Illinois Junk Fee Ban (SB 2979) — What Landlords Must Stop Charging by July 2026

What SB 2979 Actually Prohibits (And Why It Matters)

On July 1, 2026, Illinois Senate Bill 2979 will eliminate an entire category of rental fees that have become industry standard across the United States. Unlike California’s earlier junk fee restrictions (which applied to residential rentals broadly), Illinois’ law targets landlords directly and defines prohibited fees with surgical precision.

The statute, codified as amendments to the Illinois Residential Tenants’ Rights Act (765 ILCS 710), does not use the term “junk fees.” Instead, it prohibits any charge for rental housing that is “not directly attributable to the tenant’s occupancy” or “attributable to a cost incurred by the landlord or owner as a direct result of the tenant’s tenancy.” This two-pronged test disqualifies fees that look like administrative costs but function as disguised revenue.

Application and screening fees are first on the chopping block. Many Illinois landlords charge $25–$75 per application to cover credit checks, background screening, and administrative time. Starting July 1, 2026, you cannot charge these separately. If you incur actual costs to screen a tenant—credit report fees ($15–$25), background check fees ($10–$40)—those costs must be borne by the landlord or built into base rent. The statute specifically prohibits charging the applicant for “application processing” as a distinct line item.

Processing, document preparation, and lease execution fees vanish. Landlords who charge $50 for “lease processing,” $30 for “document preparation,” or $15 for “lease signing” are running out of time. These fees do not represent a cost directly caused by that specific tenant’s occupancy; they represent routine operational expenses. Under SB 2979, they become illegal.

Move-in inspection and administrative fees are prohibited. Some landlords charge $75–$150 to conduct move-in inspections or prepare move-in checklists. The statute treats these as non-compliant because the cost of property inspection is a landlord’s operational expense, not a tenant-specific cost. If you employ a property manager or maintenance vendor to conduct inspections, that cost cannot be passed to the tenant as a line-item fee.

Convenience fees for digital payments face legal risk. If you charge an extra $10 or 2.5% when a tenant pays rent online instead of by check, SB 2979 creates exposure. The law defines prohibited fees to include any charge not “directly attributable to the tenant’s occupancy.” A convenience fee is attributable to your payment processing system choice, not the tenant’s use of your property. Illinois regulators and plaintiff attorneys will likely challenge this practice.

Credit check markups and bundled screening fees are no longer allowed. If your lease says “Credit Check: $35” but the actual credit report costs $18, the $17 markup is prohibited. Tenants can now argue (and courts may agree) that a markup or “administrative charge” on top of actual screening costs violates SB 2979’s cost-attribution requirement.

What Fees Remain Legal After July 1, 2026

SB 2979 does not ban all fees. It bans junk fees. Legitimate charges directly tied to tenant occupancy or actual landlord costs remain enforceable.

Fee Type	Status After 7/1/26	Notes
Late rent fee	Legal	Capped at 5% of monthly rent or $5, whichever is greater (765 ILCS 710/5)
Pet deposit/fee	Legal	Combined pet deposit and monthly pet rent cannot exceed one month’s rent (765 ILCS 710/6.2)
Parking fee	Legal	Directly attributable to tenant occupancy and use; must be listed separately in lease
Utility deposit (tenant-required)	Legal	When utility company requires tenant to post deposit, landlord may collect and hold
Security deposit	Legal	Up to one month’s rent (765 ILCS 710/1); see our post on security deposit deadlines
NSF/returned check fee	Legally uncertain	May be allowed as cost directly attributable to tenant’s non-payment; keep documentation of actual bank fees incurred
Lease renewal fee	Prohibited	Administrative cost, not attributable to occupancy; must be absorbed or built into new rent
Tenant-caused damage fee	Legal if substantiated	Deducted from security deposit with itemization (765 ILCS 710/1); separate charges must show actual cost

How to Identify Prohibited Fees in Your Current Leases

You likely have prohibited fees in your lease templates, move-in checklists, and rent payment systems today. The compliance work starts now, before July 1, 2026.

Step 1: Audit Your Lease Template

Pull your current lease document and search for these phrases:

• “Application fee”
• “Processing fee”
• “Administrative fee”
• “Application processing”
• “Lease execution fee”
• “Document preparation”
• “Lease signing fee”
• “Move-in inspection”
• “Move-in fee”
• “Convenience fee” (for online payments)
• “Background check fee” (charged separately)
• “Credit report fee” (charged separately)
• “Screening fee”

Any line item matching these descriptions must be removed or redesignated as part of base rent.

