When must a landlord pay interest on security deposits according to Illinois law?

In Illinois, the law stipulates that a landlord must pay interest on security deposits for properties that consist of 25 residential units or more. This requirement is designed to protect tenants and ensure equitable treatment when it comes to the handling of their deposits, reflecting a fair return for the time that the landlord holds these funds. The interest must be calculated on a yearly basis and paid to tenants at least once a year.

This law ensures that landlords of larger properties, which typically have more resources and a greater financial capacity, provide transparency and fairness when managing security deposits, similar to the financial benefits that deposit-holding institutions would offer. Thus, for any residential building with 25 or more units, the legal obligation to pay interest exists, fostering better relationships and trust between landlords and tenants.