SB3771 101ST GENERAL ASSEMBLY

LRB101 20335 LNS 69879 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB3771

Introduced 2/14/2020, by Sen. Emil Jones, III

SYNOPSIS AS INTRODUCED:

New Act

Creates the Tenant Protection Act. Provides that after a tenant has continuously and lawfully occupied a residential real property for 12 months, the owner of the residential real property shall not terminate the tenancy without just cause. Provides that before an owner of residential real property issues a notice to terminate a tenancy for just cause that is a curable lease violation, the owner shall first give notice of the violation to the tenant with an opportunity to cure the violation. Provides that if an owner of residential real property issues a termination notice based on a no-fault just cause, the owner shall: (1) assist the tenant to relocate by providing a direct payment to the tenant; or (2) waive, in writing, the payment of rent for the final month of the tenancy, prior to the rent becoming due. Provides that an owner of residential real property shall not, over the course of any 12-month period, increase the gross rental rate for a dwelling or a unit more than 5% plus the percentage change in the cost of living, or 10%, whichever is lower, of the lowest gross rental rate charged for that dwelling or unit at any time during the 12 months prior to the effective date of the increase. Provides that if the same tenant remains in occupancy of a unit of residential real property over any 12-month period, the gross rental rate for the unit of residential real property shall not be increased in more than 2 increments over that 12-month period. Requires, on or before January 1, 2031, the Commission on Government Forecasting and Accountability to report to the General Assembly regarding the effectiveness of the Act. Repeals the Act on January 1, 2031. Effective immediately.

A BILL FOR

AN ACT concerning civil law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Tenant Protection Act.

Section 5. Findings; intent. The General Assembly finds and declares that the unique circumstances of the current housing crisis require a statewide response to address rent gouging by establishing statewide limitations on gross rental rate increases.

It is the intent of the General Assembly that this Act applies only for the limited time needed to address the current statewide housing crisis. This Act is not intended to expand or limit the authority of units of local government to establish local policies regulating rents, nor is it a statement regarding the appropriate, allowable rental rate increase when a local government adopts a policy regulating rent that is otherwise consistent with applicable law.

Section 10. Definitions. As used in this Act:

"Assisted housing development" has the meaning provided in subsection (e) of Section 3 of the Federally Assisted Housing Preservation Act.

"Expiration of rental restrictions" means the expiration of rental restrictions for an assisted housing development unless the development has other recorded agreements restricting the rent to the same or lesser levels for at least 50% of the units.

"Owner" means any person, acting as principal or through an agent, having the right to offer residential real property for rent. "Owner" includes a predecessor in interest to the owner. "Owner" does not include the owner or operator of a mobile home park or the owner of a mobile home or his or her agent.

"Percentage change in the cost of living" means the percentage change from April 1 of the prior year to April 1 of the current year in the regional Consumer Price Index for the region where the residential real property is located, as published by the United States Bureau of Labor Statistics.

"Residential real property" means any dwelling or unit that is intended for human habitation.

"Substantially remodel" means the replacement or substantial modification of any structural, electrical, plumbing, or mechanical system that requires a permit from a governmental agency, or the abatement of hazardous materials, including lead-based paint, mold, or asbestos, in accordance with applicable federal, State, and local laws, that cannot be reasonably accomplished in a safe manner with the tenant in place and that requires the tenant to vacate the residential real property for at least 30 days. "Substantially remodel" does not include cosmetic improvements alone, including painting, decorating, and minor repairs, or other work that can be performed safely without having the residential real property vacated.

"Tenancy" means the lawful occupation of residential real property and includes a lease or sublease.

Section 15. Termination of tenancy.

(a) Notwithstanding any other provision of law, after a tenant has continuously and lawfully occupied a residential real property for 12 months, the owner of the residential real property shall not terminate the tenancy without just cause, which shall be stated in the written notice to terminate the tenancy. If any additional tenant who is at least 18 years old is added to the lease before an existing tenant has continuously and lawfully occupied the residential real property for 24 months, this subsection only applies if:

(1) each tenant who is at least 18 years old has continuously and lawfully occupied the residential real property for at least 12 months; or

(2) at least one tenant who is at least 18 years old has continuously and lawfully occupied the residential real property for at least 24 months.

