New Illinois Rental Fee Law Takes Effect January 1, 2027: What Landlords Need to Know About HB 3564

Updated July 2026

Illinois landlords and property managers will soon face new statewide rules governing rental fees, lease disclosures, application charges, and other costs imposed on tenants.

Governor J.B. Pritzker signed House Bill 3564 into law in 2026, with the new requirements scheduled to take effect January 1, 2027. The law will generally apply to residential lease agreements entered into after the effective date.

The legislation changed considerably during the legislative process. Earlier versions generated significant concern among landlords because they proposed much broader restrictions, including limitations on move-in fees and other common leasing practices. Many of those provisions did not make it into the final enacted law.

Instead, the final legislation focuses primarily on two areas:

• Transparency: Prospective tenants must be told about mandatory fees upfront.

• Fee restrictions: Certain fees and charges may no longer be passed on to tenants.

For Illinois rental property owners—and particularly Chicago landlords who already operate under extensive local regulations—the new law will require a careful review of rental listings, application processes, lease agreements, and tenant fee structures before January 1, 2027.

What Does HB 3564 Require?

One of the biggest practical changes is simple:

All non-optional fees must be disclosed upfront.

Beginning January 1, 2027, mandatory fees—whether one-time or recurring—must be clearly disclosed as required by the new law. Mandatory fees must also be disclosed clearly and conspicuously in the rental listing or through an accompanying link available when the property is advertised.

For landlords and property managers, this means mandatory charges should not be buried deep within a lease or introduced only after an applicant has already committed to renting the property.

Rental Listings Will Need More Transparency

The new law affects the leasing process before a tenant ever signs a lease.

When a residential property is advertised for rent, applicable non-optional fees must be clearly disclosed in the listing or through an accompanying link.

The required disclosures must also address whether utilities are included in the advertised rent.

For example, if a property is advertised at $2,500 per month but also requires a mandatory:

• $500 move-in fee

• $50 monthly technology fee

• $25 monthly administrative fee

  
  

These charges should not appear for the first time after the applicant has been approved.

The practical goal of the law is to give prospective tenants a clearer understanding of the actual cost of renting a property before they commit to a lease.

Are Move-In Fees Banned in Illinois?

No—not under the final version of HB 3564.

This is one of the most important points for landlords because earlier versions of the legislation proposed much stricter limitations on move-in fees. Those earlier proposals were changed before final passage. The final enacted version of HB 3564 does not prohibit landlords from charging a move-in fee. Instead, mandatory move-in fees must comply with the applicable disclosure requirements.

This distinction is especially important in Chicago, where many landlords use non-refundable move-in fees rather than traditional security deposits.

Are Security Deposits Banned?

No.

The new law does not prohibit security deposits.

Illinois landlords may continue to use security deposits, subject to all other applicable state and local laws. Chicago landlords should remember that security deposits are already subject to extensive requirements under the Chicago Residential Landlord and Tenant Ordinance and other applicable laws.

The final version of HB 3564 also does not contain some of the broader restrictions discussed during earlier stages of the legislative process. Landlords should therefore be cautious when relying on older articles or summaries of the bill, as some describe provisions that were proposed but did not ultimately become law.

Application Fees Will Generally Be Capped at $50

Beginning January 1, 2027, landlords generally may not charge more than $50 for a rental application, including background checks. There is a limited exception when the actual cost of a third-party background check exceeds $50.

To charge more than $50, landlords may be required to follow specific documentation and reimbursement procedures, including providing supporting information regarding the actual third-party screening cost. For property managers and landlords currently charging more than $50 per applicant, this is an important policy to review before January 1, 2027.

Lease Renewal Fees Charged to Tenants Will Be Prohibited

The new law prohibits certain fees or fines charged to tenants for modifying or renewing a lease agreement. This is an important distinction for property owners who use professional management companies.

A property management company may have a contractual agreement under which the property owner pays the management company for negotiating and preparing a lease renewal. That is different from charging the tenant a renewal fee.

Property owners and managers should therefore review any lease renewal charges currently imposed directly on residents.

Certain Maintenance Fees Will Be Prohibited

The law also restricts several charges associated with ordinary maintenance and tenant communication.

Landlords may no longer be permitted to charge tenants certain fees or fines for activities such as:

• Making an after-hours maintenance request

• Contacting the landlord or property manager regarding maintenance or tenancy-related matters

• Travel associated with completing necessary maintenance or safety repairs

• Using a maintenance hotline

• Routine maintenance and upkeep of the rental unit

This does not necessarily mean that a tenant can never be held financially responsible for damage they cause.

Tenant-caused damage and charges for prohibited maintenance-related fees are different issues. Responsibility for actual tenant-caused damage should continue to be evaluated under applicable law, the lease agreement, and the specific circumstances involved.

Pest Control Fees Will Be Restricted

A landlord may not charge a tenant a fee or fine for pest abatement or removal when the tenant did not contribute to the infestation. This makes documentation increasingly important.

If a landlord believes a pest problem resulted from tenant conduct, the circumstances should be properly documented rather than relying on an automatic lease provision that assigns every pest-control expense to the tenant.

Landlords Cannot Charge for Certain Move-In or Move-Out Walk-Throughs

The law also restricts fees or fines charged to tenants for certain in-person move-in or move-out walk-throughs.

Property inspections themselves are not prohibited. The restriction applies to charging the tenant a fee or fine for the walk-through.

Certain Eviction-Related Fees Will Be Prohibited

The law also prohibits certain fees or fines associated with serving an eviction notice or filing an eviction action before a court grants an eviction order. This does not necessarily prevent a landlord from recovering applicable court costs or filing fees where otherwise permitted by law.

