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

What Is SB 2979 and Why It Matters to Illinois Landlords

On June 28, 2024, Illinois Governor J.B. Pritzker signed Senate Bill 2979 into law. Effective July 1, 2026, this statute fundamentally changes how Illinois landlords can structure fees in residential leases. The law doesn’t ban all fees—it bans junk fees: charges that either lack transparent justification or don’t correspond to actual landlord costs.

For self-managing landlords with 2-75 units, this is a critical compliance deadline. Unlike some states that grandfather existing leases, Illinois applies SB 2979 to all renewals and new leases executed after the effective date. Violations expose you to individual lawsuits by tenants, attorney fees, and damages that can quickly exceed the junk fees you tried to collect.

The law addresses a specific consumer harm: landlords systematically charging tenants for administrative tasks that cost virtually nothing but generate hundreds of dollars per lease. Illinois lawmakers framed junk fees as a consumer protection issue similar to overdraft fees in banking or hidden resort fees in hospitality.

Which Fees Does SB 2979 Explicitly Prohibit?

SB 2979 defines prohibited fees with specificity. The statute bans charges for:

Application and Screening Fees

Prohibited: Application processing fees, lease application fees, application review fees, or tenant screening fees that exceed your actual documented costs for:

• Credit report pulls (typically $15–$25 per report)
• Criminal background checks (typically $20–$40)
• Eviction history searches (typically $10–$30 per state)

The key word is “documented costs.” If you charge a $75 application fee but your screening vendor costs $35, the $40 difference is a prohibited junk fee. You cannot charge a flat $50 “processing” fee to cover your time reviewing applications—Illinois law does not allow bundled labor charges masked as screening costs.

Lease Administrative Fees

Prohibited fees include:

• Lease renewal fees: Any charge to renew an existing lease document
• Lease modification fees: Any charge to amend lease terms (e.g., adding a roommate, changing lease end date)
• Lease transfer fees: Any charge to transfer a lease to another tenant or assign rights
• Document preparation fees: Charges for drafting, printing, or executing lease documents
• Lease recordation fees: Fees to file or record leases (residential leases are not typically recorded, but if you attempted this practice, it’s now banned)
• Administrative fees: Catchall category—any fee labeled “administrative,” “processing,” “handling,” or similar that doesn’t correspond to a specific, documented service cost

Pet-Related Junk Fees

Prohibited: Pet screening, pet application, pet processing, or pet registration fees.

Allowed: Non-refundable pet deposits, refundable pet fees tied to actual damage caused, and reasonable pet rent (monthly charges) for tenants with pets. However, the pet rent must be consistent with market rates and cannot be a disguised pet application fee.

Other Prohibited Categories

Any charge not directly traceable to actual, documented costs for:

• Credit/background check verification
• Utility deposits or setup fees (unless they cover actual utility company costs)
• Move-in/move-out inspection fees (unless they reflect actual costs for a professional third-party inspector hired specifically for that lease)
• “Resident services” or “amenity fees” unrelated to tangible property improvements

What Fees Can Landlords Still Charge?

SB 2979 does not prohibit these charges when documented and disclosed clearly:

Fee Type	Status Under SB 2979	Compliance Notes
Security Deposit	Allowed	Subject to Illinois security deposit law (ILCS 765/710 et seq.); must be held in trust account; cannot exceed two months’ rent
Last Month’s Rent	Allowed	Traditional rent prepayment; not considered a fee under SB 2979
Pet Deposit	Allowed	Refundable; used to cover actual pet damage; must be tracked separately from security deposit
Pet Rent (Monthly)	Allowed	Non-refundable recurring charge for tenants with pets; must be clearly labeled and disclosed in lease
Late Rent Fee	Allowed (with limits)	Illinois law caps late fees at 5% of monthly rent or $5, whichever is greater (ILCS 765/505)
Utility Deposit	Allowed (when justified)	Only if it covers actual utility company deposit requirements; cannot be a junk fee mask
Actual Service Charges	Allowed (documented)	Maintenance calls, emergency repairs, locks rekeyed for tenant-caused damage, or actual third-party vendor costs must be itemized and tied to receipts
Returned Check Fee	Questionable	SB 2979 language is ambiguous; recommend limiting to actual bank fees incurred or avoid entirely

Understanding the Statute’s Text: What Counts as a “Junk Fee”?

