Security deposits for student-rented apartments are on the decline in Hyde Park, as local realtors heed the advice of a city-wide realtor association that shunned the practice last month.
In late January, the Chicago Association of Realtors began advising Chicago landlords not to require security deposits, long used by landlords as collateral for unpaid rent, utilities, or damages to a unit. Security deposits are no longer a mainstay in rental leases. With approximately 50 percent of UChicago undergraduates residing in off-campus housing, the demise of the up-front down payment has resulted in one less living expense for some student renters.
MAC Property Management, which owns 53 apartment buildings in Hyde Park and has many student tenants, stopped collecting security deposits in 2007, according to MAC’s Director of Community Management Peter Cassel. Cassel said that MAC landlords now accept credit scores in lieu of security deposits to validate a tenant’s good standing.
“We don’t need to hold a large amount of cash, so the deposit became unnecessary. We’re trying to balance barriers to entry,” Cassel said.
Many private landlords, however, continue to require security deposits. Timothy O’Connell, who owns two eight-unit apartment buildings on East 61st Street and South Ellis Avenue as well as a building on East 61st Street and South Kimbark Avenue, rents his buildings to between 50 and 70 students. He requires a security deposit of between $500 to $600 per room for three- and four- bedroom apartments, equal to a month’s rent.
“I have never had a problem asking for security deposits. It’s silly and bad business not to ask for security deposits,” he said.
According to Chicago laws, before deducting expenses, a landlord must give a tenant an itemized list of damages within 30 days of move-out and return the security deposit and interest, minus unpaid rent and expenses, within 45 days of move-out. If a landlord does not comply, a tenant can file a class-action lawsuit and be awarded damages worth twice his or her deposit with interest, court costs, and attorney fees.
As landlords, particularly those associated with larger companies, have stopped requiring security deposits, administrative or move-in fees have become more common in rental leases. This is a one-time, nonrefundable fee paid with a new lease. It is unclear if this trend is a response to the declining use of security deposits, said Jerry Ettinger, president and owner of Hallmark & Johnson Properties, which owns at least six buildings in Hyde Park and specializes in student housing.
Second-year Marc Vernick, who lives in a MAC apartment, doesn’t regard the shift away from security deposits as a net good for student renters.
“On either side of the exchange, I think it’s crazy not to use a security deposit system,” he said in an e-mail. “Obviously there’s some risk for both sides, but the alternatives—either no security for the owner or higher fees for the renter—seem way worse.”