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

What Is SB 2979 and Why Does It Matter to Illinois Landlords?

In 2024, Illinois passed Senate Bill 2979 (also referenced as Public Act 103-0858), which prohibits landlords from charging "junk fees" in residential rental agreements. The law takes effect on July 1, 2026—giving self-managing landlords approximately nine months to audit leases, update policies, and remove prohibited charges.

This is not theoretical compliance. SB 2979 includes enforcement teeth: violations trigger penalties up to $2,500 per violation under the Illinois Consumer Fraud Act (ICFA), 815 ILCS 505/2, plus attorney's fees and costs if a tenant sues. Unlike some state laws that rely on regulatory agency enforcement, SB 2979 creates a private right of action, meaning tenants can bring civil claims without waiting for government action.

The statute reflects a nationwide trend. California banned junk fees in 2022 (SB 611, effective January 1, 2023), and other states followed. Illinois joined this movement to protect tenants from hidden, unjustified charges that inflate the true cost of renting.

For self-managing landlords operating 2-75 units, the stakes are clear: identify every fee in your lease, justify it with actual costs or services, or remove it. Ignorance is not a defense.

What Fees Does SB 2979 Prohibit?

SB 2979 uses functional language rather than a narrow list. The law prohibits any fee that is not:

• For an actual service rendered to the tenant, or
• For a reasonable cost actually incurred by the landlord

The burden is on the landlord to prove the fee meets one of these tests. This creates a compliance challenge: you cannot charge a fee simply because it is industry practice or because other landlords charge it.

Explicitly Prohibited Fees Under SB 2979

Illinois Attorney General guidance and statutory language clarify that the following fees are junk fees and illegal as of July 1, 2026:

Fee Type	Why It's Prohibited	Compliance Action
Application Processing Fee	No actual service performed for a fee; tenant screening is a landlord's operational cost	Remove from lease; absorb as landlord cost or roll into move-in charges (if transparent)
Administrative Fee	Vague charge with no specified service; used as catch-all padding	Delete entirely; replace with itemized, specific charges if costs are real
Lease Renewal/Preparation Fee	Lease renewal is administrative maintenance, not a service to tenant	Remove; cannot charge tenant for routine lease administration
Document Preparation/Copying Fee	Digital copies cost minimal; paper copies are nominal; used to inflate revenue	Remove unless charge reflects extraordinary request outside normal landlord duties
Tenant Screening/Credit Check Fee	Landlord screens tenants for own protection, not as a service; tenant does not request screening	Remove; cost of tenant vetting belongs to landlord, not tenant
Late Payment Processing Fee	Separate from statutory late fees; used to double-charge late payers	Remove; use only statutory late fees (5% of rent or $5, whichever is greater, per 735 ILCS 5/9-217)
Move-In/Move-Out Inspection Fee	Landlord inspects to protect property; not a service rendered to tenant	Remove; inspections are landlord operational costs
Returned Check/NSF Fee (beyond actual cost)	Banks charge $25-35; landlords cannot inflate to $50+ as profit	Cap at actual bank charge; itemize cost in lease if charged
Utility Setup/Transfer Fee	Tenant is responsible for utility setup; landlord does not incur cost	Remove; tenant contacts utilities directly

Fees That Remain Legal Under SB 2979

SB 2979 does not ban all fees. Landlords can still charge for services actually rendered or costs actually incurred. Examples of legal fees include:

• Rent — the primary charge for occupancy
• Late fees — up to 5% of monthly rent or $5, whichever is greater (735 ILCS 5/9-217), if lease discloses the charge and reason
• Utilities and utility pass-throughs — if tenant is responsible per lease and landlord provides documentation
• Actual repair or maintenance costs — if tenant caused damage and landlord itemizes the cost (e.g., "drywall repair: $400")
• Reasonable returned check charges — limited to landlord's actual bank fee (typically $25-35)
• Pet deposits or pet fees — if pet damage is documented and charge relates to actual damage or cleaning (not prohibited under SB 2979, but subject to separate pet deposit law, 735 ILCS 5/9-101.5)
• Parking fees — if tenant elects to use additional parking and pays per space

The key: every fee must be tied to a specific, real service or cost. Vague language ("administrative costs," "processing") will not withstand scrutiny.