SB 2979 adds Section 5-5 to the Illinois Residential Tenants’ Rights Act (ILCS 765/5-5). The statute defines a prohibited charge as any fee in a residential lease that:

“does not represent the actual, direct cost to the lessor of providing a specific service or administering a specific cost incurred in connection with the rental of the dwelling unit.”

This “actual, direct cost” standard is the compliance linchpin. It means:

• Overhead is not recoverable. You cannot charge a $25 “lease administration fee” to cover your general office costs, even if you genuinely spend time on leases. The fee must correspond to a specific, incremental cost triggered by that particular lease.
• Third-party costs are recoverable if documented. If you hire a credit reporting agency and they charge $35 per applicant, you may pass that cost to the applicant. You cannot mark it up or bundle it with other costs.
• Bundled or “miscellaneous” fees are prohibited. A catchall “processing fee” that covers application review, document preparation, and lease execution is a junk fee, even if the individual components theoretically cost money.
• Preventive or speculative charges are prohibited. You cannot charge a “renewal coordination fee” because you might need to renew the lease someday. Charges must reflect actual, incurred costs.

Penalties for Violating SB 2979

Illinois law provides steep penalties for junk fee violations:

Civil Liability

Under ILCS 765/5-5, a tenant harmed by a junk fee charge can sue directly without filing a complaint with a government agency. Remedies include:

• Refund of the junk fee (actual damages)
• Civil penalty of up to $1,000 per violation (separate from the refund)
• Attorney fees and court costs (incurred by the tenant)
• Treble (triple) damages if the violation is found to be willful or in bad faith

Importantly, each fee charged to each tenant is a separate violation. If you charged three tenants a $50 “lease renewal fee” in violation of the law, you face three separate $1,000+ penalty exposures, plus attorney fees.

Regulatory Enforcement

The Illinois Attorney General and local state’s attorneys can also pursue civil actions against landlords engaging in a pattern of junk fee violations, which may trigger:

• Injunctions preventing future violations
• Larger damages if the violations constitute unfair or deceptive practices
• Public enforcement actions that damage landlord reputation

Real-World Cost Example

Suppose you manage 20 units in Chicago. You collect a $75 “lease renewal fee” when tenants renew. If three tenants renew in 2026 and sue:

• Three $75 refunds = $225
• Three violations × $1,000 penalty = $3,000
• Tenant attorney fees (often $2,000–$5,000 per case) = $6,000–$15,000
• Total exposure: $9,225–$18,225 for collecting $225

That’s why compliance now is cheaper than litigation later.

Timeline: What You Must Do Before July 1, 2026

Deadline	Action Item	Compliance Risk if Missed
By September 2025	Audit all lease templates and fee schedules for prohibited charges	Discover junk fees in your standard forms late; risk charging fees in new leases signed in fall 2025
By November 2025	Remove prohibited fee language from all templates; document actual costs for any allowed fees	No time to revise before renewals begin in spring/summer 2026
By January 2026	Communicate with tenants about upcoming law; update move-in/move-out procedures if fees are affected	Tenants surprised by fee removal; perceived as bait-and-switch; relationship damage
By June 15, 2026	Implement compliant fee structure in all systems; train staff; update tenant communications	July 1 arrives; you’re still charging prohibited fees to new tenants
July 1, 2026	SB 2979 effective — all new leases and renewals must comply	Any junk fees charged after this date trigger immediate private right of action

Compliance Audit: Step-by-Step Checklist for Landlords

Step 1: Review Your Current Lease Template

Print or pull up your standard lease document. Search for these red-flag terms:

• “Application fee” or “application processing fee”
• “Lease renewal fee” or “lease extension fee”
• “Administrative fee” or “processing fee”
• “Document preparation fee” or “lease preparation fee”
• “Pet screening” or “pet application fee”
• “Tenant screening fee” (beyond documented background check costs)
• “Lease modification fee” or “lease amendment fee”
• “Move-in inspection fee” or “move-out inspection fee”
• “Returned check fee” or “NSF fee” (use caution—may be unallowable)
• Any fee labeled “miscellaneous,” “facility,” or “resident services”

