Vendor Portal
Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
Back in August we published our breakdown of HB 3564 and the January 2027 changes for all Illinois landlords. That article covered the whole law at a high level. Now that we are about two months out from January 1, 2027, we are going to start breaking it down one piece at a time and going deep on how each change affects business for landlords and tenants forever.
I have been doing this since 2003, and I have never seen a set of laws force this much change across the entire state in a single year. Historically, the big shifts in Chicagoland landlord regulation came one jurisdiction at a time. Chicago would pass an amendment, or Cook County would launch the RTLO(this was the biggest deal to date), and landlords in DuPage, Kane, Will, and McHenry kept doing business the way they always had. When Springfield did act, it was usually a modest change that much of the region was already following because Chicago or Cook County had required it for years.
HB 3564 is different. It changes how every covered landlord in Illinois lists units, takes applications, writes leases, and charges fees, all starting on the same day. A landlord in Woodstock has the same changes coming as a landlord in Rogers Park, and most suburban owners have never had to rebuild their leasing process like this. This is a big deal for Mom and Pop investors.
In this article, we are starting with application and screening fees because this affects the most people the quickest. At GC Realty we handle close to 500 lease transactions a year, and every one of those starts with applications, usually several per unit.
I want to be upfront that some of this is still open to interpretation. Where the statute is clear, I will tell you what it says. Where it is not, I will tell you how we are reading it and why, and you should run your own setup by your attorney. None of this is meant to be legal advice and merely one professional Property Managers thoughts to another investor.
Losing fee income in 2027? Make sure your rent is keeping pace with the market.
When application fees and other charges get capped or banned, rent is the one number left that covers your costs. If your unit is sitting below market, you are leaving money on the table before this law even kicks in. Check where your unit stands with our free rental analysis.
Key Takeaways
Starting January 1, 2027, Illinois caps rental application fees, including background checks, at $50.
A landlord can only go above $50 when the actual third party screening cost is higher, the landlord pays that cost up front, and bills the applicant with the provider's receipts within 14 days. Miss the 14 days and the extra charge is waived.
That extra screening charge can never be the basis for an eviction during the first year of the lease.
You cannot stack a second fee on top of the application fee that duplicates screening or covers costs unrelated to screening, and renaming a fee does not get you around it.
Illinois already has a separate law, in effect since January 2025, that lets applicants bring a qualifying reusable screening report. When they do, you cannot charge them a screening fee at all.
In Cook County, the two step screening process under the Just Housing Amendment makes double charging an easy mistake to make.
Chicago and other local governments can set tighter limits than the state, but not looser ones.
Owner occupied buildings with 6 units or fewer are exempt.
A tenant can sue for damages, attorney's fees, and costs, which turns a small fee mistake into real exposure once it is repeated across a portfolio.
Who This Applies To
HB 3564 covers residential landlords everywhere in Illinois, not just Chicago or Cook County. If you own a rental in Naperville, Elgin, Joliet, or Woodstock, this applies to you the same as an owner on the North Side. It also reaches the property managers, leasing agents, and Realtors who list units and take applications on an owner's behalf.
There is one exemption. The law does not apply to leases in an owner occupied building with 6 units or fewer. Both parts have to be true.
The owner actually lives in the building.
The building has 6 units or fewer.
A 3 flat you own but do not live in is covered. A 7 unit building is covered even if you live in one of the units. Keep in mind this exemption is only for HB 3564. The 2025 reusable screening report law has no owner occupied exemption, and Chicago's RLTO and Cook County's RTLO each have their own separate tests.
What the Law Actually Says
The application fee rules sit in the new Section 35 of the Illinois Landlord and Tenant Act, under what the statute calls the junk fee ban. You can read the full text of 765 ILCS 705/35 on the Illinois General Assembly website. Two of the eleven banned fee types deal with applications.
The first is any rental application fee, including background checks, above $50. A landlord can only charge more than $50 for a third party background check when all three of these are true.
The actual cost of the third party background check service is more than $50.
The landlord paid that cost up front.
