Seattle lawsuit shines light on 'first-come, first-serve' rental housing policy, already followed in Chicago

By April Brown | Mar 21, 2017

CHICAGO — Chicago could adopt a law that is similar to a recent Seattle ordinance that requires landlords to rent to the first qualified tenant who walks through the door, according to Richard Magnone, an attorney at Reda, Ciprian, Magnone LLC in Chicago who specializes in landlord-tenant law.

In Seattle, a group of landlords recently filed a lawsuit, challenging that city's power under the Washington state constitution to enact such a city ordinance, which is known as "first-come, first-serve." The landlord said the ordinance deprives them of their constitutional property rights, according to an article published by The Seattle Times

The Cook County Record recently spoke to Magnone about the ordinance. Mangone said Chicago landlords already largely adhere to this practice, which is called  for fear of discrimination suits.

Magnone said the rental business is highly regulated, and only professional landlords will survive the stringent rules and policies they must follow to comply with the law. 

“For the past three or four years, I advised smaller Chicago landlords to sell their buildings," Magnone said. 

Magnone said smaller landlords do not always view their rentals as a business, so they are often unable to withstand the city's confining polices, and are more susceptible to legal disputes. He said Chicago is now solely a professional rental district.

Cook County landlords face a tough legal landscape when it comes to choosing tenants. Magnone said the current landscape tends to treat housing as a right, while landlords' private property rights are greatly diminished. 

In Cook County, "the rental industry is regulated like the nuclear power industry,” he said

For example, rental agreements in Chicago are 20 pages long, as the city's rental rules require a large number of disclosures. Landlords also are held to a crime-free leasing amendment, making them solely responsible for crimes committed on the property. But running a criminal background check against a tenant could lead to litigation, particularly for U.S. Department of Housing and Urban Development applicants, where background checks are forbidden.

Chicago landlords are also required to pay interest on security deposits. But if they fail to pay the nominal fee within the first 30 days of the rental agreement’s end, they are required to pay two times the security deposit back to the tenant. That means if a landlord fails to pay as little as 10 cents interest on a $1,000 security deposit within the allotted time, that landlord owes $2,000 instead – a practice Magnone refers to as a “gotcha.” 

Because of this rule, many landlords are now charging a non-refundable “move-in fee” of $300 to $400, rather than collecting a refundable security deposit. Magnone said tenants don't fare well under such a system, as good tenants who may have gotten back their security deposits are now paying for those who may not. 

Although Chicago hasn’t officially adopted a "first-come, first-serve" ordinance like Seattle, Magnone said many landlords already follow the practice to avoid lengthy legal disputes with tenants. Some have given up the practice of collecting security deposits altogether.  

He rates Chicago alongside New York and San Francisco in terms of the level of landlord compliance required, but “the trend – even nationally – is toward tenant protection, and very little about landlord protection.”

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City of Chicago City of Seattle Reda Ciprian Mangone

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