Landlords Cannot Simply Rename a Prohibited Fee

One particularly important aspect of the law is that landlords cannot necessarily avoid the restrictions simply by changing the name of a charge.

Calling a prohibited fee an:

• Administrative fee

• Service fee

• Convenience fee

• Processing fee

does not necessarily make it permissible if the underlying purpose of the charge is prohibited.

Landlords should therefore review the substance and purpose of every mandatory tenant charge, not simply the name assigned to it.

What Happens if a Landlord Violates the New Law?

The law provides enforcement mechanisms that may allow individuals alleging violations to pursue civil remedies.

Depending on the circumstances, potential remedies may include:

• Injunctive relief

• Monetary relief

• Attorney's fees

• Court costs

That makes compliance particularly important. A relatively small improperly disclosed or prohibited fee could potentially create a dispute costing substantially more than the original charge.

Does the Law Apply to Every Illinois Rental Property?

Not necessarily.

The new provisions generally apply to residential lease agreements covered by the law after its effective date.

The legislation also contains certain exemptions, including an exemption involving some owner-occupied properties containing six units or fewer. Owners should confirm whether an exemption applies to their specific property rather than assuming they are exempt.

Does the New Law Apply in Chicago?

Yes.

Chicago landlords must comply with applicable statewide requirements in addition to Chicago-specific rental laws and ordinances. This is particularly important because Chicago already has one of the more complex regulatory environments for residential landlords in Illinois.

Where local law provides additional or stronger tenant protections, landlords may still need to comply with those local requirements as well.

What Changed From Earlier Versions of HB 3564?

This is an important point because many landlords may have seen earlier headlines about the legislation.

During the legislative process, versions of the bill proposed significantly broader restrictions on rental fees and common landlord practices. Not all of those proposals became law.

The final legislation focuses more heavily on:

• Upfront disclosure of mandatory fees

• Application and screening fee limitations

• Prohibiting specific categories of tenant fees

• Utility disclosures

• Enforcement mechanisms for violations

Landlords should make sure they are reviewing the final enacted law, not an earlier proposal or an outdated summary.

What Should Illinois Landlords Do Before January 1, 2027?

Property owners and managers should begin reviewing their leasing practices well before the effective date.

The most important steps include:

1. Review every fee charged to tenants. Determine whether the fee will remain permissible under the new law.

2. Update rental listings. Ensure required mandatory fees and other required information are properly disclosed.

3. Review the first page and fee disclosures in lease agreements. Make sure required charges are presented in the manner required by the new law.

4. Review application fees. Most application and background-check charges will be subject to the new $50 limitation, with limited exceptions.

5. Remove prohibited tenant fees. Pay particular attention to tenant-paid renewal fees, maintenance-related charges, walk-through fees, and other specifically restricted charges.

6. Review utility disclosures. Make sure prospective tenants receive the required information about utilities and advertised rent.

7. Review lease templates with qualified legal counsel. This is particularly important for Chicago landlords, who must navigate both state and local requirements.

   
   

What This Means for Chicago Rental Property Owners

The biggest practical change may not be the elimination of any single fee. Instead, it is the increased importance of transparency, documentation, and properly structured leasing practices.

For responsible landlords who already clearly communicate costs to prospective tenants, many of these changes may be manageable. However, landlords and property managers who use numerous mandatory charges scattered throughout their leases or introduced late in the application process may need to make more substantial changes.

For Chicago property owners, this is another reminder that managing a rental property involves much more than collecting rent. State and local rental laws continue to evolve, and failing to update a lease or leasing process can create unnecessary legal and financial risk.

Chicago Landlords Should Continue Watching City Hall

Although the final version of HB 3564 did not go nearly as far as some of the earlier proposals, Chicago landlords should not assume that the regulatory discussion is over.

The Chicago Mayor's Office has separately proposed additional housing and renter-protection policies that could potentially go significantly further than the new statewide law. These proposals are separate from HB 3564 and, unless and until enacted, should not be confused with current law. The proposals may also change substantially as they move through the legislative and political process.

However, they demonstrate that the regulatory environment for Chicago rental housing continues to evolve. Future local proposals could potentially affect additional areas of the landlord-tenant relationship and impose requirements beyond those contained in the new Illinois law.

For Chicago property owners, the key takeaway is to stay informed. Compliance with the new statewide law does not necessarily mean that an owner's leasing practices will automatically comply with every current or future Chicago-specific requirement.

At City Roots Properties, we will continue monitoring both Illinois legislation and proposed changes to Chicago's rental housing regulations so that the owners we work with can adapt their leasing and management practices as the regulatory landscape changes.

The Bottom Line

Beginning January 1, 2027, Illinois landlords will face new statewide requirements governing rental fee disclosures and certain tenant charges.

The final law:

• Does not ban move-in fees

• Does not ban security deposits

• Does require greater upfront transparency regarding mandatory fees

• Generally limits application and background-check fees to $50

• Prohibits several categories of tenant fees and fines

• Creates potential civil remedies for violations

  
  

For landlords, the best approach is to review rental listings, application procedures, fee schedules, and lease templates well before the January 1, 2027 effective date.

At City Roots Properties, we help Chicago rental property owners navigate the increasingly complex responsibilities that come with leasing and managing investment properties. From rental pricing and tenant screening to lease preparation and ongoing property management, our goal is to help owners protect their investments while providing a professional experience for their tenants.

Have questions about renting or managing your Chicago property? Contact City Roots Properties to learn more about our tenant placement and full-service property management services.