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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
Here's something interesting: I get crazy questions everyday from Chicago area investors but I don't get asked about late fees very often. But here's the thing, I see investors getting this wrong every single week. Landlords across the Chicago metro are making up their own late fee policies, slapping whatever number feels right into their leases, and they have no idea they're exposing themselves to serious legal and financial risk.
The reality is that late fee regulations vary dramatically depending on where your property sits. What's perfectly legal in Will County could get you sued in Chicago. What works in suburban Cook County won't fly in Evanston. And if you're charging the same late fee across your entire portfolio without checking each jurisdiction's rules, your leaving yourself exposed.
I wanted to take this opportunity to create this article as a reference for our 500+ property management clients and our 15,000 podcast listeners. I will break this down by jurisdiction so you know exactly what you can and can't charge, and more importantly, so you can stay compliant and lower your risk.
Want to see the version of lease we are using? Schedule a 15 minute call “Here” and we will share with you all of our resources.
Late Fees in Chicago
Governing Document: Chicago Residential Landlord Tenant Ordinance (CRLTO)
If you own rental property in Chicago, the CRLTO is your bible. This ordinance is notoriously strict, and the late fee provisions are no exception. Under Section 5-12-140(h), late fees are capped at $10 for the first $500 of monthly rent, plus 5% of any rent amount that exceeds $500.
Let me show you how this works with a real example. Say your Chicago unit rents for $1,800 per month. Here's the calculation:
First $500 of rent: $10 flat fee
Remaining rent above $500: $1,800 - $500 = $1,300
5% of $1,300 = $65
Maximum compliant late fee: $10 + $65 = $75
Here's where investors get burned: if you charge more than the CRLTO allows, that late fee provision in your lease becomes completely unenforceable, meaning you can't collect ANY late fee at all. Worse, if you try to enforce an illegal late fee, your tenant can sue you for two months' rent in damages plus their attorney's fees. I've seen this play out in court, and it's ugly.
Late Fees in Cook County (Excluding Chicago)
Governing Document: Cook County Residential Tenant Landlord Ordinance (RTLO)
The Cook County RTLO went into effect on June 1, 2021, and it covers almost all rental units in suburban Cook County. This includes places like Elk Grove Village, Skokie, Des Plaines, Berwyn, and dozens of other municipalities outside Chicago's city limits.
The late fee structure here is slightly more generous than Chicago. Under the Cook County RTLO, late fees are capped at $10 for the first $1,000 of monthly rent, plus 5% of any rent amount above $1,000.
Let's run the same $1,800 rent example for a Cook County property:
First $1,000 of rent: $10 flat fee
Remaining rent above $1,000: $1,800 - $1,000 = $800
5% of $800 = $40
Maximum compliant late fee: $10 + $40 = $50
Notice the difference? The same $1,800 rent allows a $75 late fee in Chicago but only $50 in suburban Cook County. This is why you can't use a one-size-fits-all approach across your portfolio.
If you want to learn everything you need to know about the Cook County RTLO. Check out this resource.
Late Fees in Evanston
Governing Document: Evanston Residential Landlord and Tenant Ordinance (RLTO)
Evanston has always marched to its own drum when it comes to landlord-tenant law, and they updated their ordinance significantly with amendments that took effect January 1, 2025. Previously, Evanston had no cap on late fees, but that's changed.
Under Section 5-3-3(A)(8) of the updated Evanston RLTO, late fees are now capped at $25 for the first $1,600 of monthly rent, plus 5% of any rent amount above $1,600.
Here's the math for an Evanston property renting at $2,200 per month:
First $1,600 of rent: $25 flat fee
Remaining rent above $1,600: $2,200 - $1,600 = $600
5% of $600 = $30
Maximum compliant late fee: $25 + $30 = $55
If you have Evanston properties and haven't updated your leases since 2025, now's the time. Any lease signed on or after January 1, 2025 must comply with these new caps.