The landlord billed the applicant within 14 days of the screening, with receipts from the screening provider.
If the bill and receipts do not go out within 14 days, the extra charge is waived. The statute also says that fee can never be used as the basis for an eviction during the first year of the lease.
The second is any fee or fine charged alongside the application fee that duplicates the cost of tenant screening or covers costs that have nothing to do with screening. The law is clear that you can still charge an application fee to cover screening. What you cannot do is add a second line item next to it.
Two other parts of Section 35 matter here. The law flatly prohibits renaming a fee to avoid these rules, and it gives any person who alleges a violation the right to sue for injunctive relief, monetary relief, attorney's fees, and costs.
At GC Realty & Development, we are trying to keep it simple. We are literally switching our screening service so our total hard costs us sub $50.00 to keep it clean. Too bad for our current provider but the screening companies need to keep our issues on their radar as well.
How the Over $50 Exception Works in Practice
On paper there is a path to charge more than $50. In practice, very few landlords are going to use it.
Think about what the exception requires. You cannot collect more than $50 when the application comes in. You have to pay the screening company yourself, wait for the report, and then send the applicant a bill with the provider's receipt attached, all inside 14 days. Then you have to actually collect it. If you declined that applicant, good luck getting $10 or $15 out of someone who just got a no from you.
The receipt piece matters too. The statute ties the extra charge to the actual cost of the third party background check service, backed by that provider's receipts. A bundled price from your software platform that includes its own markup is not the same thing as the screening company's actual cost. If you ever bill above $50, the paper trail needs to show what the screening company charged, not what your platform charged you.
The last piece is the eviction rule. That extra charge can never be the basis for an eviction in the first year of the lease. If you bill an approved applicant and it ends up on their tenant ledger, it needs its own charge code. A lot of property management software applies incoming payments to the oldest open charge first. If a screening balance sits on the ledger and the next rent payment gets applied to it, the tenant suddenly looks short on rent, and now you have built an eviction case on a charge the law says cannot support one.
For most landlords, the practical answer is to set the application fee at $50 or less and absorb anything above it.
Is the $50 Per Applicant or Per Household?
This is the first question investors have been asking me, and the statute does not answer it directly. It caps "a fee for a rental application" and stops there.
Most professional property managers, us included, require every adult who will live in the unit to submit their own application and be screened individually. Cosigners and guarantors get screened too. Under that setup, each person is filing their own application, and the most defensible reading is that each individual application is capped at $50.
What I would not do is take a household application and charge $50 for the household plus a separate per person screening charge on top of it. That starts to look exactly like the ancillary fee the law bans. Until there is guidance or case law, keep it simple. One person, one application, $50 or less, and nothing stacked on top.
No Stacking Fees on Top of the Application Fee
The second application provision is the one that will catch people who think they are already compliant. Even if your application fee is $50, any fee charged with it at the time of application that duplicates screening costs, or covers something other than screening, is banned.
Here is what I would audit on your application process right now.
An application processing fee or admin fee charged at the same time as the application fee or lets just say in advance of signing a lease.
A technology, portal, or convenience fee to submit the application online.
A separate charge for income verification, identity verification, or fraud checks when that is part of your screening.
A per person screening charge layered on top of a flat application fee.
The statute is written around what the landlord or the lease requires the tenant to pay. If you require applicants to apply through a specific platform and that platform charges them directly, assume that charge counts toward your $50, because you are the one requiring it. And because the law bans renaming a fee to get around it, calling something a processing fee instead of a screening fee changes nothing.
This is different from a lease admin fee charged at lease signing for actually preparing the lease. We covered that in the August article. It is not on the banned list, but it has to be on page one of the lease and it cannot be a disguised screening fee collected at the application stage.
