City Council today passed amendments to the Keep Chicago Renting Ordinance (KCRO), first passed in 2013. In the aftermath of the 2008 foreclosure crisis, KCRO was enacted as a means to protect Chicago renters and stabilize rental housing by keeping tenants in foreclosed buildings safely housed. The 2013 KCRO required that banks or other owners of foreclosed rentals either allow renters in good standing to renew or extend their current lease with an annual rent that did not exceed 102% of current annual rent; or required that banks pay tenants relocation funds of $10,600 to leave the building to enable an easier transition. Unfortunately, a court ruling earlier this year rendered the entire KCRO unenforceable due to the rent restriction provision.

In April 2021 (Rivera v. Bank of New York Mellon), an Illinois Appeals court held that the Illinois Rent Control Preemption Act preempts the KCRO due to the provisions regulating the rental amount in the lease a bank is required to offer to avoid paying a relocation fee. (The court held that removing references to rent limits would allow a bank, after obtaining property as a result of foreclosure, the ability to avoid paying a relocation fee and still remove tenants by offering to extend a qualified tenant’s lease at a prohibitive rental rate, knowing that the tenant is likely to refuse.

The amendment removes all language requiring banks that acquire buildings with renters to provide those tenants the option to renew or extend their current lease with an annual rent that does not exceed 102% of the current annual rent, which was found to be unenforceable in the April 2021 Illinois Appeals Court ruling. The revised ordinance will allow tenants to elect between any lease renewal offered by the new owner and relocation assistance; include buyers of short sale rental properties; require KCRO notice to be given to all occupants in additional languages; create definitions of "good faith" negotiation; increase the amount of time for owners to register the property; and shift responsibility for managing registration to the Department of Housing (DOH) from the Department of Buildings (DOB).

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