An inside look at Chicago real estate

Keep Chicago Renting Ordinance Passed

Yuval Degani
   | Rental Market

Foreclosed properties have experienced this problem over again: A lender takes over and tenants in the home or building are abandoned and eventually evicted.

Sometimes, like the eight members of the Shaw family in Englewood, they’re left without electricity, gas, or water for weeks. The family, according to an article by Progress Illinois, didn’t receive a notification that the building was foreclosed upon, or any information about who would maintain the property during this process.

Keep Chicago Renting, an ordinance recently passed by the Chicago Council, works to protect tenants like the Shaw family. The law orders banks that acquire foreclosed properties to keep its tenants under a rent controlled lease until the building or home is sold to a third party. Otherwise, lenders have to pay $10,600 per unit for relocation expenses.

Banks, landlords, and realtors argued against this measure, explaining that it would violate Illinois statues (such as a law that prohibits local government from setting up rent control) and hurt sales of rental properties in Chicago.

Pat Holden, Bank of America Senior Vice President of Governmental Relations, expressed concerns for a “cottage industry” of illegal tenants seeking to receive the required relocation payments. “The fact is these properties, when we are walking into them, we do not know who the tenant is. […] Many times I’m taking calls about squatters. This is an unintended consequence of this legislation,” she said in a Chicago Tribune article.

The number of Chicago homes repossessed by lenders, however, is on the decline. According to the Chicago Sun Times, March showed US foreclosures fall to the lowest level in more than five years. April echoed this trend.

With evidence that the housing market is improving and the foreclosure crisis is alleviating, this debated issue should become less of a problem. In the meantime, lenders will have to compromise to keep renters protected.