Source: http://lcbh.org/resources/overview-keep-chicago-renting-ordinance
Timestamp: 2018-05-27 09:52:30
Document Index: 183006298

Matched Legal Cases: ['§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5']

Overview of the Keep Chicago Renting Ordinance (KCRO) | Lawyers' Committee for Better Housing
In response to the effect of the mortgage foreclosure crisis on renters, the City of Chicago enacted the Protecting Tenants in Foreclosed Rental Property Ordinance, commonly known as the Keep Chicago Renting Ordinance (KCRO). This amendment to the Chicago Municipal Code went into effect on September 24, 2013 and only impacts properties in the City of Chicago. The text of the ordinance is available online at: https://chicago.legistar.com/LegislationDetail.aspx?ID=1156573&GUID=4F70...
The City of Chicago passed amendments to the ordinance on April 15, 2015 that clarify the law and increase protections for many renters living in properties lost to foreclosure. The new amendments clearly advise both renters and the new owners about the timeframe in which the new owner and renter need to communicate with each other during the process. The text of the amendments is available online at: https://chicago.legistar.com/LegislationDetail.aspx?ID=2244871&GUID=F547...
Owners Required to Renew or Extend Rental Agreements or Pay Substantial Relocation Assistance
The Ordinance requires the owner of a foreclosed rental property to either: (1) offer the Qualified Tenant a renewal or extension of their rental agreement with a rent increase of no more than 2%; or (2) pay the tenants a relocation fee of $10,600 within seven days of the Qualified Tenant vacating the unit. Chicago Municipal Code, § 5-14-050(a). If the owner elects to offer a lease, the owner must continue to offer renewals or extensions (with rent increases of no more than 2% per year) until the owner sells the property to a "bona fide third-party purchaser." Chicago Municipal Code, § 5-14-050(g).
Notice of change in ownership must be provided to all occupants of a foreclosed property within 21 days after a person becomes an owner or within 7 days of determining the tenant’s identity. Notice must either be mailed or delivered to known tenant/household member 13 years or older. In addition, notice must be posted on the primary entrance of each foreclosed property. Chicago Municipal Code, § 5-14-040(a)(b)
The notice must include information about the foreclosure, change in ownership, new owner, where to pay rent, who to request repairs from, and tenants’ rights under the Ordinance. The Ordinance requires that the notice about tenants’ rights under the Ordinance be given in English, Spanish, Polish and Chinese. The English language version of the notice is incorporated into the Ordinance, but translations were not. The Lawyers’ Committee for Better Housing (LCBH) has translated the notice and those translations may be used by owners to inform their tenants in accordance with the law.
In addition to the translated notice language, we have included language to assist renters in seeking free information about their rights and responsibilities. We recommend that owners using the translated notice also include the added information as well.
As part of the notice and communication timeline, the process includes a standardized form for renters to complete and return to the new owner. Chicago Municipal Code, § 5-14-040(b)
A copy of the disclosure form can be found at: http://www.cityofchicago.org/content/dam/city/depts/bacp/Consumer%20Info...
Even though the new owner may have been involved in the foreclosure, they often have very little information about the property, its condition, and who is living at the property. Tenants should not assume that the new owner has any of this information. The form is a tenant’s chance to make themselves known. While there is no penalty or loss of rights for the failure to return the Tenant Information Disclosure Form, it is very important to send the form back in a timely manner.
The new amendments clearly advise both renters and the new owners about the timeframe in which the new owner and renter need to communicate with each other during the process. This includes a specified deadline for when the new owner must decide whether to continue renting to the renter or pay the relocation assistance.
Within 21 days of taking over the property, the new owner must send the renter a form requesting information from the renter. This information is intended to help the new owner assess which option they wish to offer the renter, either to renew the lease or pay the relocation assistance.
Within 21 days of receiving the completed form from the renter (or 42 days from the date the new owner sent the form to the renter if the form is not returned), the owner must let the renter know which option the owner is offering to the renter.