Step 2: Review Your Rent Payment Systems

Log into your payment processor (Stripe, Venmo, PayPal, or property management software) and check your payment flow. If tenants see a line like “Convenience fee: $12” or “Processing fee: 2.5%,” you must eliminate that surcharge. SB 2979 treats it as a prohibited fee because it is not “directly attributable” to the tenant’s occupancy—it is attributable to your choice of payment system.

Step 3: Audit Your Move-In Checklist and Vendor Invoices

If you collect move-in inspection fees or charge tenants for move-in walk-through documentation, stop. These are administrative costs you must absorb. If a vendor charges you to prepare a move-in checklist, that vendor cost cannot be passed to the tenant as a separate line item. It is part of your operational expense.

Step 4: Document Your Actual Screening Costs

If you run credit checks, background checks, or other screening, document the actual third-party cost. A credit report typically costs $12–$25 depending on the service. A background check runs $15–$40. If you have been charging $50 for “application processing,” you now know the gap between actual cost and collected fee. That gap is prohibited starting July 1, 2026.

How SB 2979 Defines “Directly Attributable to the Tenant’s Occupancy”

The statute’s legal standard is crucial because it sets the boundary between allowed and prohibited fees. A fee is legal if it meets both of these requirements:

1. It is directly attributable to the tenant’s occupancy — The fee arises because that specific tenant is renting the property. A late fee is directly attributable because the tenant’s late payment triggers the cost. A pet deposit is directly attributable because the tenant’s pet causes wear. An application fee, by contrast, is not attributable to occupancy—it is incurred before occupancy, and it covers the landlord’s screening process, not the tenant’s use of the property.
2. It is attributable to a cost incurred by the landlord as a direct result of the tenant’s tenancy — The fee must reimburse or reflect an actual cost the landlord bears. If you pay a credit report company $18 for a report, you may not charge the tenant $50 and keep the difference as profit; that $32 gap is not a “direct result” of the tenant’s tenancy. It is a junk fee.

Illinois courts and the Department of Financial and Professional Regulation will interpret this standard broadly in tenants’ favor. When in doubt, the fee is prohibited.

Penalties for Non-Compliance: What It Costs to Ignore SB 2979

The consequences of charging prohibited fees after July 1, 2026 are severe and cumulative.

Civil Liability: Up to $500 Per Violation

SB 2979 authorizes a tenant (or group of tenants) to sue a landlord for each prohibited fee charged. The statute imposes a penalty of “up to $500” per violation. Courts interpret “per violation” to mean per fee, per tenant, per occurrence. If you charge five tenants an illegal $50 application fee, that is five separate violations, creating potential exposure of $2,500. If you charge one tenant illegal fees across five lease clauses, that is five separate violations.

Consumer Fraud Act Coverage

SB 2979 violations also trigger liability under the Illinois Consumer Fraud Act (815 ILCS 505/1 et seq.). Under that statute, a violation can result in statutory damages, treble damages, and attorney fees awarded to the plaintiff. A tenant’s attorney representing multiple affected tenants can recover attorney fees from the landlord, making class action litigation financially attractive.

No “Mistake” Defense Available

The statute does not include a safe harbor for landlords who claim they were unaware of the law or made honest mistakes. Once July 1, 2026 arrives, charging a prohibited fee is strict liability.

Regulatory Action

The Illinois Attorney General and local state’s attorneys have enforcement authority. While they are unlikely to prosecute individual landlords for isolated incidents, a pattern of violations—especially charging large groups of tenants prohibited fees—creates regulatory exposure. The AG can pursue cease-and-desist orders and civil penalties.

What to Do Instead: Restructure Your Revenue Model

Losing application fees and processing fees represents real lost income for landlords. You have two compliant alternatives before July 1, 2026.

Option 1: Increase Base Rent

Calculate the average revenue you collected from prohibited fees over the past 12 months. If you charged 24 tenants a $50 application fee, your annual collection was $1,200. Divide by 12 months: $100/month. You can increase rent by $100 across your portfolio to offset the loss, but you must provide proper notice.

Notice requirements depend on lease type:

• Month-to-month leases: 30 days’ written notice under 735 ILCS 5/9-204
• Fixed-term leases: You may increase rent only at lease renewal (after the term expires)
• Lease expiring before 7/1/26: Build the new rent into the renewal lease offered after July 1

Document the rent increase in writing. Do not use language like “junk fee adjustment” or “application fee replacement.” Use neutral language: “Rent is increased to $1,100 per month effective [date].”

