Chicago Protecting Renters Ordinance: Landlord Guide

Chicago’s Protecting Renters Ordinance, or PRO, is a proposed package of rental-law changes. The legislative record reviewed on October 19, 2026 does not establish that it has become law. Landlords should continue using the current Residential Landlord and Tenant Ordinance, or RLTO, and other applicable laws. Illinois’s enacted rental fee changes have a separate January 2027 effective date.

The distinction matters when you buy an occupied building, renew a lease, or price a management contract. A proposal can justify planning. It cannot establish a new charge, replace an existing notice deadline, or supply a reliable operating-cost estimate.

The official legislative history for SO2026-0026554 lists the September 23, 2026 action as Deferred and Published. The official City Clerk matter and its documents are the place to check subsequent action. This guide separates the proposal from duties owners can identify in the published code today.

What is the current status of Chicago’s PRO?

The record identifies the proposal as an amendment to Municipal Code Chapter 5-12. It was introduced on June 29, 2026. A substitute received a committee recommendation on September 16. The recorded September 23 Council action was a deferral, rather than passage. These events appear in the legislative action history.

The 41-page substitute ordinance proposes changes to the RLTO and other city provisions. Topics include tenant rights, deposit handling, rental fees, registration, and housing administration. Its final article names January 1, 2027, after passage and publication, as a proposed effective date. That conditional language does not itself prove passage.

Read the current substitute carefully. An ordinance marked up with deletions and additions contains both existing language and proposed replacements. Plain-text extraction can mix those together. Likewise, an article about the original June proposal may describe terms that changed before a later committee vote.

For an operating decision, collect three pieces of evidence: the final adopted text, the adoption history, and the effective-date provision. If the record shows only a pending substitute, keep it in your planning file. Continue using enacted rules for lease documents and notices.

What does that mean for a landlord today?

It means you should review the business processes the debate highlights without pretending every proposal already applies. Check who handles tenant deposits, rent notices, repair requests, and lease disclosures. Those are useful questions even if the Council changes the proposal again.

Ask a manager who recommends a new fee or procedure to identify its source. Is it an existing code requirement, an enacted future rule, a pending city proposal, or the manager’s own service policy? Each answer has a different effect on the lease and your budget.

Keep the date of each review beside the source. A folder containing an undated summary called “new Chicago landlord law” is difficult to trust six months later. A dated copy of the relevant code section and adopted amendment is much easier to use.

PRO, RLTO, and Illinois fee law serve different roles

Rule or proposal	Status reviewed October 19, 2026	What owners should do
Chicago RLTO, Chapter 5-12	Existing municipal law, subject to its exclusions	Apply the current sections relevant to the property and tenancy
Chicago PRO, SO2026-0026554	Pending substitute in the legislative history reviewed	Track final action and review any adopted text before implementation
Illinois rental fee provisions, 765 ILCS 705/35	Enacted, with a delayed January 1, 2027 effective date	Prepare covered listings, agreements, and billing practices for the transition
Existing lease and subsidy terms	Depends on the signed agreement and program	Review the actual documents alongside applicable law

The primary references are the published Chicago code, the PRO matter record, and Illinois Public Act 104-0479. Public Act 104-0514 changes the state act’s effective date.

A city proposal does not create a statewide rule. A statewide disclosure requirement also does not cancel Chicago’s separate deposit and notice rules. For each obligation, record the jurisdiction, covered properties, triggering event, and start date.

Our Chicago RLTO landlord compliance guide provides the broader operating framework. Use this article to assess the PRO discussion and its investment implications.

Which Chicago landlord rules apply now?

Start with the property’s actual exemption status

The current RLTO generally excludes dwelling units in owner-occupied premises containing six units or fewer. However, its Fair Notice provision and anti-lockout section still apply to those rented units. The controlling language is Section 5-12-020.

A two-flat owned by an investor who lives elsewhere does not qualify for that exclusion merely because it is small. Conversely, a qualifying owner-occupied building may be excluded from much of the RLTO while remaining subject to other laws.

For a purchase, evaluate the facts that will exist after closing. A seller living in one apartment does not establish your future exemption. Record unit count, occupancy, ownership, and the particular legal provision being evaluated. Avoid a single “exempt” checkbox that gets reused for unrelated rules.

This also matters when hiring a manager. Give each candidate the same building facts. A proposal based on an owner-occupied two-flat can omit work needed for a fully rented investment building. Ask what their contract actually includes before comparing prices.

Use the correct Fair Notice period

The general city notice periods for a rent increase or qualifying nonrenewal are based on the tenant’s continuous occupancy:

Length of occupancy	General written notice period
Less than six months	30 days
Six months through three years	60 days
More than three years	120 days

These tiers come from Section 5-12-130(j). Three years exactly is within the middle tier. Signing a replacement lease does not restart continuous occupancy.