Compliance Requirements: What Landlords Must Do by July 1, 2026

Step 1: Audit Your Current Lease (By December 2026)

Start immediately. Review every single fee clause in your standard lease agreement. For each fee, ask:

• What service am I providing to the tenant?
• Can I document the actual cost incurred?
• Is this fee a necessity for the tenant's occupancy, or something only the landlord benefits from?
• Would a reasonable person view this as a hidden charge used to inflate rent?

If the answer is unclear, the fee should be removed.

Step 2: Amend Leases Before the July 1, 2026 Effective Date

SB 2979 contains no grandfather clause. Even if a tenant signed a lease with junk fees before July 1, 2026, the law applies immediately upon enactment. You cannot continue charging prohibited fees under old lease terms.

For existing leases:

• Stop collecting junk fees immediately after July 1, 2026
• Do not charge them when lease renews
• Consider refunding junk fees collected from existing tenants to avoid legal exposure

For new leases signed after July 1, 2026, use the updated lease template with prohibited fees removed.

Step 3: Update Lease Templates and Online Rental Materials

If you use online rental platforms, property listing sites, or tenant portals, remove all references to junk fees. Screenshots, PDFs, and cached versions of your lease can become evidence in litigation. Clean them all up.

For LeaseBase users managing lease documents via lease operations, audit your stored templates and sync updates across all properties to ensure consistency and compliance.

Step 4: Document Your Compliance Process

Keep records showing:

• Date you reviewed your lease for compliance
• Fees you identified as prohibited
• Date you removed them
• Updated lease template effective date

This documentation demonstrates good-faith compliance if a tenant later challenges a charge. It's not a complete defense, but it shows you acted in response to the law.

Penalties and Enforcement Under SB 2979

Statutory Penalties

Violations of SB 2979 are treated as violations of the Illinois Consumer Fraud Act (ICFA), 815 ILCS 505/2. This creates multiple liability pathways:

Enforcement Mechanism	Penalty Range	Who Enforces
Per-Violation Civil Penalty	Up to $2,500 per violation	Illinois Attorney General or tenant lawsuit
Private Right of Action	Actual damages + Attorney's fees + Costs	Tenant suing landlord directly
Class Action Exposure	Multiplied across all affected tenants	Tenant attorneys/class action firms

What Counts as One "Violation"?

A single prohibited fee charged to one tenant in one month = one violation. If you charged a $75 application processing fee to 20 tenants in 2024, and SB 2979 applied retroactively or was enforced, that could be 20 separate violations at $2,500 each = $50,000 in liability.

Attorneys fees compound exposure. If a tenant sues for $150 in junk fees and wins, the court may order you to pay the tenant's attorney $3,000-5,000 in fees. Plaintiff attorneys know this and actively recruit clients.

Attorney General Enforcement

Illinois Attorney General Kwame Raoul's office has prioritized consumer protection. The Attorney General can:

• Issue cease-and-desist orders requiring immediate fee removal
• Seek restitution for affected tenants
• Pursue injunctive relief (court orders)
• File suit in civil court under ICFA

The Attorney General's office is not passive. If a tenant complains or a news outlet reports on a landlord's junk fees, an investigation often follows.

SB 2979 vs. Late Fees and Statutory Charges

Late Fees Are Not Junk Fees (If Compliant)

Illinois law allows landlords to charge late fees under 735 ILCS 5/9-217. The statutory limit is 5% of monthly rent or $5, whichever is greater. This is a legitimate fee for an actual service (rent collection and processing).

Late fees and SB 2979 can coexist, but late fees must meet these requirements:

• Lease must explicitly disclose the late fee amount or percentage
• Lease must state the date rent is considered late (typically 5 days after due date)
• Fee cannot exceed statutory maximum (5% of rent or $5)
• Fee cannot be charged until rent is actually late per lease terms

If your lease charges a $50 late fee on $1,000 rent (5%) and includes proper disclosure, it's legal. If it charges $100, it violates both SB 2979 (junk fee) and statutory late fee law.

