Illinois Supreme Court Rules in Security Deposit Case

On May 21, 2009, The Illinois Supreme Court, in Landis v. Marc Realty, L.L.C., held that the tenant's lawsuit under Sections 5-12-080(c) and (d) for the failure to pay interest and late/non-return of their security deposit was barred under the statute of limitations which deal with statutory penalties. Important to tenants and landlords, the Court set the statute of limitations for this type of case at TWO YEARS from the time the violation occurred.

The tenants in Landis moved out of their apartment in November of 2001 yet did not file a Section 5-12-080 lawsuit for the failure to return interest and return their original security deposit until 2006, almost 5 years after the violation under the RLTO occurred. They argued that the statute of limitations was 10 years and tried to classify the RLTO as a non-statutory penalty to which a 2-year statute of limitations did not apply. The Court held that the RLTO security deposit violations were a statutory penalty because the ordinance sets a formula of two times the amount of the deposit for damages and, (2) in a far reaching interpretation, the Court classified municipal ordinances as a type of statute.

Another important note is that the Court said that RLTO violations concerning security deposit penalties are not classified as breach of contract actions.

In a dissenting opinion, Justice Kilbride and Justice Karmeier thought that the 10 year statute of limitations was appropriate and cited several older Illinois cases that held that municipal ordinances were not statutes. Taking an originalist approach to the issue, the dissenters felt that the term "statute" should be defined according to the meaning it had in the 1870's when the forerunner limitations period statute was first created. The dissenters looked to legal texts and dictionaries from that time period to support their position.

This extremely important case sets the statute of limitations on security deposit interest and late/no return cases under the RLTO at 2 years from the date the violation occurred.

The case is Landis v. Marc Realty Co. L.L.C., Docket No.: 105569, filed May 21, 2009. The case may be found here: http://www.state.il.us/court/OPINIONS/SupremeCourt/2009/May/105568.pdf or on the Illinois Courts website: http://www.state.il.us/court/OPINIONS/recent_supreme.asp