One cost that catches landlords off guard is employment verification. Many large employers and federal agencies no longer answer verification calls themselves. They send every request to The Work Number, an Equifax service that charges the landlord a fee for each verification, and landlords run into it constantly with postal and other government workers. Equifax's own position is that this fee is normally covered by the application fee, and under HB 3564 that is exactly where it has to live. If your credit, criminal, and eviction report already costs close to $50, a Work Number verification can push you over, and you cannot tack it on as a separate verification fee. You either absorb it or use the receipt and 14 day billing process. I know we have always passed the fee onto the tenant and we wont do that anymore. We will have to eat it or find a new method to verify employment we can feel confident in such as direct salary payments hitting the applicants bank account.
New Law Combined With Existing Law Can Help Chicago Tenants
Here is a bonus for renters. HB 3564 is not the only Illinois law on screening fees. Since January 1, 2025, Section 25 of the Landlord and Tenant Act (Public Act 103 0840) has let applicants bring their own reusable tenant screening report, and a lot of renters in Chicago and across Illinois still do not know it exists.
If you hand a landlord a qualifying reusable screening report, the landlord cannot charge you a fee to access it or an application screening fee. To qualify, the report has to meet four conditions.
It was prepared within the last 30 days by a consumer credit reporting agency, at your request and expense.
The landlord can access it directly or through a third party site that regularly provides these reports and follows state and federal consumer reporting law.
It costs the landlord nothing to access or use.
It includes all of the criteria the landlord consistently uses to screen applicants.
The report also has to show your name, contact information, verification of income source, last known address, and eviction history, along with the date the information is current through. The landlord can ask you to confirm nothing material has changed, and can still have you fill out their application as long as they do not charge a screening fee for it.
Put the two laws together and the most a covered Illinois landlord can charge you to screen an application in 2027 is $50, and if you bring a qualifying report, it can be zero. The catch is that fourth condition. Ask the landlord for their written screening criteria before you pay for a report so you know it covers everything they check. Then one report can be used for every unit you apply to within that 30 day window.
Cook County Two Step Screening and the Chicago Layer
If you own in Cook County, the Just Housing Amendment already requires a two step screening process. You prequalify the applicant on everything else first, like income, credit, and rental history, and only after they pass do you run the criminal background check. That means two separate screening events for one applicant.
Under HB 3564, the safe approach is to treat both steps as one application when it comes to any fees being charged. The total screening charge across both steps stays at $50 or less unless you go through the over $50 receipt process. Charging a second fee when you run the criminal check is exactly the kind of fee charged next to the application fee that duplicates screening costs, and that is what the law bans.
Then there is the local layer. Section 35 includes a home rule provision that lets cities, villages, and counties regulate tenant fees, but only if their rules restrict fees at least as much as the state does. In plain terms, the state is now the floor. A municipality can go lower than $50. It cannot go higher.
The December Timing Question
The law applies to lease agreements entered into after January 1, 2027. Application fees, though, are collected before there is any lease at all. That leaves landlords with a real judgment call on every application taken in the last few weeks of 2026.
Take an application submitted December 15 for a lease signed January 3. One reading says the fee was charged in 2026, before the law took effect, so the old fee stands. The other reading says the application fee is part of a lease agreement entered into in 2027, so the cap applies. A tenant's attorney is going to argue the second reading, and the fee shifting provision means it does not take much money at stake to make that argument worth bringing.
So every landlord has to weigh it. Keeping a higher fee through December protects a little revenue on a handful of applications. Dropping to $50 early gives up that same small amount but takes the question off the table. The more applications you take for January move ins, the bigger the exposure, since one fee setting applies to every applicant who comes through.
What This Means for Landlords
Application fees stop being as much as a profit center. Some landlords and management companies have been charging $80, $90, or more per applicant and keeping the spread over the actual screening cost. On a unit that draws five or six applications, that adds up. That spread is gone in 2027, and that money is going to come from somewhere else, most likely rent.
Every declined applicant costs you more. If you are absorbing anything above $50, you want fewer people applying who never had a shot. That means publishing clear written criteria, prescreening at the showing or inquiry stage, and in some cases taking one application at a time instead of letting ten people apply for one unit. I wouldnt recomend this approach and would advise to get your costs under control.
Documentation becomes part of the job. If you ever bill above $50, you need the provider receipt, the date of the screening, and proof the bill went out inside 14 days. If you cannot produce all three, assume the charge is waived. This also seems like more effort then it is worth.