Returned Check Fees Must Be Tied to Actual Cost

Under SB 2979, you can charge a returned check fee only if it reflects the actual cost your bank charged. If your bank charges $30 for a returned check, you can pass that $30 to the tenant. You cannot charge $50 as "markup."

Document the charge: include in lease and on any notice to tenant the specific amount and that it equals your bank's NSF fee.

Step-by-Step Compliance Checklist for Illinois Landlords

By December 2026 (9 months to act):

1. Print or pull up your current standard lease agreement
2. Highlight every fee mentioned in the lease (search terms: "fee," "charge," "cost," "payment," "deposit")
3. For each fee, document:
   • Fee name and amount
   • The service provided or cost incurred
   • Whether the tenant directly benefits from this service
   • Whether you can defend the charge in court
4. Remove or rewrite any fee that fails the "actual service/cost" test
5. For legitimate fees, ensure lease language is specific and transparent (not vague)
6. Update your lease template and all related documents (move-in forms, application forms, renewal notices)
7. If using a lease software or template site, delete old versions or mark them "compliant"
8. Train yourself and any staff on which fees are prohibited so you don't accidentally charge them after July 1
9. Communicate with existing tenants: consider notifying them of fee removal in renewal notices or payment reminders
10. Create a written record of your compliance process (date, fees removed, new lease effective date)

After July 1, 2026 (Ongoing Compliance):

1. Use only the updated, compliant lease for all new leases
2. Never charge fees prohibited by SB 2979, even if tenant agrees or lease pre-dates the law
3. If tenant questions a fee, explain what service it covers or refund it immediately
4. Keep records of all fees charged, with documentation of services or costs
5. Monitor for legal updates; Illinois courts may issue guidance on borderline fees

Gray Areas: Fees That May Be Challenged

Parking Fees

If a tenant must pay extra for parking and has the option to decline, the fee is likely legal (it's payment for a specific amenity). If parking is mandatory and charged on top of rent to all tenants, it may be recharacterized as a junk fee hiding the true rent. Document whether parking is optional or included in the unit.

Pet Deposits vs. Pet Fees

Illinois law (735 ILCS 5/9-101.5) allows non-refundable pet fees if documented; it also allows refundable pet deposits for damage. SB 2979 doesn't ban these, but the charge must be reasonable and tied to actual pet-related costs or damage. A pet fee with no description ("$50 pet fee") may be challenged as a junk fee. Instead, use clear language: "Pet fee (non-refundable): $50 for carpet treatment and odor control" or "Pet deposit (refundable): $300 for potential damage."

Utility Setup or Reimbursement Charges

If the lease says the tenant is responsible for setting up their own utilities (standard practice), charging a "utility setup fee" is a junk fee—the tenant does the work, not you. However, if you, as a landlord, actually set up a utility account on behalf of a tenant at their request and absorb a setup charge, you could arguably pass that cost through. Document it: "Tenant-requested utility setup at 123 Main St: Electric company setup fee $85 (reimbursed to landlord)." This is defensible; the practice of discouraging it via vague "fees" is not.

How to Communicate Fee Removal to Tenants

When you stop charging junk fees, don't hide it. Transparency builds trust and reduces disputes. Consider this language in a renewal notice or email:

"Effective [date], we are removing the [fee name] charge from your lease in compliance with Illinois Senate Bill 2979. This fee is no longer permitted under state law. Your rent will decrease by $[amount] per [period]. We appreciate your tenancy."

This approach:

• Shows legal compliance, not financial burden on the landlord
• Makes tenants more likely to renew
• Provides evidence you acted in good faith if later challenged
• Prevents surprise disputes if a tenant discovers the fee was removed

Integration With Lease and Compliance Management

For self-managing landlords, tracking compliance across multiple properties is complex. A lease operations system can centralize lease templates, flag prohibited language, and track effective dates across your portfolio.