Option 2: Absorb the Cost and Simplify

Some landlords prefer to eliminate screening fees entirely, absorb the cost of credit reports and background checks, and price it into base rent across the portfolio. This approach simplifies tenant onboarding, reduces administrative disputes, and aligns with the intent of SB 2979. It may also attract higher-quality applicants if you advertise “no application fee.”

Do Not Try This: Attempted Workarounds That Will Fail

• Renaming fees — Calling an “application fee” a “lease initiation charge” does not make it legal. The substance of the charge, not the name, determines compliance.
• Building fees into “non-refundable deposits” — If you charge a “non-refundable processing deposit” instead of an outright fee, courts will treat it as a prohibited fee under the substance-over-form doctrine.
• Having a third party collect fees — If you use a third-party tenant screening service that charges tenants directly for background checks, and you receive a referral fee or rebate, you remain liable as the landlord. The tenant can sue you for restitution.
• Claiming fees are “voluntary” — If a fee is listed in the lease as a condition of tenancy, it is not voluntary, and the tenant’s formal agreement to it does not cure its illegality.

How to Comply Before July 1, 2026: A Landlord Checklist

By September 2026 (immediately after the law takes effect)

• ☐ Revise all lease templates to remove prohibited fees
• ☐ Audit your rent payment processor; disable any convenience fee or processing surcharge
• ☐ Update your application form to state: “No application fee will be charged”
• ☐ Train any property managers or leasing agents on the new rules
• ☐ Document the revenue impact of eliminated fees
• ☐ Calculate any rent increases needed to offset fee loss
• ☐ Prepare tenant notice of rent increase (with proper 30-day advance notice for month-to-month tenants)

By May 2026 (2 months before the law takes effect)

• ☐ Send rent increase notices to month-to-month tenants (30 days minimum notice required)
• ☐ For fixed-term leases expiring before 12/31/26, prepare renewal leases without prohibited fees
• ☐ Review your move-in inspection process; confirm no illegal fees are listed on checklists
• ☐ Notify any third-party vendors or screening services that you will no longer pass through prohibited fees
• ☐ Update your website and rental listings to reflect new fee structure

By January 2026 (now)

• ☐ Complete your lease audit
• ☐ Identify all prohibited fees currently in use
• ☐ Calculate the total annual revenue from prohibited fees
• ☐ Begin drafting revised lease templates
• ☐ Review your rent payment system settings

Special Situations: How SB 2979 Affects Specific Landlord Scenarios

Landlords Using Property Management Software

If you use LeaseBase’s lease operations platform or another property management software, that system may have application fee collection built into the default settings. Log into your account and audit the following:

• Application form templates (check for fee fields)
• Payment processing settings (check for convenience fees or processing surcharges)
• Move-in checklist or inspection report (check for move-in fees)
• Lease generation templates (check for junk fee language)

Contact your software provider for updated templates compliant with SB 2979. If your vendor has not updated its system, document that in writing and request a formal response about compliance.

Landlords with Multiple Units and Portfolio-Level Rent Changes

If you manage 10, 25, or 75+ units across Illinois, coordinating a portfolio-wide rent increase requires careful planning. You may not raise rents uniformly across all units; you must provide individual notice to each month-to-month tenant and handle fixed-term leases at renewal. Use portfolio management tools to track which tenants are on month-to-month vs. fixed-term leases, identify renewal dates, and schedule notice sending 30 days before the effective date.

Landlords with Existing Prohibited Fees Collected Before July 1, 2026

SB 2979 does not address retroactive liability. Fees charged before July 1, 2026 are generally not covered by the statute’s prohibition. However, a tenant who was charged a prohibited fee before July 1 can argue that the practice was already illegal under existing Illinois law or the Consumer Fraud Act. To avoid disputes, document the transition clearly: “Effective July 1, 2026, [fee name] is no longer charged. All current tenants are subject to the new fee structure.”

Landlords with Three-Year Fixed-Term Leases (Expiring After 2029)

If you have a tenant in a three-year lease signed in 2024 with prohibited fees listed, you cannot unilaterally remove those fees mid-lease. However, you can give notice 60 days before lease expiration that the lease will renew under the new compliant terms (without prohibited fees). Alternatively, offer the tenant an amendment to the existing lease removing the prohibited fees in exchange for a modest rent increase. This approach creates goodwill and documentation of your good-faith compliance effort.

