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

What Is SB 2979 and Why Illinois Banned Junk Fees

On June 3, 2024, Illinois Governor J.B. Pritzker signed Senate Bill 2979 into law, making Illinois one of the first states to comprehensively prohibit what tenant advocates call "junk fees" in residential rental agreements. The law takes effect on July 1, 2026, giving landlords nine months from now to audit their fee structures and update their leases.

SB 2979 targets fees that provide no real benefit to tenants and exist primarily as hidden revenue streams for landlords. Unlike security deposits (which are held and returned) or rent payments (which compensate for housing), junk fees are charged upfront, rarely refunded, and often duplicate costs already covered by other charges.

The legislative intent is clear: Illinois legislators found that rental fees had become increasingly opaque and unfair, particularly affecting lower-income renters who face cumulative charges that can exceed $1,000 before moving into a unit. The ban aligns with similar efforts in California (SB 611), New York, and Washington state.

Which Fees Does SB 2979 Actually Ban?

The statute itself (815 ILCS 505/2Z) does not provide an exhaustive list of banned fees. Instead, it uses a "per-act" definition: a fee is prohibited if it:

• Is charged to a tenant or prospective tenant
• Is not a security deposit, an advance payment of rent, or a pet deposit or pet fee (if permitted by law)
• Does not directly correspond to a specific, necessary cost actually incurred by the landlord

The key phrase is "directly correspond to a specific, necessary cost." This means you cannot charge a flat $50 "lease administration fee" unless you document that your actual administrative labor, software costs, or specific service for that tenant equals or exceeds $50.

Commonly Banned Fees Under SB 2979

Based on the statute's language and guidance from tenant advocacy organizations in Illinois, the following fees are presumptively banned unless you have itemized cost documentation:

Fee Type	Why It's Banned	Exception or Requirement
Application Fees	No specific cost basis; often collected from multiple applicants without corresponding labor	Banned entirely — tenant screening is a landlord's basic responsibility
Lease Renewal/Re-signing Fees	Renewal involves minimal landlord effort beyond printing; duplicates admin costs already paid	Banned entirely — lease renewal is routine property management
Pet Registration/Licensing Fees	Does not correspond to a direct cost to landlord; municipal licenses cost $5–$30, not $75–$150	Banned unless you itemize actual costs incurred (vet screening, municipal registration)
Administrative or Processing Fees	Vague label; no specific cost tied to individual tenant; covers normal landlord duties	Banned entirely — covered by rent payment
Document Preparation Fees	Modern leases are template-based; labor cost is minimal and not tenant-specific	Banned unless you hire an attorney for custom lease work (must itemize)
Move-In Inspection Fees	Illinois law requires habitability inspection; it's a landlord duty, not a tenant cost	Banned entirely
Late Payment/NSF Fees (Beyond Late Rent)	If not tied to actual NSF bank charges or collection costs, they are punitive, not compensatory	Allowed only if actual bank NSF charge or third-party collection fee incurred
Key Replacement/Lock-out Fees	Can be legitimate if tenant caused damage; but flat fees without documentation are banned	Allowed only if you itemize actual locksmith or replacement hardware costs
Amenity Reservation Fees	Typically no identifiable cost to landlord; single-family rentals rarely have amenities	Banned unless directly tied to amenity vendor cost (e.g., parking lot cleaning contractor)

Fees That Remain Permitted Under SB 2979

The following charges are explicitly exempt from the junk fee ban and may continue to be charged:

• Security Deposits: Fully refundable deposits held as assurance against damage or unpaid rent. Illinois law caps security deposits at one month's rent (or 1.5 months for buildings with 6+ units built before 1969). See 815 ILCS 505/2.
• Pet Deposits: Refundable deposits tied to pet damage. Illinois permits pet deposits up to one month's rent. Documented pet fees (for damages or services) are also permitted if they reflect actual costs.
• Rent Payments: The tenant's primary monthly payment for occupancy.
• Documented Service Charges: Fees that correspond to services actually provided and costs actually incurred by the landlord. Examples include trash removal, water/sewer paid by landlord, HOA fees, or parking in multi-unit complexes.
• Court Costs and Attorney Fees: If a tenant is sued for eviction or lease breach, actual court filing fees and attorney fees awarded by a court may be recovered (separate from junk fee restrictions).

The "Specific, Necessary Cost" Standard: How to Prove Your Fees Are Compliant

The compliance burden falls on the landlord. Under SB 2979, you must be prepared to prove that every fee charged directly corresponds to a specific, necessary cost you incur for that tenant. Vague justifications will not survive legal challenge.