LeaseBase's compliance engine identifies state and local rule changes, alerts you to fee restrictions, and helps audit your current documents against updated law. Rather than manually reviewing 20 leases across 5 properties, the system does the comparison and flags issues.

For rent collection, accurate fee tracking also matters. If you charge late fees, a system that separates rent from fees ensures transparency and simplifies accounting when disputed.

Frequently Asked Questions About SB 2979

Q: If I charged junk fees before July 1, 2026, can tenants sue me retroactively?

SB 2979 itself does not have an explicit retroactive application clause, so violations occurring before July 1, 2026 likely cannot be prosecuted under SB 2979. However, tenants might have remedies under the broader Illinois Consumer Fraud Act (ICFA) if the fee was unlawful under existing law. Illinois courts have sometimes applied consumer protection statutes retroactively. The safest approach: voluntarily refund junk fees collected in good faith before July 1, 2026, to avoid legal exposure and goodwill damage. Document the refund as a "compliance correction," not an admission of liability.

Q: Does SB 2979 apply to commercial leases or only residential?

SB 2979 applies specifically to residential rental agreements. Commercial leases are generally not covered. However, mixed-use properties (e.g., apartment building with ground-floor retail) should have separate lease documents clearly distinguishing residential from commercial to avoid disputes over applicability.

Q: Can I require tenants to waive their SB 2979 rights in the lease?

No. SB 2979 is a consumer protection statute that creates rights tenants cannot contract away. Any lease clause purporting to waive compliance is void. Do not include language like "tenant acknowledges and waives claims under SB 2979." This only invites litigation.

Q: If a tenant and I agree to a fee off the books, does SB 2979 still apply?

Yes. SB 2979 prohibits the charge itself, not just written lease clauses. An oral agreement or side deal to charge a junk fee still violates the law. The fact that both parties consented is irrelevant to statutory compliance. Do not charge prohibited fees under any circumstances.

Q: How do I know if a fee I charge is a "junk fee" or a legitimate pass-through cost?

Apply this test: If the service is something the tenant can refuse or opt out of, and you provide it to benefit the tenant (not yourself), it's likely legal. If the service is something you (the landlord) provide for your own protection or operational needs, and you're simply passing the cost to the tenant, it's likely a junk fee. Example: A tenant-optional premium lock upgrade ("tenant elects smart lock upgrade: +$50/month") is legitimate. A mandatory move-in inspection fee ("inspection fee: $100") is a junk fee because inspections protect your property, not benefit the tenant. When in doubt, remove it.

Q: Can I charge a fee to have a tenant sign an updated lease that removes junk fees?

Absolutely not. Updating a lease to comply with state law is not a service you provide to the tenant; it's your legal obligation. Any fee to sign a compliant lease is itself a junk fee. Never charge for lease amendments required by law.

Conclusion: Act Now to Avoid Liability

SB 2979 is not a future issue—it's a 2026 deadline with real penalties. Nine months may sound like enough time, but delays compound:

• If you don't audit your lease until June 2026, there's no buffer for complications
• If you have 50 tenants on existing leases, notifying each of fee removal takes time
• If your lease is on an online platform, cached versions linger after updates

The math is simple: Audit your lease in December 2026. Remove junk fees by January 2027. Sleep soundly knowing you're compliant.

Self-managing landlords who use systematic, documented processes avoid legal surprises. Document your compliance audit. Keep records of fee removal. Update your templates. Then monitor for updates; Illinois courts may clarify borderline issues in 2027-2028.

For landlords managing multiple properties, LeaseBase's compliance platform reduces manual audit work and ensures consistency across your portfolio. Rather than reviewing each lease manually, the system flags prohibited language and tracks effective dates, freeing you to focus on tenancy management.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance specific to your situation. Compliance requirements vary by property location and individual circumstances. A licensed Illinois real estate attorney can review your specific leases and provide tailored guidance on SB 2979 compliance.