New Illinois Rental Fee Rules: What Chicago Landlords Should Know About HB 3564

Illinois landlords may soon see major changes to how rental fees are charged, disclosed, and enforced under House Bill 3564 (HB 3564), also known as the proposed Rental Fee Transparency and Limitations Act.

The legislation has gone through multiple revisions, amendments, and negotiations over the past year, creating understandable confusion among landlords and property managers across Chicago and Illinois. While many details are still evolving, one thing is clear: the state is moving toward increased rental fee transparency and tighter restrictions on certain landlord charges.

What Is HB 3564?

HB 3564 is proposed legislation that would significantly change how landlords handle:

• Application fees

• Move-in fees

• Lease fees

• Maintenance-related fees

• Fee disclosures

• Late fees

• Tenant screening practices

  
  

The bill was originally introduced with stricter limitations, including broader restrictions on move-in fees and application charges. Over time, the legislation has gone through numerous committee amendments and revisions as lawmakers, housing advocates, and landlord groups negotiated changes.

Some of the earlier versions of the bill were considerably more aggressive, while later amendments softened or clarified certain provisions.

Why There Is So Much Confusion

One of the biggest sources of confusion is that HB 3564 has been amended multiple times throughout the legislative process.

At various stages, the bill proposed:

• Different application fee caps

• Different treatment of move-in fees

• Expanded restrictions on landlord charges

• New lease disclosure requirements

• Changes to late fee rules

  
  

Because different articles and summaries were written during different stages of the amendment process, landlords are now seeing conflicting information online.

Proposed Application Fee Limits

One of the most discussed portions of the legislation relates to application fees.

The latest versions generally propose:

• A cap of approximately $50 for application/background check fees

• Allowing higher charges only if actual third-party screening costs exceed $50

• Requiring landlords to provide receipts within a specified period if costs exceed the cap

• Preventing duplicate or ancillary screening-related fees

  
  

The legislation also includes portability provisions, meaning landlords may need to accept a recent screening report provided by the applicant instead of charging a new screening fee.

New Disclosure Requirements

The proposed legislation would also require landlords to disclose all mandatory non-optional fees clearly and conspicuously.

This includes:

• Rental listings

• Marketing materials

• Lease agreements

  
  

Importantly, many versions of the bill require mandatory fees to appear directly on the first page of the lease agreement. If not properly disclosed, tenants may not be legally obligated to pay them. The bill also proposes requiring landlords to clearly disclose whether utilities are included in rent.

Proposed Restrictions on Certain Fees

The legislation may prohibit or restrict several fees commonly charged by landlords, including:

• Lease renewal fees

• Lease modification fees

• After-hours maintenance fees

• Move-in or walkthrough fees in some versions

• Certain pest-related charges

• Ancillary administrative fees

  
  

The bill also includes anti-evasion language preventing landlords from simply renaming fees to avoid compliance.

Late Fee Changes

HB 3564 also proposes changes to late fee rules.

Current proposals generally include:

• A 5-day grace period before late fees can be charged

• Caps on allowable late fees based on rent amount

  
  

Some versions reference:

• $10 for the first $1,000 of rent

• Plus 5% of the remaining balance over $1,000

  
  

Exemptions for Small Owner-Occupied Buildings

The legislation may exempt certain owner-occupied buildings containing six units or fewer. This exemption has remained an important discussion point throughout the amendment process.

The Implementation Timeline: July 2026 vs January 2027

Another major source of confusion is the effective date. Earlier versions and summaries of HB 3564 referenced a July 1, 2026 implementation date. However, lawmakers later introduced companion trailer bill HB 5234, which proposes delaying implementation until January 1, 2027.

As a result:

• Some articles still reference July 2026

• More recent legislative discussions reference January 2027

  
  

This shifting timeline is one reason landlords should continue monitoring developments closely.

What Landlords Should Do Now

Even though final implementation details are still evolving, landlords should begin preparing now by:

• Reviewing lease templates

• Auditing fee structures

• Improving disclosure practices

• Documenting screening costs carefully

• Monitoring legislative updates

  
  

The broader trend is clear: Illinois is moving toward increased fee transparency and greater regulation of rental charges.

Final Thoughts

HB 3564 represents one of the most significant proposed changes to Illinois rental fee

practices in years. While the bill continues to evolve through amendments and companion legislation, landlords who proactively review and modernize their leasing practices will likely be in the strongest position moving forward.

As always, landlords should consult qualified legal counsel regarding compliance obligations and implementation requirements.

If you have questions about how these proposed changes could impact your rental property, City Roots Properties is happy to help.