Move-in fees are the cause of many headaches for some new tenants. There are often great debates waged between landlords/associations and tenants over the reasons behind these fees and their legality.
Here are the answers to some common questions about move-in fees:
Why do I have to pay?
Usually, a move-in fee is charged to a tenant upon signing their new lease. The fee serves to cover the costs of accomodating and processing new tenants, such as changing directories and reprogramming security systems. A move-in fee is always non-refundable.
How is this different from a security deposit?
A security deposit is a lump sum paid by a tenant to a landlord at the beginning of their lease period. This deposit is essentially an insurance account that a landlord can draw from to fix any damage caused by the tenant. At the end of the lease period, whatever is left from the deposit must be returned to the tenant. A move-in fee does not get returned to the tenant at the end of the lease, but it is often a much smaller amount than a security deposit, which can be as much as two months' rent. Because of this, some tenants prefer move-in fees.
How common are these fees?
Move-in fees are gradually replacing security deposits in the Chicago area because landlords often face severe financial penalties for mishandling the deposits within their own accounts, not returning the deposits on time or even something as minor as not labeling the deposits correctly.
Is this even legal?
A recent ruling (Steenes v. MAC Property Management, LLC) has determined that move-in fees are completely within the bounds of the law, provided that they follow certain stipulations. For example, the fee cannot be any higher than half of a single month's rent, to be paid before the tenant moves in. It also must be made perfectly clear to the tenant that the fee is non-refundable, either spelled out in the lease or another legally binding document. Furthermore, successful payment of a move-in fee cannot have any effect on a tenant's legal obligations to their lease.
There are many pros and cons to move-in fees, making them very controversial among renters. Whether or not they will effect Chicago's rental market remains to be seen, but it is very likely that move-in fees will become ubiquitous in the coming years.