Tenant screening is a crucial first step for property managers in Illinois, ensuring that landlords secure responsible tenants who will care for their owners' rental units and adhere to the terms of the lease. However, in Illinois, particularly in the dense populated Chicagoland areas in NE Illinois, including Cook County and the city of Chicago, tenant screening comes with unique challenges and strict regulations. Owner-landlords and property managers must remain compliant to avoid legal pitfalls and maintain equitable practices, for both owners and tenants.
Importance of Tenant Screening
Effective tenant screening is the foundation of a successful rental property operation, especially in a highly scrutinized environment like Illinois. Proper screening minimizes the risk of delinquent rent payments, property damage and legal disputes.
The City of Chicago has implemented one of the strongest fair housing ordinances in the country. The law that governs fair housing is the Chicago Fair Housing Ordinance (CFHO) enforced by the Chicago Commission on Human Relations (CCHR). It states:
The CFHO prohibits discrimination based on race, sex, color, age, religion, disability, national origin, ancestry, parental status, sexual orientation, gender identity, marital status, military status, and source of income.
It is critical for anyone operating as a property manager in any state to be aware of the fair housing regulations for their area and abide by them.
Key Regulations Impacting Tenant Screening in Illinois
1. The Cook County Just Housing Ordinance (JHO)
Enacted to address housing discrimination, the JHO requires property managers in Cook County to:
- Prohibit housing discrimination based on an individual’s covered criminal history;
- and Require landlords considering an individual’s covered criminal history to perform an individualized assessment of an otherwise qualified individual’s criminal conviction history prior to denying them any application for housing.
Key steps under JHO include:
- Conducting a prequalification assessment before reviewing criminal history.
- Providing applicants with written notice of any adverse action based on their criminal record.
- Allowing applicants an opportunity to respond with mitigating evidence.
More information can be found at the Cook County website:
Cook County Just Housing Ordinance (JHO)
2. Fair Housing Laws
Federal and Illinois state laws prohibit discrimination based on race, color, national origin, religion, sex, disability, familial status, and other protected classes. Chicago and Cook County expand these protections to include source of income (e.g., housing vouchers), gender identity, and military status.
3. Security Deposit Regulations
Illinois and the city of Chicago have their additional rules governing security deposits, as well. This includes how they’re held, when they must be returned, and penalties for noncompliance. Although not directly part of tenant screening, understanding these rules is crucial when evaluating an applicant's move-in readiness.
Illinois has it's own law called the Security Deposit Return Act. More on this can be found at the Illinois General Assembly website:
Illinois General Assembly website
The city of Chicago has further created their own set of regulations called the Residential Landlord and Tenant Ordinance. Property managers operating in the city of Chicago can find more information at the city of Chicago's website:
Residential Landlord and Tenant Ordinance - City of Chicago
Challenges in Tenant Screening
1. Balancing Thoroughness and Compliance
Overly restrictive policies can lead to fair housing violations, while lax screening may result in problematic tenants. For example, rejecting applicants based on low credit scores without assessing broader financial stability could inadvertently discriminate against protected classes.
2. Navigating Criminal Background Checks
The JHO’s requirements for individualized assessments add complexity to the screening process. Property managers must document their evaluations carefully to show compliance while avoiding arbitrary or discriminatory decisions.
3. Managing Source of Income Discrimination
Accepting housing vouchers or other forms of government assistance requires familiarity with additional regulations, such as Housing Quality Standards (HQS) inspections. Denying applicants solely due to their source of income can lead to legal challenges.
4. Maintaining Consistency Across Multiple Jurisdictions
Property managers operating in both Chicago and its suburbs must stay informed about varying local laws. For instance, screening practices permissible in DuPage or Will counties may not align with stricter regulations in Chicago or Cook County. Best practices should be established early to cover for all these deviances in local laws.
Best Practices for Tenant Screening
1. Standardize Screening Criteria
Develop clear, written policies outlining screening criteria, such as income-to-rent ratio, credit score minimums, and acceptable rental history. Ensure these policies comply with local, state, and federal regulations.
2. Adopt the Two-Step Screening Process
Understand and implement recommended processes for criminal background checks. Train any staff members to handle this process effectively and in a consist manner.
3. Leverage Technology
Use property management software that integrates background checks and applicant tracking. These tools can help ensure compliance by automating notifications and documenting decisions. Regulatory boards and commissions will also understand documentation and data from large third party service providers implemented in the screening process.
4. Stay Educated
Regularly review updates to your local housing laws and attend training sessions offered by local property management associations or legal experts. Being proactive helps you avoid costly legal mistakes.
5. Communicate Clearly with Applicants
Communication and transparency builds trust and reduces misunderstandings. Provide applicants with clear explanations of your screening process and criteria. If you need to deny an application, explain the reasons.
Final Thoughts
Tenant screening in Chicagoland requires a delicate balance between thoroughness and compliance. By understanding the regulations and challenges specific to this region, property managers can develop effective, lawful screening processes that attract qualified tenants while avoiding legal risks. Ultimately, prioritizing fairness and transparency not only protects landlords but also contributes to equitable housing opportunities in the community. If you are an owner-landlord it is imperative to review these regulations in Illinois and consider having professional software, services and best practices in place to conduct business within Illinois and Cook County.
