Chicago City Council Acts to Clarify Legal Protections Available for Chicago Renters

Chicago City Council in Chambers

Two years ago the Chicago City Council passed the Protecting Tenants in Foreclosed Rental Property Ordinance, commonly known as the Keep Chicago Renting Ordinance (KCRO). The KCRO applies to Chicago renters from the time of a completed foreclosure sale until the building is sold to a third-party purchaser. The ordinance provides that successors-in-interest (usually banks) to foreclosed properties must do one of two things: either offer to renew or extend leases to qualified tenants in foreclosed properties or, if the owner should choose to vacate the property, provide $10,600 in relocation assistance per household. The strong policy behind the KCRO is to allow renters, even those without a written lease, to remain in their home as long as they comply with their rental agreements. It also provides a financial incentive for banks to collect rent, or sell occupied Real Estate Owned properties (REOs), keeping them in productive use.

Once the ordinance went into effect, it became clear that because the ordinance did not clarify precisely enough the timeframe in which renters should be offered a lease renewal or relocation assistance, that banks and other successors-in-interest were simply not following the ordinance . This spring, the City of Chicago passed amendments to the Keep Chicago Renting Ordinance (KCRO) which clarifies the law and increases protections for many renters living in properties lost to foreclosure. Lawyers’ Committee for Better Housing (LCBH) was instrumental in both the initial passage of the law, in monitoring its enforcement and compliance, and in the process of drafting the amendments.

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. The new process now includes a standardized form for renters to complete and return to the new owner.

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 to let the new owner know if they are accepting the owner’s offer.

Renters living in units that were illegally converted or have very hazardous conditions may be offered a replacement unit. This unit can either be in their 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.

The amendments also expand the number of renters who are covered under the ordinance. Close family members who reside in a different unit from the original owner are now provided the protections if their lease was otherwise covered under the ordinance. LCBH will continue to monitor the enforcement and effectiveness of the KRCO, and other laws, that affect renters in Chicago.