What Constitutes Admissible Proof

Acceptable documentation includes:

• Itemized invoices from third-party vendors (e.g., credit reporting company charging $15 per applicant background check)
• Documented labor hours with hourly rate (e.g., "attorney review of lease = 0.5 hours × $150/hr = $75 charge")
• Municipal or government fees you actually paid (e.g., rental license registration)
• Specific, tenant-caused damage repair costs (with photos and receipt from contractor)
• Actual bank fees charged to your account (NSF fees, wire transfer fees)

Unacceptable justifications:

• "Administrative purposes" (vague; no specific cost)
• "Standard industry practice" (irrelevant under the statute)
• "General overhead" (not tenant-specific)
• "Lease compliance fee" (no identifiable service)
• Flat fees without cost documentation (e.g., "$50 renewal fee" charged to all tenants regardless of actual labor)

If a tenant or the Illinois Attorney General challenges your fee, you will be required to produce this documentation. Failure to do so will result in liability for the fee amount plus penalties.

When Does SB 2979 Apply? Timeline and Scope

Effective Date: July 1, 2026

SB 2979 becomes effective on July 1, 2026. However, the statute's application depends on when the lease is signed or renewed:

Lease Timeline	SB 2979 Applies?	Action Required
Leases signed before July 1, 2026	No (unless lease is renewed or modified after July 1)	No immediate action required; existing fee structures remain valid until lease renewal
Leases renewed or modified after July 1, 2026	Yes	Must comply with SB 2979 in renewal or amended lease
New leases signed on or after July 1, 2026	Yes	Must fully comply; cannot charge any junk fees

Critical note: A lease renewal is considered a new lease for purposes of SB 2979. If you renew any lease after July 1, 2026, that renewal must comply with the law, even if the original lease (signed before July 1) contained junk fees.

Geographic Scope

SB 2979 applies statewide to all residential rental agreements in Illinois, including single-family homes, multi-unit buildings, and mobile home lots. There are no municipal exemptions or rural carve-outs.

Penalties for Violating SB 2979

Violations of SB 2979 carry meaningful financial consequences. Under 815 ILCS 505/2Z, a landlord who charges a prohibited fee may face:

Civil Liability (Private Lawsuits)

Tenant can recover:

• The full amount of the junk fee charged
• Statutory damages of $100 to $1,000 per violation (court discretion based on severity and intent)
• Attorney fees and court costs

This means a single junk fee charge could result in total liability of $200–$2,000+ per tenant, depending on the court's assessment. If you manage 10 units and charged 10 tenants a $75 "renewal fee," your total exposure could exceed $10,000 in fees plus penalties plus attorney fees.

Administrative Enforcement

The Illinois Attorney General's Consumer Fraud Bureau can investigate and take action against landlords for systematic junk fee charging. Violations may be treated as unfair or deceptive practices under the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/2). Penalties can include:

• Cease-and-desist orders
• Civil penalties up to $50,000 per violation (for systematic violations across multiple tenants)
• Restitution to affected tenants
• Attorney fees for the state's investigation

Class Action Risk

Given the complexity and tenant-friendly nature of SB 2979, class actions by tenant rights organizations are likely. If you have charged hundreds or thousands of tenants junk fees over several years, you could face multi-year litigation and settlement exposure in the six-figure range.

Step-by-Step Compliance Checklist: What to Do Before July 1, 2026

You have nine months from now to audit your practices and update your leases. Follow this checklist:

Step 1: Audit Your Current Fee Structure (By November 2026)

• Review every lease in your portfolio and list all fees charged to tenants
• Categorize each fee as: (a) Security/Pet Deposit, (b) Rent, (c) Documented Service Cost, or (d) Junk Fee (banned)
• For any fee you consider compliant, document the cost basis. Create a spreadsheet with:
  • Fee name
  • Amount charged
  • Cost justification (vendor invoice, labor hours, government fee, etc.)
  • Lease pages where fee appears
• Identify any fees lacking documentation—these must be eliminated

Step 2: Revise Your Lease Template (By December 2026)

• Remove all provisions referencing banned fees (application fees, renewal fees, admin fees, etc.)
• For permitted fees with cost documentation, retain the provision but add explicit cost basis language:
  • Example (Good): "Pet registration fee: $35. This fee covers the cost of veterinary screening ($20) and municipal pet licensing ($15) incurred by Landlord for each pet."
  • Example (Bad): "Administrative pet fee: $50 per pet for lease compliance."
• Add a new clause: "Landlord represents that all fees charged under this lease correspond to specific costs actually incurred by Landlord and are compliant with Illinois law."
• Have an attorney review the revised lease to ensure full compliance

Step 3: Communicate with Current Tenants (By January 2026)

• Send written notice to all tenants explaining that junk fees will be eliminated effective July 1, 2026
• Clarify which fees (if any) will continue to apply and why
• If a tenant's lease renews before July 1, you may still charge junk fees under the existing lease, but make this clear to avoid confusion
• Create FAQ document addressing common questions

Step 4: Update Your Move-In Process (By February 2026)

• Remove application fees from your tenant screening process. (Screening is a landlord expense, not a tenant expense.)
• If you use a third-party tenant screening service, absorb that cost into your overall rental pricing or portfolio management costs
• Remove any "document preparation," "move-in inspection," or "lease administration" charges
• Keep only: rent, security deposit, pet deposit (if applicable), and any documented service charges

Step 5: Implement New Lease Language (Starting July 1, 2026)

• Immediately begin using your revised, compliant lease template for all new leases and renewals
• Include a signed acknowledgment that the tenant has received and understands all fees and charges
• Retain all documentation of cost basis for any permitted fees for at least three years

Practical Pricing Adjustments: How to Maintain Revenue Without Junk Fees

If you currently rely on junk fees to supplement rental income, you have legitimate alternatives that comply with SB 2979:

Option 1: Modest Rent Increase

If you were charging $300/year in junk fees across 10 units, increase rent by $2.50/month per unit. This is transparent, directly covered by the tenant fee-for-service exchange, and not subject to junk fee restrictions.

