Ask a Lawyer - Archive

Do landlords have to pay interest on commercial lease deposits in the state of IL?

A lessor of residential real property that contains 25 or more units, who receives a security deposit from a lessee to secure the payment of rent or as compensation for damages to property must pay interest to the lessee. [Section 765 ILCS 715/1] The interest is computed from the date the deposit is made and is paid at a rate equal to the interest paid by the largest commercial bank having its main banking premises in the State of Illinois on minimum passbook savings accounts as of December 31 of the calendar year immediately preceding the beginning of the rental agreement on any deposit held by the lessor for more than six months. [Section 765 ILCS 715/1]

Within thirty days after the end of each twelve month rental period, the lessor is required to pay the lessee the accrued amount of interest computed at this rate, except when the lessee is in default under the terms of the lease. [Section 765 ILCS 715/2]

The Security Deposit Interest Act [Section 765 ILCS 715/1 et. seq.], by its terms, only applies to residential property. There is little legal authority with regard to security deposits and commercial leases. Thus, it is our firm's opinion that the commercial lease itself should provide for the disposition of the security deposit at the end of the lease.