(b) For the purposes of this Section, "just cause" includes:

(1) At-fault just cause, including:

(i) default in the payment of rent;

(ii) a breach of a material term of the lease, including, but not limited to, the violation of a provision of the lease after being issued a written notice to correct the violation;

(iii) maintaining, committing, or permitting the maintenance or commission of a nuisance;

(iv) committing waste;

(v) in the case of a tenant with a written lease that terminated on or after January 1, 2021, after a written request or demand from the owner, refusal by the tenant to execute a written extension or renewal of the lease for an additional term of similar duration with similar provisions, as long as those terms do not violate this Section or any other provision of law;

(vi) criminal activity by the tenant on the residential real property, including any common areas, or any criminal activity or criminal threat, on or off the residential real property, that is directed at any owner or agent of the owner of the residential real property;

(vii) assigning or subletting the premises in violation of the tenant's lease;

(viii) refusal of the tenant to allow the owner to enter the residential real property;

(ix) using the premises for an unlawful purpose;

(x) if the tenant is an employee, agent, or licensee of the owner who was leased the residential real property based on such status, failure by the employee, agent, or licensee to vacate after his or her termination as an employee, agent, or a licensee; or

(xi) failure to deliver possession of the residential real property after providing the owner written notice of the tenant's intention to terminate the lease, or making a written offer to surrender that is accepted in writing by the owner, but failing to deliver possession at the time specified in that written notice.

(2) No-fault just cause, including:

(i) intent to occupy the residential real property by the owner, or his or her spouse, domestic partner, child, grandchild, parent, or grandparent. For leases entered into on or after July 1, 2021, this subparagraph only applies if the tenant agrees, in writing, to the termination, or if a provision of the lease allows the owner to terminate the lease if the owner, or his or her spouse, domestic partner, child, grandchild, parent, or grandparent, unilaterally decides to occupy the residential real property. The addition of a provision allowing the owner to terminate the lease as described in this subparagraph to a new or renewed rental agreement or fixed-term lease constitutes a similar provision for the purposes of subparagraph (v) of paragraph (1);

(ii) withdrawal of the residential real property from the rental market;

(iii) the owner complying with:

(A) an order issued by a governmental agency or court relating to habitability that necessitates vacating the residential real property;

(B) an order issued by a governmental agency or court to vacate the residential real property; or

(C) a local ordinance that necessitates vacating the residential real property.

If it is determined by any governmental agency or court that the tenant is at fault for the conditions triggering the order or need to vacate under this subparagraph, the tenant is not entitled to relocation assistance under subsection (d); or

(iv) intent to demolish or to substantially remodel the residential real property.

(c) Before an owner of residential real property issues a notice to terminate a tenancy for just cause that is a curable lease violation, the owner shall first give notice of the violation to the tenant with an opportunity to cure the violation. If the violation is not cured within the time set forth in the notice, a 3-day notice to quit without an opportunity to cure may thereafter be served to terminate the tenancy.

(d) For a tenancy for which just cause is required to terminate the tenancy under subsection (a), if an owner of residential real property issues a termination notice based on a no-fault just cause described in paragraph (2) of subsection (b), the owner, at his or her option, regardless of the tenant's income, shall:

(1) assist the tenant to relocate by providing a direct payment to the tenant as described in this subsection; or

(2) waive, in writing, the payment of rent for the final month of the tenancy, prior to the rent becoming due.

If an owner issues a notice to terminate a tenancy for no-fault just cause, the owner shall notify the tenant of the tenant's right to relocation assistance or rent waiver under this Section. If the owner elects to waive the rent for the final month of the tenancy as provided in paragraph (2), the notice shall state the amount of rent waived and that no rent is due for the final month of the tenancy.

The amount of relocation assistance or rent waiver shall be equal to one month of the tenant's rent that was in effect when the owner issued the notice to terminate the tenancy. Any relocation assistance shall be provided within 15 calendar days of service of the notice. If a tenant fails to vacate after the expiration of the notice to terminate the tenancy, the actual amount of any relocation assistance or rent waiver provided under this subsection shall be recoverable as damages in an action to recover possession. The relocation assistance or rent waiver required by this subsection shall be credited against any other relocation assistance required by any other law.

An owner's failure to strictly comply with this subsection shall render the notice of termination void.

(e) This Section does not apply to the following types of residential real properties or residential circumstances:

(1) Transient and tourist hotel occupancy.

(2) A housing accommodation in a nonprofit hospital, religious facility, extended care facility, licensed residential care facility for the elderly, or an adult residential facility.

(3) A dormitory owned and operated by an institution of higher education or a kindergarten and grades 1 through 12 school.

(4) A housing accommodation in which the tenant shares bathroom or kitchen facilities with the owner who maintains his or her principal residence at the residential real property.

(5) A single-family owner-occupied residence, including a residence in which the owner-occupant rents or leases no more than 2 units or bedrooms, including, but not limited to, an accessory dwelling unit or a junior accessory dwelling unit.