Step 2: Categorize Remaining Fees by Allowed Status

For each fee in your lease, ask:

• Is this fee explicitly prohibited by SB 2979? If yes, delete it.
• Does this fee represent an actual, direct cost I incur? If yes and you can document it, you may keep it but must disclose the cost basis.
• Am I charging this fee proactively to cover potential future costs? If yes, it’s likely a junk fee—remove it.

Step 3: Document Cost Basis for Allowed Fees

For fees you’re keeping (e.g., background check fees), create a simple cost sheet:

• Fee Name: Background Check
• Actual Cost: $35 (vendor invoice from XYZ Screening Co.)
• Charge to Tenant: $35 (no markup)
• Frequency: Per application
• Documentation: Annual vendor contract attached

Keep vendor invoices and contracts on file. If a tenant disputes a fee, you must produce documentation proving the cost is real and not padded.

Step 4: Revise Lease Language

Bad (junk fee language): “Tenant shall pay a $50 lease renewal fee upon execution of lease renewal.”

Better (cost-justified): “If Tenant requests a lease renewal, Landlord shall charge the actual cost of document preparation and execution, not to exceed $30, provided such costs are documented and invoiced separately.”

Best (compliant): Remove the renewal fee entirely. No lease renewal is required in Illinois—tenants transitioning to a new lease term can do so via a written notice of non-termination under ILCS 765/130. Avoid the fee to avoid disputes.

Step 5: Update Tenant-Facing Fee Schedules

If you provide a separate “Fees and Charges” schedule with your lease application, revise it to remove all prohibited items. For any remaining fees, include this language:

“The following fees represent actual, direct costs incurred by Landlord. Fees are subject to documentation upon request.”

Key Distinctions: What’s Allowed vs. Prohibited

Background Checks: Allowed (With Documentation)

Allowed: Charging a tenant the cost of a credit report ($20–$30) and criminal background check ($25–$40) if you can show the vendor invoice.

Prohibited: Charging a flat $75 “tenant screening fee” that bundles the above and includes undefined “application review” time.

Pet Policies: Nuanced

Prohibited: Pet screening fee, pet application fee, pet registration fee, pet processing fee.

Allowed: Pet deposit (refundable, used to cover actual damage), pet rent (non-refundable monthly charge), pet fee tied to actual damages caused.

Trap: Don’t relabel a pet screening fee as a “pet deposit.” The form of the charge matters less than its substance. If the charge is paid upfront and non-refundable for a service (screening) rather than damage remediation, it’s prohibited.

Maintenance and Repairs: Allowed (With Invoices)

Allowed: Charging a tenant for maintenance called due to tenant damage (e.g., rekeyed lock, patched wall, replaced faucet). You must provide itemized invoices showing:

• Description of work
• Cost of materials
• Cost of labor (if outsourced to a vendor)
• Date of service

Prohibited: Flat “maintenance visit fee” or “repair coordination fee” charged without itemization or invoices.

State-by-State Junk Fee Laws: Is Illinois Alone?

No. Illinois follows a national trend. As of 2026, several states and cities have banned junk fees:

• California (SB 611, effective 2022): Bans most of the same fees Illinois does; penalties up to $1,000 per violation
• New York (various, 2024+): Apartment associations challenged some fee bans; ongoing litigation
• Federal: The Biden administration’s CFPB (Consumer Financial Protection Bureau) has issued guidance against “junk fees” in credit products; housing may follow

If you manage properties in multiple states, junk fee compliance is increasingly table-stakes. Illinois is not an outlier; it’s a sign of the direction rental housing law is moving.

Frequently Asked Questions

Q: Can I charge an application fee if the tenant does not sign a lease?

A: Only if the fee represents documented costs for background checks, credit reports, or eviction history searches that you actually purchased. You cannot charge a non-refundable “application processing fee” simply for reviewing an application, even if the applicant does not move in. The cost must be incurred. If you run a $35 background check and the applicant is rejected, you may charge the applicant $35—but no more.

