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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast

You're sitting at your kitchen table, running the numbers on a two-flat you’ve owned for decades in Humboldt Park. You’re finally ready to cash out, retire, maybe head somewhere warmer. But your agent calls, and suddenly the plan comes to a halt. "We’ve hit a roadblock with the 606 ordinance. Title's not clean, lender’s pulling back, we may need to delay."

This isn’t fiction. This is the real experience of countless Chicago landlords caught off guard by what’s quietly become one of the most confusing, restrictive, and legally risky housing policies in the city: the Northwest Side Preservation Ordinance.

Let’s not sugarcoat it. The ordinance was created with a noble intention—to protect affordable housing and give tenants a shot at homeownership. But in its current form, it’s doing more harm than good. And in 2025, two key aldermen—Cardona and Viegas—have finally said out loud what landlords, brokers, and title companies have been whispering for months: this ordinance isn’t working.

The core of the ordinance is the so-called "Right of First Refusal," giving tenants the first chance to buy their building when it hits the market. It sounds empowering on paper. But here’s the problem: it’s paralyzing deals, pushing lenders to walk away, and forcing sellers into unnecessary vacancies or steep legal exposure.

Let’s break it down from a landlord’s perspective. You follow the rules. You send the required notices. You wait. And wait. And wait. The Department of Housing (DOH), underfunded and overwhelmed, often doesn’t respond for weeks—if at all. There’s no tracking system. No confirmation that you’re in the clear. Meanwhile, your buyer’s financing window is closing, your rate lock is expiring, and your retirement timeline is evaporating.

Title companies like Chicago Title and Fidelity have stepped in to plug the compliance gap, but at a cost. They now require custom endorsements costing anywhere from $1,000 to $3,000 just to insure over the risk that someone—often a tenant with no real intent to buy—might file a lawsuit claiming their rights were violated. And guess who’s on the hook for that fee? You, the seller.

It gets worse.

The ordinance allows tenants to assign their purchase rights to others. That means someone living in the building could sell their right to a third-party investor for profit—effectively taxing your sale. That’s not theoretical. It’s already happened. One owner was forced to pay $40,000 more just to buy back their deal after a tenant transferred their rights.

And if you thought Fannie Mae would play ball, think again. Residential lenders—especially those relying on Fannie Mae—are now rejecting loans within the ordinance boundaries. Why? Because Fannie doesn’t allow Right of First Refusal clauses. So unless your buyer has 20% down and goes conventional, your deal is dead on arrival.

What about owner-occupants? The house hackers? The buyers who want to live in the building and become long-term invested landlords? They’re opting out. They’re walking away from properties inside the zone. And why wouldn’t they? With a nine-month waiting period, no right to non-renew a lease, and a dozen gray areas in the ordinance, they’re being pushed toward other neighborhoods—or out of the city entirely.

What if you are trying to improve your property or the block…there are obstacles there too. There’s the demolition fee if you want to tear any structures down.

Originally set to disincentivize teardown-and-flip developers, it now adds a minimum $60,000 fee—or $20,000 per unit—to properties that need to be knocked down. That math is simple: if your building is worth $600,000 on a good day and needs a full gut rehab, subtract $60,000 instantly. Suddenly your equity’s gone. For many long-time owners, it’s decades of sweat erased in one policy line.

And it’s not just about the numbers. It’s about fairness. These fees disproportionately affect owners who have held onto properties through decades of hardship. Owners who kept buildings afloat through the Great Recession, COVID, and rising taxes. These aren’t mega developers with corporate attorneys—they’re often retirees, immigrants, first-generation property owners looking to tap into the equity they built brick by brick.

But perhaps the most dangerous part of the ordinance is what’s still unknown. Legal experts are warning of three layers of conflict: what the ordinance says, what the DOH policy outlines, and what DOH is actually doing in practice. They don’t match. And that gap means lawsuits are coming. Whether from tenants who feel their rights were skipped, or from new owners caught in post-sale compliance issues, the risk is no longer hypothetical.

Let’s talk about liability. In its current form, the ordinance opens up the possibility of retroactive penalties. The DOH has up to three years to audit a file, potentially levying fines of up to $1,000 per day for noncompliance. That means you could sell a building in 2025 and be hit with legal action in 2028 based on what a tenant claims wasn’t done correctly—even if you followed the DOH’s guidance at the time.

That’s not a functioning system. That’s a ticking time bomb.

Brokers are telling sellers to vacate buildings in advance—just to avoid the mess. That’s ironic, considering the ordinance’s stated goal was to prevent displacement. Instead, it’s fast-tracking it. One broker described the entire process as “trying to get through TSA with a carry-on full of unknowns.” Even if you do everything by the book, the rules are so unclear that no one can guarantee you’re safe.

Some owners are even pulling listings mid-process. Deals falling apart because title companies won’t close without a new round of compliance checks. Lenders backing out last minute. Contracts extended endlessly. One deal saw four extensions and finally canceled—not because of buyer or seller fault, but because no one could confidently certify the sale was legal under the ordinance.

So what’s the path forward?

Thankfully, Aldermen Cardona and Viegas are pushing for change. They’ve filed to remove their wards from the ordinance altogether, calling it rushed, broken, and unworkable. Title experts, real estate attorneys, and the NBOA (Neighborhood Building Owners Alliance) are calling for a full repeal or major rewrite.

There’s a better way. Chicago can protect affordability without punishing small owners. Cities like Minneapolis and Austin are tackling affordability by incentivizing new construction, streamlining permitting, and offering targeted tax breaks for actual affordable units. Chicago should do the same. Instead of demonizing landlords, we need to bring them to the table—because they’re part of the solution.

Here’s the reality: if Chicago wants affordability, we have to build. If we want compliance, we need clarity. And if we want tenants and landlords to work together, the rules can’t put them at odds by design.

The current ordinance isn’t a plan—it’s a barrier. It’s not preserving housing—it’s preserving chaos.

To every landlord in Chicago reading this: if you own within the affected area within Humboldt Park, Logan Square, Avondale, and Pilson—or are even thinking about buying there—you need to be fully informed. The risks aren’t just about timing anymore. They’re about lawsuits, financing, and long-term value.

Visit NBOAChicago.com, share your story, and stay active. Because silence on this issue helps no one. These are the moments when organized voices matter. Elected officials listen when the industry speaks up—especially when it’s backed by data, stories, and clear alternatives.

And if you’re unsure how your investment is affected—or how to price your unit in this ever-changing market—run a Free Rent Analysis today. It’s one of the few tools that can still give you clarity in a market this confusing.

Chicago’s still worth investing in. But only if we get this right.

Because if the goal is to preserve neighborhoods—we have to stop creating policies that destroy their future.

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There is a lot of information contained here if you plan on investing in real estate locally. It may seem overwhelming for those wanting to invest in the Chicago market, but it is really just a team sport. Who is on your investing team? Do you even have a team? GC Realty & Development, LLC. has a dedicated team of professionals that are willing to share their decades of experience in all facets of real estate. We handle everything from Brokerage, Leasing and Property Management. Whether you hire us or not, we are happy to provide you with our resources and expertise.

What gets me up in the morning and keeps me going twelve hours a day is the ability to add value to local area investors, in Chicago and beyond! Those who connect with me often hear me say that our goal is to bring value to everyone we come in contact with. We hope that in return, they will one day hire us for our Tenant Placement,or Property Management Services, refer us to someone they know, or leave us a review about our services. We would clearly love all three, however, we are happy whenever we get the opportunity to help!

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