What Chicagoland Tenants Should Know
Consistency is the real win. Today one landlord might charge $50 to apply, the next one $75, and another $150 for what is basically the same credit, criminal, and eviction check. Renters have no way of knowing what is reasonable. Starting in 2027, every covered landlord in Illinois works under the same $50 ceiling, so a house hunter can budget for applications before they start touring.
Applying gets cheaper. A renter who applies to three or four units in a tight market can easily spend a few hundred dollars today. In 2027 the ceiling is $50 per application.
The reusable screening report law still applies. Illinois' 2025 tenant credit report law did not go away when HB 3564 passed. If you pull your own qualifying screening report, it is less than 30 days old, and it covers what the landlord screens for, the landlord cannot charge you a screening fee. We broke that law down in how the 2025 Illinois tenant credit report law impacts landlords, and it is worth reading from the renter side too.
Surprise screening bills come with rules. If a landlord bills more than $50, it has to come with the screening company's receipt and arrive within 14 days of the screening. If it does not, the renter does not owe it. And that charge cannot be used to evict them during their first year.
Expect landlords to be more selective about who applies. When landlords absorb more of the screening cost, they get pickier before the application stage. Renters should expect more questions up front, published income and credit criteria, and some landlords only accepting one application at a time. The smart move as a renter is to read the criteria before paying anything.
Costs do not disappear, they move. Screening still costs money. When a landlord can no longer pass the full cost through on the application, part of it ends up built into rent. Over a 12 month lease, a renter may never notice it, but it is there.
What This Means for Software Providers
Most landlords never set their screening price by hand. It is set inside their property management software, their screening platform, or the listing site where the applicant clicks apply. Those platforms were built to run one fee structure nationwide, and Illinois now needs its own rules, with local rules stacked on top.
The actual cost question is going to put pressure on pricing models. Plenty of platforms charge one price when the landlord pays for the screening and a higher price when the applicant pays. Buildium's own published pricing, for example, lists its standard screening at $17 when the property manager pays and $35 when the applicant pays. Both are under $50, so that is not a violation. But it shows how much of what applicants pay can be platform margin rather than the cost of the report, and that matters any time someone tries to bill above $50 using actual cost.
Here is what I would want from any software provider serving Illinois landlords before January 1.
A hard cap at $50 per application for Illinois properties, counting every platform, portal, and convenience fee the applicant pays.
A landlord paid screening option with a follow up invoice tool that attaches the screening company's receipt and tracks the 14 day clock, and automatically waives the charge if the clock runs out.
A separate ledger charge type for screening overages that is excluded from rent delinquency and eviction workflows during the first year of the lease.
A way to accept and store reusable screening reports with a zero fee path.
A Cook County two step workflow that runs the criminal check after prequalification without triggering a second charge.
A property level flag for the owner occupied, 6 units or fewer exemption.
Room for municipal overrides, since Chicago or any other town can set a lower cap.
If your software cannot do these things yet, ask your provider what their plan is and get the answer in writing. When a tenant's attorney comes calling, it is your name on the lawsuit, not your software company's.
What We Are Doing at GC Realty
We manage roughly 1,500 units across more than 100 municipalities, so we cannot wait for this to sort itself out. Here is where our team is focused between now and January 1.
Reviewing our application fee against what our screening actually costs per applicant.
Working with our software provider on the Illinois settings, including the cap, the ledger coding, and how platform fees are counted.
Auditing every charge an applicant sees from the moment they click apply, so nothing is sitting next to the application fee that should not be.
Building a process for reusable screening reports so our leasing team knows exactly what qualifies.
Confirming our Cook County two step process does not create a second screening charge.
Updating our published applicant criteria so prospects can tell if they qualify before they pay.
We are still working through some of the open questions, like how per applicant charges will be treated and how the December timing will be read. As more clarity comes out, we will update this article.
$50 Works Today, but What About 10 Years From Now?