A separate Jackson Park provision, Section 5-12-135, establishes expanded notice requirements for covered tenancies in a defined area. Check the property’s address and that provision’s applicability before using the general table.

The RLTO also restricts requiring a tenant to renew more than 90 days before the agreement ends. That rule is distinct from the landlord’s notice period. It does not create a universal 90-day notice requirement. Existing lease terms can also prevent an increase during the fixed term.

For a planned acquisition, obtain original occupancy dates and actual notice records. A rent roll showing only the latest lease date can cause an incorrect deadline. Our Chicago rent increase laws guide explains the scheduling process and exceptions in more detail.

Separate deposit accounting from operating income

For covered security deposits, Section 5-12-080 requires specific banking, receipt, interest, and return procedures. The general refund deadline is 45 days after the tenant vacates. A damage deduction ordinarily requires an itemized statement within 30 days. A particular casualty-related termination has a different deadline.

Those are different tasks. An owner should calendar inspection, itemization, supporting receipts, interest, and refund separately. One reminder labeled “deposit due” is inadequate if it hides the earlier documentation deadline.

The current section does not establish a general one-month deposit cap. A proposed cap should not be described as existing RLTO law. Nor should a refundable deposit be counted as revenue available for repairs or debt payments.

At closing, reconcile each tenant’s deposit liability against the lease, ledger, interest records, and settlement transfer. Do not assume a seller’s closing credit resolves every tenant-facing obligation. The Chicago deposits and move-in fees guide covers those records and the distinction between deposits and fees.

What changes in Illinois on January 1, 2027?

Illinois enacted rental fee rules through Public Act 104-0479. Public Act 104-0514 moved the effective date from July 1, 2026 to January 1, 2027. The operative section is 765 ILCS 705/35. These state changes are separate from Chicago’s pending PRO package.

The section addresses mandatory fee disclosures, including the first page of a lease and residential listings or an accompanying link. It also requires utility disclosure and prohibits specified charges. Its application-fee provision includes a $50 limit with a narrow exception for qualifying third-party background-check costs.

The section applies to residential rental agreements entered after its effective date. It excludes owner-occupied buildings with six or fewer units and nonresidential tenancies. Review the final text and amended effective date together when deciding how it applies to an agreement.

Prepare the documents and the billing system together

Make an inventory of every amount a prospective tenant may be asked to pay. Include amounts collected by the owner, manager, application platform, or another provider. For each charge, identify whether it is refundable, mandatory, recurring, and separately authorized.

Then compare three things: the advertisement, the proposed agreement, and the actual payment screen. A corrected lease is not enough if the application platform still adds an inconsistent charge. Ask who can change those settings and who verifies the final result.

Keep one approved fee schedule for each property. Record its effective date and the agreements to which it applies. When a fee changes, update the connected documents together. This reduces the risk that a leasing assistant copies terms from an older listing.

Do not assume an older bill summary describes the enacted statute. Introduced versions and amendments can differ. In particular, do not import a general one-month deposit cap or a blanket deposit-and-move-in-fee prohibition into the final state law without support in its text.

Current screening obligations also deserve a separate review. Our Chicago tenant screening guide covers the application process, reusable reports, and Cook County requirements. Preparing for the future state fee rules does not replace those existing duties.

How should investors model the financial impact?

There is no substantiated universal “PRO compliance cost” of a fixed dollar amount per unit each month. An ordinance text can establish a specific obligation. It cannot tell you what every manager, lawyer, accountant, or software provider will charge to help fulfill it.

Build the operating budget from evidence: tax bills, insurance quotes, utility statements, maintenance history, and written management proposals. If a provider adds a compliance charge, ask which tasks it covers. Determine whether those tasks were already included in the base fee.

Our Chicago property-management fees guide explains how to compare management, leasing, renewal, maintenance, and termination charges. Compare total costs for a realistic year, including turnover. A low percentage can conceal expensive charges elsewhere in the contract.

A transparent three-flat example

The following numbers are hypothetical. They illustrate sensitivity to expenses, rather than a forecast of PRO costs or a lender’s required underwriting method.

Assume three apartments each rent for $2,200 monthly. The owner allows 5% of scheduled rent for vacancy and collection loss. Documented operating expenses total $2,100 monthly, including taxes, insurance, utilities, repairs, and management.