Option 2: Itemized Service Charges (If Legitimate)

If you provide genuine, documented services—trash removal, landscaping, pest control—charge tenants for the actual cost. This is permitted under SB 2979, provided you can prove the cost basis.

Option 3: Build Cost Into Portfolio Pricing

If you manage 25 units and previously collected $7,500/year in junk fees, absorb that $300/unit/year into your overall rent pricing. This is standard practice in competitive markets and is fully compliant.

FAQs: Common Questions About Illinois Junk Fee Ban

Q1: Can I charge a tenant for a credit report I run during screening?

A: No. Under SB 2979, application and screening fees are banned. The cost of running a credit report is a routine landlord business expense and must be absorbed by the landlord. Tenant screening is not a cost the tenant should bear—it is a necessary landlord function to ensure rent payment and property safety. Many landlords manage screening costs by factoring them into rent pricing or reserving a small percentage of rent for portfolio management.

Q2: What if my property management software automatically charges a $25 "lease renewal fee"? Am I liable?

A: Yes. You are responsible for all fees charged to tenants, regardless of whether they are automated through software. Immediately audit your payment system and disable the automatic renewal fee. If you have already charged tenants renewal fees after July 1, 2026, you face liability. Going forward, you must manually override any software-generated junk fees and ensure your platform is configured to comply with SB 2979. Consider using compliance-aware platforms like LeaseBase's lease operations tools that are designed for state-by-state fee restrictions.

Q3: Do pet deposits count as "junk fees"?

A: No. Pet deposits are explicitly exempt from the junk fee ban. Under Illinois law, you can charge a pet deposit up to one month's rent. However, pet registration or licensing fees are only permitted if you can document the actual cost of registration, screening, or licensing. A $75 flat pet fee with no documentation will likely be challenged as a junk fee.

Q4: Can I charge NSF or late payment fees?

A: It depends. If you charge a fee equal to the actual NSF fee your bank charged you, or if the fee reimburses you for a collection agency fee, the charge is permitted. However, flat $35 "NSF fees" or $50 "late fees" with no documented cost basis are junk fees and are banned. Illinois law on late fees also caps damages at the lesser of (a) actual costs incurred or (b) 5% of the monthly rent (see 815 ILCS 505/2R). Be conservative and document all charges.

Q5: What if I still have leases in effect after July 1, 2026 that include junk fees?

A: If the lease was signed before July 1, 2026 and is not renewed or modified after that date, you may technically still charge fees under the original lease. However, this creates legal risk. The safer approach is to voluntarily eliminate junk fees from all leases going forward, even existing ones, to signal good faith compliance and avoid tenant litigation. When an existing lease is renewed or amended after July 1, the renewal must comply with SB 2979.

Why Compliance Matters Now

Tenant advocacy organizations in Illinois are already preparing for July 1, 2026. The Illinois Tenants Union, legal aid groups, and plaintiffs' attorneys are monitoring landlord practices and will likely file test cases and class actions in the first months after the effective date. Landlords who have not remedied their fee structures by then will face:

• Individual tenant lawsuits
• Attorney General enforcement action
• Negative publicity and reputation damage
• Difficulty attracting tenants

Self-managing landlords who use LeaseBase's compliance engine have real-time visibility into state-specific fee restrictions and automatic alerts when laws change. This eliminates guesswork and ensures leases are updated before tenants sign.

Next Steps: Prepare Your Portfolio

Don't wait until June 2026 to audit your fees. Begin now:

1. Review your current leases and list every fee charged
2. Document the cost basis for each fee you intend to keep
3. Consult with an Illinois attorney to ensure your revised fee structure is defensible
4. Update your lease template and remove all banned fees
5. Notify current tenants of upcoming changes
6. Configure your payment and lease systems to prevent junk fee charges after July 1, 2026

For self-managing landlords, this is the ideal time to centralize your lease language, document all costs, and build a defensible record of compliance. Platforms that integrate lease management with fee tracking will make this audit easier and faster than spreadsheets or paper files.

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Disclaimer: This article is for informational purposes only and does not constitute legal advice. Illinois junk fee law is complex and subject to interpretation by courts and the Attorney General. Consult a qualified Illinois attorney to review your specific lease language and fee structure before July 1, 2026. LeaseBase is not a law firm and cannot provide legal advice.