Q: What about fees I charged before July 1, 2026?

A: SB 2979 does not retroactively refund fees charged in prior years. However, if a tenant sues and alleges bad faith or willful violation, treble damages (3x) may apply, which could incentivize settlements covering past fees. Focus on compliance going forward. If an existing tenant on an active lease complains about a junk fee collected in 2024, consult an attorney about settlement options.

Q: Does SB 2979 cap security deposits or pet deposits?

A: No. SB 2979 addresses fees, not deposits. Illinois law separately caps security deposits at two months’ rent (ILCS 765/710). Pet deposits are not separately capped but must be refundable and tied to actual damage. Neither is considered a “junk fee” under SB 2979.

Q: If I have a property management company collecting fees on my behalf, am I liable?

A: Yes. As the landlord, you remain liable for all fees charged under your lease or by your agent. SB 2979 assigns liability to the “lessor,” which is you. Ensure your property manager or leasing agent is trained on the law and that your management agreement explicitly requires junk fee compliance. Indemnification clauses may help shift costs, but they don’t shield you from tenant lawsuits.

Q: Can I ask tenants to pay for background checks if I provide the screening service?

A: Only to the extent of your actual, documented cost. If you use a tenant screening vendor and they charge you $40 per report, you may charge the tenant $40. You cannot charge a markup or a “service fee” for arranging the report. If you conduct your own background check (manually reviewing court records), you cannot charge a fee—the manual time does not constitute a recoverable “direct cost” under SB 2979’s strict interpretation.

Tools and Systems for Compliance

Managing junk fee compliance across multiple leases is easier with centralized systems. LeaseBase’s Lease Operations module allows you to store lease templates with approved fee schedules and flag prohibited language before leases are executed. The Compliance Engine alerts you to state-law changes like SB 2979 so you’re aware of deadlines ahead of time.

For documentation, use Portfolio Management to attach vendor invoices and cost justifications to each property’s fee schedule. This creates an auditable record if disputes arise.

Communication Strategy: Notifying Tenants

If you’ve been charging junk fees and are now removing them, communicate proactively:

Sample Tenant Letter (January 2026):

“Dear Tenant,

Effective July 1, 2026, Illinois law will change how we collect certain fees. We are writing to inform you that effective with your next lease renewal or move-in, we will no longer charge [list fees: lease renewal fee, application processing fee, etc.]. This change reflects new state legislation aimed at making housing more affordable.

Your current lease terms remain unchanged. These new rules apply only to new leases signed or renewals executed after July 1, 2026.

If you have questions, please contact us at [phone/email].

Sincerely,
[Your Name]”

This approach builds goodwill and reduces surprise or resentment when fees disappear.

Final Compliance Checklist Before July 1, 2026

• [ ] Reviewed all lease templates for prohibited fees
• [ ] Deleted or revised all junk fee language
• [ ] Documented actual costs for any remaining fees (vendor invoices, contracts)
• [ ] Updated fee schedules and tenant documents
• [ ] Trained staff on SB 2979 compliance
• [ ] Notified existing tenants of upcoming changes
• [ ] Tested revised lease and fee systems with a test case
• [ ] Consulted an Illinois real estate attorney for lease-specific questions
• [ ] Scheduled a reminder for June 15, 2026, to finalize implementation

Bottom Line

SB 2979 is not optional, and it’s not negotiable. Illinois has signaled that junk fees harm tenants and will not be tolerated. Landlords who charge prohibited fees after July 1, 2026, face immediate liability—not years down the road when enforcement happens, but when the first tenant sues.

The financial math is stark: removing a $50 junk fee now avoids $1,000+ in penalties and attorney fees later. Audit your leases today, document your allowed fees, and communicate changes to tenants. Compliance is cheaper than litigation, and reputation damage worse than revenue loss.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified Illinois real estate attorney for guidance specific to your situation, lease language, and fee practices. Junk fee law is evolving; laws and interpretations may change. Seek professional counsel before finalizing lease revisions or fee policies.