Want to learn more about changes in Evanston in 2025…check out this article.
Late Fees in Other Chicago MSA Counties (DuPage, Kane, Will, McHenry, and Lake)
Governing Document: Illinois Security Deposit Act and general Illinois state law
Here's where things get much simpler, and honestly, much more landlord-friendly. If your properties are located in DuPage County, Kane County, Will County, McHenry County, or Lake County, you're operating under Illinois state law rather than any local ordinance with specific late fee caps.
Illinois state law does not impose any specific limit on late fees. The only requirement is that your late fee be "reasonable." What does reasonable mean? The courts have generally held that a late fee should bear some relationship to the landlord's actual costs and damages from late payment, but there's no bright-line rule or formula.
In practice, this gives you significant flexibility. Many landlords in these collar counties charge flat late fees ranging from $50 to $100, or a percentage of monthly rent (commonly 5-10%), without running afoul of the law. Just make sure your late fee is clearly stated in the lease and is defensible as reasonable if challenged.
If you're an investor with properties spread across the Chicago metro, this is actually good news. Your Naperville, Aurora, Joliet, Crystal Lake, and Waukegan properties can have more robust late fee structures than your Chicago or suburban Cook County holdings, just make sure you're tracking which rules apply where.
Frequently Asked Questions About Late Fees in Illinois
Can I charge a late fee on the first day rent is late in Chicago?
Technically, yes. The CRLTO doesn't require a grace period before charging late fees, if rent is due on the first and it's not paid, you can assess the late fee. However, many landlords build a 3-5 day grace period into their leases as a practical matter. Just know that if your lease says rent is due on the first with no grace period, you're within your rights to charge the late fee on day two.
What's the maximum late fee I can charge in Cook County suburbs?
Under the Cook County RTLO, the maximum is $10 for the first $1,000 of rent plus 5% of any rent above $1,000. For a typical suburban Cook County rental at $1,500/month, that's $10 + $25 = $35 maximum. Don't exceed this or your entire late fee provision becomes unenforceable.
Are there any grace period requirements in Illinois?
Illinois state law does not mandate a grace period for late fees. However, Chicago, Cook County, and Evanston all have different notice requirements before you can pursue eviction for nonpayment (typically 5-10 days). These notice periods are separate from late fee timing, you can charge a late fee before the notice period expires, but you can't file for eviction until the applicable notice period has passed.
Can I charge daily late fees that accumulate in Illinois?
In jurisdictions with late fee caps (Chicago, Cook County, Evanston), the caps apply to the total late fee you can charge for that month's rent, whether it's a one-time fee or accumulating daily fees. You can structure it as daily fees, but the total cannot exceed the jurisdictional cap. In the collar counties without caps, daily accumulating fees are permissible as long as the total remains reasonable.
What happens if I charge an illegal late fee in Chicago?
If your late fee exceeds the CRLTO limits and you attempt to enforce it, the tenant can bring a counterclaim against you. The penalty is two months' rent plus the tenant's attorney's fees and court costs. Even if you win on the eviction itself, you could end up owing the tenant money. This is why getting the calculation right matters.
Do these late fee rules apply to commercial properties?
No. The CRLTO, Cook County RTLO, and Evanston RLTO all apply specifically to residential rental properties. Commercial leases are governed by contract law, and you can negotiate whatever late fee terms both parties agree to. This guide is strictly for residential landlords and investors.
The bottom line is this: late fees are a legitimate tool for encouraging timely rent payment, but you have to play by the rules of each jurisdiction. Review your leases, make sure your late fee provisions comply with local ordinances, and update any non-compliant language before it becomes a liability. And if you're ever unsure, consult with a real estate attorney who knows Chicago-area landlord-tenant law—the cost of a legal review is nothing compared to a two-month rent penalty plus attorney's fees.
Stay compliant, stay profitable, and keep investing in Chicago real estate the right way.
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