(6) A duplex in which the owner occupies one of the units as the owner's principal place of residence at the beginning of the tenancy, so long as the owner continues to occupy the duplex as his or her principal place of residence.

(7) Housing that has been issued a certificate of occupancy within the previous 15 years.

(8) Residential real property that is alienable and separate from the title to any other dwelling unit, if:

(i) the owner is not:

(A) a real estate investment trust, as defined in Section 856 of the Internal Revenue Code;

(B) a corporation; or

(C) a limited liability company in which at least one member is a corporation; and

(ii) the tenant has been provided written notice that the residential property is exempt from this Section using the following statement:

"This property is not subject to the just cause requirements of Section 15 of the Tenant Protection Act and is not subject to the rent limits imposed by Section 20 of the Tenant Protection Act. This property meets the requirements of paragraph (8) of subsection (e) of Section 15 and paragraph (5) of subsection (d) of Section 20 of the Tenant Protection Act and the owner is not: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation."

For a tenancy existing before July 1, 2021, the notice required under this subparagraph may be provided in the rental agreement.

For any tenancy commenced or renewed on or after July 1, 2021, the notice required under this subparagraph shall be provided in the rental agreement.

The addition of a provision containing the notice required under this subparagraph to any new or renewed rental agreement or fixed-term lease constitutes a similar provision for the purposes of subparagraph (v) of paragraph (1) of subsection (b).

(9) Housing restricted by deed, regulatory restriction contained in an agreement with a governmental agency, or other recorded document as affordable housing for persons and families of very low, low, or moderate income, or subject to an agreement that provides housing subsidies for affordable housing for persons and families of very low, low, or moderate income.

(f) An owner of residential real property subject to this Section shall provide notice to the tenant as follows:

(1) For any tenancy commenced or renewed on or after July 1, 2021, as an addendum to the lease or rental agreement, or as a written notice signed by the tenant, with a copy provided to the tenant.

(2) For a tenancy existing prior to July 1, 2021, by written notice to the tenant no later than August 1, 2021, or as an addendum to the lease or rental agreement.

(3) The notification or lease provision shall include the following:

"Illinois law limits the amount your rent can be increased. See Section 20 of the Tenant Protection Act for more information. Illinois law also provides that after each tenant has continuously and lawfully occupied the property for at least 12 months or at least one tenant has continuously and lawfully occupied the property for at least 24 months, a landlord shall provide a statement of cause in any notice to terminate a tenancy. See Section 15 of the Tenant Protection Act for more information."

(g) This Section does not apply to the following residential real property:

(1) Residential real property subject to a local ordinance requiring just cause for termination of a residential tenancy adopted on or before September 1, 2020, in which case the local ordinance shall apply.

(2) Residential real property subject to a local ordinance requiring just cause for termination of a residential tenancy adopted or amended after September 1, 2020 that is more protective than this Section, in which case the local ordinance shall apply. For purposes of this paragraph, an ordinance is more protective if:

(i) the just cause for termination of a residential tenancy under the local ordinance is consistent with this Section;

(ii) the ordinance further limits the reasons for termination of a residential tenancy, provides for higher relocation assistance amounts, or provides additional tenant protections that are not prohibited by any other provision of law; and

(iii) the local government has made a finding within its local ordinance that the ordinance is more protective than the provisions of this Section.

A residential real property shall not be subject to both a local ordinance requiring just cause for termination of a residential tenancy and this Section.

A local ordinance adopted after September 1, 2020 that is less protective than this Section shall not be enforced unless this Section is repealed.

(h) Any waiver of the rights granted under this Section is against public policy and void.

Section 20. Rental rates.

(a) Subject to subsection (b), an owner of residential real property shall not, over the course of any 12-month period, increase the gross rental rate for a dwelling or a unit more than 5% plus the percentage change in the cost of living, or 10%, whichever is lower, of the lowest gross rental rate charged for that dwelling or unit at any time during the 12 months prior to the effective date of the increase. In determining the lowest gross rental amount under this Section, any rent discounts, incentives, concessions, or credits offered by the owner of the unit of residential real property and accepted by the tenant shall be excluded. The gross per-month rental rate and any owner-offered discounts, incentives, concessions, or credits shall be separately listed and identified in the lease or rental agreement or any amendments to an existing lease or rental agreement.

If the same tenant remains in occupancy of a unit of residential real property over any 12-month period, the gross rental rate for the unit of residential real property shall not be increased in more than 2 increments over that 12-month period, subject to the other restrictions of this subsection.

(b) For a new tenancy in which no tenant from the prior tenancy remains in lawful possession of the residential real property, the owner may establish the initial rental rate not subject to subsection (a). Subsection (a) applies only to subsequent increases after the initial rental rate has been established.