The renter then has another 21 days after receiving the offer to let the new owner know if they are accepting the owner’s offer. In very specific and limited circumstances, a tenant may get an extension up to 42 days to respond to the new owner. Chicago Municipal Code, § 5-14-050(a)(3)
Tenant Forfeiture
Tenants who do not respond in a timely manner to the new owner’s offer of a lease extension or renewal risk forfeiting those rights (as well as those to the relocation assistance)! If the tenant does not respond within 21 days of receiving the offer, the new owner can act as if the tenant rejected the offer. This means the tenant can be asked to leave and the new owner would not have to pay the relocation assistance! Chicago Municipal Code, § 5-14-050(3)
Until the owner serves notice under § 5-14-040, the owner cannot collect rent or terminate a tenant’s lease for failure to pay rent. Chicago Municipal Code, § 5-14-040(d).
The Ordinance protects "Qualified" tenants who have a bona fide (valid) lease or rental agreement. The definition of a bona fide lease or rental agreement includes all agreements, whether written or oral, as long as:
The tenant is not the mortgagor, or the child, spouse, or parent of the mortgagor residing in the same unit with the mortgagor;
The rental agreement or tenancy was the product of an arm’s-length transaction; and
The rent required under the rental agreement or tenancy is not substantially less than fair market or is subsidized by the government.
Chicago Municipal Code, § 5-14-020.
In other words, rental agreements entered into with children, parents, or the spouse of the former owner while living in the same unit with the former owner; rental agreements where both parties did not negotiate in their own best interest; and rental agreements with substantially less than fair market rent are not considered bona fide. Tenants without bona fide rental agreements are not qualified tenants under the Ordinance.
The Ordinance does not apply to: (1) an owner of a foreclosed rental property who was the owner prior to the effective date of the Ordinance (9/24/13); (2) a person appointed as a receiver and issued or assigned, a Receiver’s Certificate; or (3) a bona fide not-for-profit in existence continuously for a period of five years immediately prior to becoming the owner of the rental unit and whose purpose is to provide financing for the purchase or rehabilitation of affordable housing. Chicago Municipal Code, § 5-14-030.
Renters living in units that were illegally converted or have very hazardous conditions may be offered a replacement unit. The replacement unit can either be in the current building or another building. However, if the renter does not want to move into the replacement unit, the renter can turn down the offer and elect to take the $10,600 relocation, payable within 7 days after the tenant moves out of the property. Chicago Municipal Code, § 5-14-050(a)(2).
If an owner fails to comply with § 5-14-050 (Tenant relocation assistance), the qualified tenant shall be awarded damages in an amount equal to two times the relocation assistance fee ($21,200), plus other damages (e.g., security deposit) and reasonable attorney’s fees. Chicago Municipal Code, § 5-14-050(f). Penalties for violation of the KCRO are significant enough that LCBH expects substantial compliance as well as higher rates of referrals for KCRO violations to LCBH and similar agencies.
The Illinois Mortgage Foreclosure Law (IMFL) still applies after the ordinance takes effect. Therefore, new owners must continue to honor any existing bona fide leases and cannot demand tenant renew or relocate until the end of that lease. However, Tenants should be aware that if they enter into a long term lease after the foreclosure has been filed, it may be treated as a 1 year lease. If a tenant enters into a yearly lease or longer after the property has been sold at a judicial sale, but before the foreclosure has been finalized, it may be treated as a month-to-month lease.
The IMFL was amended (in anticipation of the sunset of the federal PTFA on Dec. 31, 2014) to incorporate federal PTFA protections into Illinois law and became effective November 19, 2013. 2013 Illinois Senate Bill No. 56. SB 56 closes certain loopholes in the IMFL so that bona fide tenants may no longer be evicted in foreclosure proceedings or in a foreclosure supplemental proceeding, but instead everything must go through eviction court. 735 ILCS 5/9-207.5. See Illinois Senate Bill No. 56 (Adopted, August 21, 2013).