Illinois rental laws are set to undergomeaningful changes in 2026 which will impact how leases are written, whichdisclosures are required, handling of security deposits, and which tenant feesare allowed. For property owners, this means that existing processes andpractices for rental properties may no longer be compliant. Outdated leasetemplates or missed disclosures could lead to fines, legal disputes, or issuesduring the eviction process. It’s important that property owners stay ahead ofthese changes to protect their investment and avoid any unnecessary risk.

Below, we break down the latest leasing andrental law updates and what Chicago property owners should do to prepare.

NewLease Content and Disclosure Requirements

One of the most notable changes affects whatmust be included in every residential lease. Beginning in 2026, the Summary ofthe Rights for Safer Homes Act must be on the first page of every lease inChicago, regardless of whether it is a new lease or a renewal. This documentoutlines tenant protections, including the rights of survivors of domestic orsexual violence. If a lease is missing or improperly places this disclosure, itcould potentially put a lease at risk.

Property owners will also have moreflexibility in certain areas of lease drafting. Updated rules allow optionallease sections that clarify items, including:

• Responsibility for paying thetenant broker fee (when applicable
• Additional custom terms that areagreed to by both parties, as long as they comply with state and local laws

While some aspects are becoming more flexible,other rules are becoming stricter. There is a new requirement which willprohibit smoking in leased propertie unless it is explicitly authorized in thelease. If the property does allow smoking, it must be clearly stated. Ifrequirements around smoking are not included in the lease, then it is presumedprohibited.

These changes make it very important thatevery landlord and property owner in the Chicago area to review and updatetheir lease templates to ensure they are complying with the new regulations.

SecurityDeposit Interest & Handling Rules

Security deposits have always been a majorcompliance risk and continues to be so. For 2026, Chicago’s security depositinterest rate remains at 0.01%, and property owners are still legally requiredto pay interest on security deposits that are held for six months or longer.

That interest must be paid within 30 daysafter a one-year lease ends, along with proper documentation. Property ownersmust include the required Chicago RLTO security deposit addendum, whichexplains how interest is calculated and when it will be returned to the tenant.

If a property owner fails to follow theserules (even accidentally), it can result in penalties that can exceed the valueof the deposit itself. For multi-unit property owners, managing this becomesvery complicated with the various timelines, different dated interest payments,and documentation.

Prohibitionson Fees & Other Tenant Charges

One bill that hasn’t been passed yet isthe Illinois House Bill 3564, which proposes new restrictions on landlord fees.If passed, this bill would ban certain fees that have previously appeared inleasing agreements, including related fees related to applications, leasemodifications, and renewals. It is also outlined that the prohibited fees couldalso not be used as grounds for eviction during the first year of a lease.

While the bill has not yet passed,property owners in Chicago should continue to watch this bill to be aware ofit’s potential impacts and prepare for the possibility of these changes to takeeffect. If passed, it could mean many leases which are compliant today wouldnot be in the future.

Enforcement, Compliance & Legal Risk

Property owners in Chicago that continue touse outdated lease templates or processes in 2026 may face increased risk.These changes expand beyond just lease agreements as they also impact evictionfilings, enforcement procedures, and documentation requirements.

This means property owners may need to update:

• Lease templates and disclosures
• Internal workflows for new leases and renewals
• Updated staff training related to compliance

Ensuring you are proactive in understandingthese new and potentially upcoming laws will reduce legal exposure and createsmoother tenant experience which correlates to fewer disputes and long-termretention.

For many property owners who own multipleproperties or have limited time, keeping up with Chicago’s evolving rental lawscan feel overwhelming. This is where an experienced local property managementcompany makes a difference.

Stay Ahead of 2026 Changes

The 2026 updates to leasing laws acrossChicago and Illinois represent one of the most significant changes in recentyears, and there is a lot to keep track of. Owners who stay proactive willavoid costly mistakes, reduce liability, and continue to provide housing thatmeets both tenant needs and legal standards. But for many, the easiest and mosteffective way to stay compliant is by working with a trusted, local propertymanagement company that’s already familiar with these changes and can implementthem on your behalf.

At Domain Property Management, we helpChicago property owners navigate complex rental laws with confidence. Fromupdating lease templates and disclosures to managing security deposits andcompliance, our team stays ahead of regulatory changes so you don’t have to.

If you want help preparing for 2026 andbeyond, schedule a free rental analysis today andlearn how we can help you manage smarter and stay compliant.