(c) A tenant of residential real property subject to this Section shall not enter into a sublease that results in a total rent for the premises that exceeds the allowable rental rate authorized by subsection (a). Nothing in this subsection authorizes a tenant to sublet or assign the tenant's interest where otherwise prohibited.

(d) This Section does not apply to the following residential real properties:

(1) Housing restricted by deed, regulatory restriction contained in an agreement with a governmental agency, or other recorded document as affordable housing for persons and families of very low, low, or moderate income, or subject to an agreement that provides housing subsidies for affordable housing for persons and families of very low, low, or moderate income.

(2) A dormitory constructed and maintained in connection with any higher education institution within this State for use and occupancy by students in attendance at the institution.

(3) Housing subject to rent or price control through a public entity's valid exercise of its police power that restricts annual increases in the rental rate to an amount less than that provided in subsection (a).

(4) Housing that has been issued a certificate of occupancy within the previous 15 years.

(5) Residential real property that is alienable and separate from the title to any other dwelling unit, if:

(i) the owner is not:

(A) a real estate investment trust, as defined in Section 856 of the Internal Revenue Code;

(B) a corporation; or

(C) a limited liability company in which at least one member is a corporation; and

(ii) the tenant has been provided written notice that the residential real property is exempt from this Section using the following statement:

"This property is not subject to the just cause requirements of Section 15 of the Tenant Protection Act and is not subject to the rent limits imposed by Section 20 of the Tenant Protection Act. This property meets the requirements of paragraph (8) of subsection (e) of Section 15 and paragraph (5) of subsection (d) of Section 20 of the Tenant Protection Act and the owner is not: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation."

For a tenancy existing before July 1, 2021, the notice required under this subparagraph may be provided in the rental agreement.

For a tenancy commenced or renewed on or after July 1, 2021, the notice required under this subparagraph shall be provided in the rental agreement.

The addition of a provision containing the notice required under this subparagraph to any new or renewed rental agreement or fixed-term lease constitutes a similar provision for the purposes of subparagraph (v) of paragraph (1) of subsection (b) of Section 15.

(6) A duplex in which the owner occupies one of the units as the owner's principal place of residence at the beginning of the tenancy, so long as the owner continues to occupy the duplex as his or her principal place of residence.

(e) An owner shall provide notice of any increase in the rental rate, pursuant to subsection (a), to each tenant.

(f) On or before January 1, 2031, the Commission on Government Forecasting and Accountability shall report to the General Assembly regarding the effectiveness of this Act. The report shall include, but not be limited to, the impact of the rental rate cap pursuant to subsection (a) on the housing market within this State.

(g) This Section applies to all rent increases subject to subsection (a) occurring on or after March 15, 2020. This Section shall become operative January 1, 2021.

If an owner has increased the rent by more than the amount permissible under subsection (a) between March 15, 2020, and January 1, 2021, the following applies:

(1) the applicable rent on January 1, 2021, shall be the rent as of March 15, 2020, plus the maximum permissible increase under subsection (a); and

(2) an owner is not liable to the tenant for any corresponding rent overpayment.

An owner of residential real property subject to subsection (a) who increased the rental rate on that residential real property on or after March 15, 2020, but prior to January 1, 2021, by an amount less than the rental rate increase permitted by subsection (a) is allowed to increase the rental rate twice, as provided in paragraph (2) of subsection (a), within 12 months of March 15, 2020, but in no event shall that rental rate increase exceed the maximum rental rate increase permitted by subsection (a).

(h) Any waiver of the rights granted under this Section is against public policy and void.

(i) Nothing in this Section affects the existing authority of a unit of local government to adopt or maintain rent controls or price controls consistent with this Act.

Section 25. Exceptions.

(a) Notwithstanding Section 20, upon the expiration of rental restrictions, the following applies:

(1) The owner of an assisted housing development who demonstrates, under penalty of perjury, compliance with any other applicable law or regulation intended to promote the preservation of assisted housing, may establish the initial unassisted rental rate for units in the applicable housing development. Any subsequent rent increase in the development shall is subject to Section 20.

(2) The owner of a deed-restricted affordable housing unit or an affordable housing unit subject to a regulatory restriction contained in an agreement with a governmental agency limiting rental rates that is not within an assisted housing development may establish the initial rental rate for the unit upon the expiration of the restriction. Any subsequent rent increase for the unit is subject to Section 20.

(b) Any waiver of the rights under this Section is against public policy and void.

Section 30. Repeal. This Act is repealed on January 1, 2031.

Section 99. Effective date. This Act takes effect upon becoming law.