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That New Illinois Landlord Fee Law Didn't Kick In July 1st — But Your Countdown Clock Is Running

  • Writer: The Biggest News Jason Rosenberg
    The Biggest News Jason Rosenberg
  • 24 hours ago
  • 4 min read

If you own rental property anywhere in Illinois, you've probably heard rumblings about House Bill 3564 — the "Rental Fee Transparency" law that was supposed to take effect July 1, 2026. Maybe you spent June frantically Googling whether your move-in fee just became illegal. Maybe you did nothing and hoped it would go away, like a Bears rebuild.

Here's the update most landlords missed: it got delayed. In early July, the General Assembly pushed the effective date back to January 1, 2027 via a companion bill (HB 5234). So no, you're not out of compliance today.

But you've got about six months. And this law is going to touch nearly every lease in your portfolio. Let's break down what's actually in it — no legalese, just what you need to know as an investor.

The Big One: Every Fee Goes on Page One

The centerpiece of HB 3564 is simple: every non-optional fee — one-time or recurring — must be explicitly listed on the first page of your lease. Pet rent, parking, move-in fees, all of it. Buried a fee on page 9 in size-8 font? Under the new law, your tenant isn't legally required to pay it.

Read that again. The penalty for a disclosure mistake isn't a slap on the wrist — it's the fee becomes uncollectable. If your lease template hasn't been touched since the Blagojevich administration, this is your sign.

You'll also need to disclose whether utilities are included — in the lease and in your listings.

The Fees That Are Going Away Entirely

The law bans a list of charges outright. Highlights:

  • Lease renewal and modification fees. That $150 "renewal admin fee"? Gone.

  • After-hours maintenance fees. Pipes don't check the clock, and now neither can your fee schedule.

  • Double-dipping on move-in. You cannot charge both a security deposit and a move-in/move-out fee. Pick a lane.

And the fees that survive get haircuts:

  • Application/background check fees are capped at $50, unless you can document a higher actual third-party screening cost.

  • Security deposits are capped at one month's rent.

  • Move-in/move-out fees must reflect actual, itemized costs — no more round-number fees pulled from thin air.

  • Late fees get capped, with new rules on when you can charge them.

The Small Landlord Exemption

One carve-out worth knowing: the law does not apply to owner-occupied buildings with six units or fewer. If you're house-hacking a Logan Square three-flat and living in the garden unit, breathe easy. Everyone else — including every non-owner-occupied two-flat, courtyard building, and portfolio property from Rogers Park to Villa Park — is covered.

What This Means for Your Numbers

Let's be honest about the math. If you've been using move-in fees, renewal fees, and admin charges to pad returns, that income is going away or getting compressed. Tenants who get charged a banned fee after January 1st can come after you with civil liability — so "we'll see if anyone notices" is not a strategy.

The likely market response? Those costs migrate into base rent. And here's the thing — the timing isn't terrible for that. Chicago rents are climbing, concessions are shrinking, and units are leasing faster than they have in years. Landlords have pricing power right now. Building your true costs into transparent rent, rather than a scaffolding of fees, is very doable in this market.

Your Six-Month Checklist

  1. Pull out your lease template. Move every mandatory fee to page one, in plain language, alongside the rent.

  2. Kill the banned fees now so you're not renewing anyone into a lease that becomes a liability January 1st.

  3. Audit your deposit structure. Deposit or move-in fee — not both — and cap that deposit at one month.

  4. Update your listings to state whether utilities are included.

  5. Re-run your pro formas. If fee income was propping up your cash flow, adjust rents at your next renewal cycle while the market's on your side.

Thinking About Buying or Selling Rental Property Before the Law Hits?

Some owners will look at this compliance list and decide it's time to exit. Some investors will see motivated sellers and smell opportunity. Either way, the second half of 2026 is going to be an interesting window in the Chicago investment market — and I'd love to help you play it.

If you're selling, my 1.25% listing commission means you keep tens of thousands more of your equity compared to the standard rate — money that matters a lot more when the fee income on the other side of the ledger is shrinking. Find your own buyer? You pay me nothing, thanks to my Zero Commission Clause. And you can cancel anytime.

Jason Rosenberg | The Rosenberg Group at Infiniti Properties 312.882.9797 https://www.jasonrosenbergrealestate.com/

This post is for informational purposes and isn't legal advice — have your attorney review your leases before January 1, 2027.

Sources

 
 
 

JRR

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