Keep Chicago Renting Imposes Significant New Obligations on Foreclosing Lenders in Chicago
Financial Institutions Law Update 09/03/13 Thomas A. McCarthy, Leonard S. Shifflett, Melissa E. Manning
The "Keep Chicago Renting" ordinance will take effect on September 3, 2013 and imposes significant new obligations on lenders that foreclose on residential rental properties located in the City of Chicago. With limited exceptions, the ordinance will apply to all lenders that acquire ownership of a residential property through a foreclosure sale, deed in lieu of foreclosure, or consent foreclosure. The ordinance imposes significant new notice and registration requirements on lenders, and provides for fines between $500 and $1,000 for each day that a violation exists.
Notice Requirements. The ordinance requires a lender to send a notice to any tenants within 21 days of taking ownership of a foreclosed rental property. The notice must be in writing and given in English, Spanish, Polish, and Chinese. The content of the notice is specified in the ordinance, and requires the lender to either: (1) pay the tenant a relocation payment in the amount of $10,600; or (2) renew or extend the tenant's current written or oral rental agreement with an annual rent that does not exceed 102% of the tenant's current rent. The option to renew or extend a lease at 102% of the prior year's rent shall continue until the foreclosed property is sold to a bona fide third-party purchaser.
Registration Requirements. The ordinance also requires a foreclosing lender to register the foreclosed rental property with the City of Chicago Commissioner of Buildings and pay a $250.00 registration fee for each foreclosed rental property within 10 days of taking ownership of the property.
In addition to the fines described above, a tenant may bring a private cause of action against any foreclosing lender, and a prevailing tenant shall be entitled to recover, in addition to any other remedy available, damages and reasonable attorney's fees. The full ordinance (SO2012-5127) can be found here.
With active tenants' rights advocacy groups in Chicago, we anticipate that initial enforcement of the ordinance will be robust. If you have any questions concerning the new ordinance or its enforcement, please contact Thomas A. McCarthy (312) 715-5061 / [email protected], Leonard Shifflett (312) 715-5038 / [email protected], Melissa Manning (312) 715-5258 / [email protected], or your Quarles & Brady attorney.