Most residential landlords require tenants to pay a security deposit to cover any repairs needed when the tenant moves out, or to cover the tenant’s failure to pay the last month's rent.

Laws vary from state to state, but many states have statutes that provide the maximum amount of security deposit a landlord may require for a residential lease and the costs for which the landlord may use the security deposit (cleaning, repairs, unpaid rent) following termination of the lease.

These laws also provide a specific deadline (often 30-60 days) for the landlord to return the tenant’s security deposit following termination of the lease—after deducting any amount properly withheld, as allowed by law.

In Illinois, the security deposit regulations are primarily governed by state law, specifically the Illinois Security Deposit Return Act and the Illinois Security Deposit Interest Act. These laws apply to residential leases and outline the rights and responsibilities of both landlords and tenants regarding security deposits. Landlords can require a security deposit to cover potential damages, cleaning, or unpaid rent. However, there is no statewide limit on the maximum amount a landlord can charge for a security deposit, but some local ordinances, such as the Chicago Residential Landlord and Tenant Ordinance, may impose limits. Landlords must return the security deposit within 30 to 45 days after the tenant moves out, depending on whether deductions are made. If deductions are taken for repairs or unpaid rent, the landlord must provide an itemized statement of the damages and the estimated or actual cost of repairs. Additionally, if a building has 25 or more units, landlords are required to pay interest on security deposits held for more than six months.