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The Supreme Court of Illinois has ruled on whether a tenant was entitled to receive interest on a security deposit for pets.
Aurelia Lawrence ("Tenant") leased an apartment from the Regent Realty Group ("Landlord") from October 1990 until November 1996. At the time of leasing, the Landlord required the Tenant to make a $100 pet security deposit as well as an additional security deposit equivalent to one month's rent. In Chicago, the City's landlord/tenant ordinance ("Ordinance") requires landlords holding a security deposit to pay "within 30 days after the end of each 12 month rental period" interest on the security deposit at a mandated rate. During the first year of the lease, the Landlord paid the statutory interest rate on the entire amount of both deposits, but thereafter excluded the pet security deposit from the interest calculations.
Following the termination of her lease, the Tenant filed a lawsuit seeking damages from the Landlord for its failure to pay her interest on the pet deposit. The penalty for failing to pay the required interest is an amount equal to two times the total amount of the security deposit, plus interest, attorney's fees, and costs. The trial court ruled that the Landlord had violated the Ordinance but determined that a wilful violation was necessary for the court to impose the penalties set forth in the Ordinance. Since the court determined the Landlord's violation of the Ordinance was unintentional, the court dismissed the Tenant's lawsuit but ordered the Landlord to pay the past-due interest on the pet deposit. The Tenant appealed, and the appellate court reversed the trial court. The appellate court rejected the trial court's ruling that "wilfulness" was required for recovery by the Tenant, ruling that since the Landlord had violated the Ordinance, it was liable for the penalties. Thus, the appellate court entered judgment in favor of the Tenant, remanding the case for a determination of the costs that should be awarded to the Tenant. The Landlord appealed.
The Supreme Court of Illinois affirmed the appellate court's ruling in favor of the Tenant. The court stated that the issue before it was whether the failure to pay interest required a showing of wilfulness on behalf of the landlord. The court agreed that the pet deposit constituted a security deposit, and so the Tenant should have received interest payments on this deposit. The court also found that the Ordinance was clear in the penalty that was to be imposed for failing to make these interest payments, and there was nothing in the Ordinance requiring the court to determine whether the Landlord's behavior was wilful or not. Therefore, the court ruled that the Landlord was liable to the Tenant for an amount double the total security deposit, plus all interest owed, attorney's fees, and litigations costs.
Two justices dissented from the opinion. The dissent argued that the Ordinance was not intended to punish mistaken interpretations of the law, as the Landlord claimed here.
Lawrence v. Regent Realty Group, Inc., 197 Ill. 2d 1, 754 N.E.2d 334 (2001).
Editor's Note: The Illinois Association of REALTORS®, the Chicago Association of REALTORS®, and the NATIONAL ASSOCIATION OF REALTORS®'s Legal Action Committee all contributed financial support in the unsuccessful attempt to reverse the appellate court's ruling.