FAQs: What Landlords Ask About SB 2979

Q1: Can I charge a tenant for a credit report if I give them the actual cost?

A: Not as a separate line item. If a credit report costs $18, you cannot charge the tenant $18 as a distinct fee. The cost must be absorbed by the landlord or built into base rent. SB 2979 prohibits charging fees “not directly attributable to the tenant’s occupancy.” A credit report is attributable to your screening process, not the tenant’s use of the property. If you want to charge for screening, you must increase rent to cover the cost.

Q2: What if I use a third-party tenant screening company that charges the applicant directly?

A: You remain liable. If you send applicants to a third-party screening service that charges $40 per application, and you receive a referral fee or rebate, you have effectively arranged a prohibited fee. Tenants can sue you for violating SB 2979 even though you did not collect the fee directly. To comply, ensure applicants have the option to pay for screening themselves (as their choice), not as a requirement of your lease or application process. Better practice: eliminate the third-party fee requirement and absorb screening costs.

Q3: Is a pet deposit allowed, or does SB 2979 ban that too?

A: Pet deposits and pet rent are legal after July 1, 2026, but capped. Under 765 ILCS 710/6.2, the combined total of pet deposit and monthly pet rent cannot exceed one month’s rent. So if rent is $1,000/month, your pet deposit plus all pet rent (monthly or annual) cannot total more than $1,000. A $500 pet deposit + $50/month pet rent is compliant ($500 + $600 annually = $1,100, which exceeds the cap); a $500 pet deposit + $25/month pet rent is compliant ($500 + $300 = $800).

Q4: Can I charge different application fees based on credit score or income level?

A: No. Any application fee—whether tiered by credit score or not—is prohibited. The structure of the fee does not change its nature. SB 2979 bans application fees categorically because they are not directly attributable to the tenant’s occupancy.

Q5: If a tenant damages the unit, can I charge a damage fee outside the security deposit?

A: Damage charges must be deducted from the security deposit and itemized. You cannot charge a separate “damage fee.” Under 765 ILCS 710/1, landlords must provide an itemized list of security deposit deductions within 30 days of move-out. Charges for damage caused by the tenant are allowed deductions from the deposit, but they must be listed individually with documentation of the repair cost (receipt, contractor invoice, etc.). You cannot charge a lump “damage assessment fee” in addition to actual repair costs.

Compliance Tools and LeaseBase Integration

Tracking compliance with SB 2979 requires systematic review of your leases, payment systems, and tenant records. The LeaseBase compliance engine allows you to:

• Flag lease templates that contain prohibited fee language and generate revised versions automatically
• Track which tenants are subject to legacy leases with junk fees and schedule renewal reminders
• Generate compliance reports showing the revenue impact of fee elimination and recommended rent adjustments
• Maintain a dated record of when prohibited fees were removed (useful evidence if a tenant disputes your compliance history)

The platform also integrates with rent payment systems to disable convenience fees and process surcharges, ensuring your payment flow does not inadvertently collect prohibited charges.

Final Compliance Note: Your Audit Deadline Is Now

You have less than 12 months until SB 2979 takes effect. Landlords who wait until June 2026 to review their leases risk charging prohibited fees to new tenants signed in July or later. By then, the only recourse is retroactive rent adjustments or litigation. Disciplined self-managing landlords audit their templates and systems now—in August 2026—to ensure zero junk fees appear in any new lease executed after July 1.

Do not underestimate the risk. Illinois is actively enforcing junk fee restrictions through the Attorney General’s office and private litigation. A single class action lawsuit from tenants in your portfolio could cost $10,000–$50,000+ in legal fees and damages, even if you ultimately prevail. Prevention is vastly cheaper.

Next Steps: Move From Compliance Risk to Compliance Confidence

Prohibiting junk fees is a policy choice that benefits tenants and creates a level playing field for landlords who were already operating legally. For self-managing landlords, the immediate task is identification and remediation—a process best done systematically, not under pressure when new tenants are waiting to sign leases.

Start with your lease template audit this week. Identify prohibited fees by their line items. Calculate the revenue impact. Plan your rent adjustment strategy. Notify tenants 30 days before the change (for month-to-month leases) or at renewal (for fixed-term leases). Document the transition in writing. By the time July 1, 2026 arrives, your portfolio will be clean, your new tenants will sign compliant leases, and you will not face enforcement risk.