Monthly item	Base case	Additional $150 expense assumption
Scheduled rent	$6,600	$6,600
Vacancy and collection allowance	−$330	−$330
Effective rental income	$6,270	$6,270
Operating expenses	−$2,100	−$2,250
Net operating income	$4,170	$4,020
Principal and interest payments	−$3,500	−$3,500
Cash flow before capital reserves and income tax	$670	$520

The calculation is direct: $6,600 minus $330 minus $2,100 equals $4,170. Subtracting $3,500 leaves $670. Adding $150 of monthly expenses reduces annual cash flow by $1,800.

In this example, taxes and insurance are already operating expenses. They must not be deducted again inside the debt-payment line. A model using an escrow-inclusive payment needs a different presentation to avoid counting them twice.

The additional $150 is an assumption selected for the example. Replace it with a quote or another clearly labeled scenario. It is not an enacted fee, an estimated citywide average, or evidence that every building’s expenses will rise by that amount.

Also test a rent increase starting later than planned. A $100 increase for each of three apartments produces $300 of additional scheduled monthly rent. A two-month delay means $600 less scheduled revenue during the first year, before collection effects. The actual lawful start date depends on notices, lease terms, and applicable rules.

Keep lender qualification separate from your cash-flow budget

Debt-service coverage ratio, or DSCR, is a financing measure whose calculation depends on the loan program. Some commercial underwriting compares net operating income with debt service. Many residential investment programs use qualifying rent against a defined housing payment. Confirm the lender’s calculation and documentation requirements.

In the operating example, $4,170 divided by $3,500 is approximately 1.19. That arithmetic does not mean every one-to-four-unit DSCR lender would assign the property a 1.19 ratio. The lender may use different income, payment, vacancy, or expense inputs.

Your own cash-flow budget still needs maintenance, vacancy, capital reserves, and management costs. Loan qualification alone does not establish that the building leaves enough cash for your needs. Review the Chicago DSCR financing guide alongside the actual loan terms.

What should a buyer request before closing?

An occupied property’s compliance history should be part of the purchase review. Ask for documents early enough to resolve gaps before the closing statement is prepared.

1. Every current lease and amendment. Match names, unit numbers, rent, fees, and concessions to the rent roll.
2. Original occupancy dates. Identify tenants whose continuous occupancy began before the current lease.
3. Notices and delivery records. Confirm what was sent, when it was delivered, and the intended effective date.
4. Deposit and prepaid-rent records. Reconcile balances, receipts, bank information, interest, and closing transfers.
5. Repair and inspection records. Identify open work, recurring problems, and who is responsible for completion.
6. Management contracts and vendor invoices. Separate included services from charges triggered by leasing, repairs, or termination.
7. Subsidy documents where applicable. Reconcile the approved rent, tenant portion, agency payment, inspection status, and contract terms.

For a voucher tenancy, do not assume a new owner can immediately replace the approved rent with a market estimate. The Chicago Section 8 landlord guide explains the CHA process and documents owners should review.

Turn missing information into a specific question. “Provide the original occupancy date for Unit 2” is easier to resolve than “confirm all leases comply.” Have the appropriate adviser review unresolved legal issues and ownership-transfer duties before relying on a proposed rent or possession date.

A buyer should also reconcile actual collections with scheduled rent. A fee appearing on a ledger does not prove it was paid or legally collectible. Base dependable income on supportable rent and realistic collections, with uncertain recoveries identified separately.

How can owners prepare without guessing at future law?

Assign a person to monitor the City Clerk matter and review any adopted amendment. Record the latest action and the document version reviewed. Schedule another check before changing leases or advertising a new fee policy.

Meanwhile, improve the tasks that already exist. Use separate calendars for notices, deposits, inspections, and contract renewals. Give each task an owner and a backup. A small portfolio can use a well-maintained spreadsheet; software helps only when someone checks the underlying entries.

Test the process with one actual tenancy. Can you locate the lease, original move-in date, rent ledger, deposit balance, and most recent notice quickly? Can another person reconstruct what happened from the records? If the answer is no, fix the recordkeeping before expanding the portfolio.

When a new requirement becomes binding, map it to a specific change. A disclosure rule may require a revised first page. A registration rule may require a filing and annual reminder. A new return deadline may require changes to inspection scheduling and vendor invoicing.

Price those changes individually. Keep one-time setup costs separate from recurring costs, and distinguish statutory payments from optional services. This produces a budget that can be updated when facts change and explained to a buyer, partner, or lender.

Before submitting a financing scenario, identify the actual rents, lawful increase dates, verified expenses, and reserves. Add pending-law assumptions as separate scenarios. That gives an investment decision a clear factual basis while preserving room for changes the Council may ultimately adopt.

Sources and legislative status checked October 19, 2026. The City Clerk’s live record should be checked for later action; this article does not establish a future passage date. Property-specific decisions require the current law, the actual agreement, and the relevant tenancy facts.