This is not a horrible change today. For most applicants, a solid credit, criminal, and eviction check still comes in under $50, and plenty of good landlords were already charging around $50.
My concern is the long game. The $50 cap is a fixed number written into the statute. There is no inflation adjustment and no automatic review. Ten years from now that cap will very likely still read $50 unless lawmakers go back and amend it.
Meanwhile the cost to underwrite an applicant keeps climbing. Ten years ago screening meant a credit report and a court record search. Today it often includes income verification through bank data, identity verification, and fraud detection, because fake pay stubs and stolen identities on applications are a real problem. Every one of those tools costs money, and inflation alone pushes the price of the basic report higher every year.
When the actual cost passes $50, landlords are left with two choices. Use the receipt and 14 day billing process, or absorb the difference. Most will absorb it, and that cost ends up in rent. Worse, some landlords will cut corners on screening to stay under the cap, which means more bad placements, more evictions, and more cost for everyone, including the good renters. A cap that is fair in 2027 can quietly become a problem by 2037, and I would like to see lawmakers build in a review or an inflation adjustment before that happens.
FAQ
What is the maximum rental application fee in Illinois in 2027?
$50, including the background check. A landlord can only charge more when the actual third party screening cost is higher, the landlord pays it up front, and bills the applicant with the provider's receipts within 14 days.
What happens if the landlord misses the 14 day window?
The charge above $50 is waived. The applicant does not owe it.
Can a landlord evict a tenant for not paying the screening overage?
Not during the first year of the lease. The statute says that fee can never be the basis for an eviction action within the first year.
Is the $50 cap per person or per household?
The statute does not say directly. Most property managers require each adult to file their own application, and the safest approach is to keep each individual application at $50 or less with nothing stacked on top.
Can I charge an application fee plus a processing or admin fee?
No. Any fee charged with the application fee that duplicates screening costs or covers costs unrelated to screening is banned, and renaming the fee does not change that.
Do I have to accept a tenant's own screening report?
If an applicant provides a reusable screening report that meets the requirements of Illinois law, including being less than 30 days old, free for you to access, and covering all the criteria you consistently use, you cannot charge them a screening fee or a fee to access the report.
Does the cap apply in Cook County's two step screening process?
Yes. The safest approach is to treat both steps as one application, so the total charge across prequalification and the criminal background check stays at $50 or less.
Can Chicago set a lower application fee cap?
Yes. HB 3564 lets local governments regulate tenant fees as long as they are at least as restrictive as the state. A city can go below $50 but not above it.
Does this apply to my building if I live there?
Not if the building is owner occupied and has 6 units or fewer. Both have to be true. A 3 flat you own but do not live in is covered, and a 7 unit building is covered even if you live there. Even if you are exempt, the 2025 reusable screening report law still applies to you.
Does HB 3564 apply outside Chicago and Cook County?
Yes. It amends the statewide Landlord and Tenant Act, so it covers residential landlords everywhere in Illinois, including the suburbs and collar counties. It also applies to property managers, leasing agents, and Realtors who list units or take applications for an owner.
When does this take effect?
January 1, 2027, for lease agreements entered into after that date. We recommend being compliant before December applications for January move ins start coming in.
Don't Go At This Alone!
Application fees look like a small line item, but they touch your listings, your software, your leasing team, and every applicant you talk to. That is exactly where things get missed. We view this as a team sport. Who's on your team?
GC Realty & Development, LLC has a dedicated team of professionals with decades of experience across brokerage, leasing, and property management. We manage roughly 1,500 units across Chicagoland, and we are already rebuilding our application process, fee schedules, and lease templates for HB 3564 so nothing slips through before January 1, 2027. Whether you hire us or not, we are happy to share what we have learned.
What gets me up in the morning and keeps me going for 12 hours a day is the ability to add value for 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. In return, they will one day hire us for tenant placement or property management, refer us to someone they know, or leave a review about our services. We would love all three, but we are happy whenever we get the opportunity to help.
Founder, Partner, Podcast Co-Host, and Investor
%20(3)%20(1)_3.png)
_1.png)
