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Chicago Requires Relocation Assistance For Tenants Affected by Foreclosures

Wednesday, June 12, 2013
By Michael Bologna

CHICAGO--The Chicago City Council has enacted an ordinance requiring lenders and landlords taking control of foreclosed rental properties to provide tenants with either a rent-controlled lease or a $10,600 payment to assist with relocation.

By a vote of 45 to 4, the council June 5 endorsed the “Protecting Tenants in Foreclosed Rental Property Ordinance,’’ a tenant-friendly measure designed to minimize disruptions to families and neighborhoods affected by the ongoing foreclosure crisis sweeping Chicago. The measure, also known as the “Keep Chicago Renting Ordinance,’’ had the support of tenants rights groups, religious leaders, and community organizations.

Mayor Rahm Emanuel said the ordinance would serve as a backstop against the patterns of crime and neighborhood decay that frequently emerge when rental properties are vacated following a foreclosure.

“I applaud the members of the City Council for their vote today to pass an important ordinance that will protect Chicago renters in the event of foreclosures and ensure that communities are not ravaged by more vacant buildings,’’ Emanuel said in a statement. “This law is another important tool to ensure that all members … of our city--residents, community organizations, banks, and government--work together closely for the benefit of our communities.’’

Under the ordinance, owners of a foreclosed rental property would have 21 days to notify tenants of their rights under the ordinance. Owners could renew or extend a tenant's lease with an annual rent that does not exceed 102 percent of the current annual rent during the first 12 months. In cases where a lease is not being renewed or extended, the owner would be required to pay displaced tenants relocation assistance of $10,600.

The relocation assistance component of the ordinance had been controversial during the legislative process. The original ordinance, floated last summer, called for $12,000 in relocation assistance. Opposition from real estate and banking groups caused sponsors of the measure to lower that figure. 

Advocates for Ordinance

The Lawyers Committee for Better Housing was an aggressive advocate for the ordinance.

“The Keep Chicago Renting Ordinance would keep renters in their homes post-foreclosure, prevent the accumulation of vacant properties, and incentivize banks to maintain or relinquish real estate owned properties,’’ the committee said in a statement supporting the ordinance.

The committee released a report in April pointing to patterns of crime and community blight in Chicago during the foreclosure crisis. The report, Vacant Properties: Havens for Crime in a City Plagued by Violence, noted that nearly 52,000 apartment units, or 9 percent of Chicago's rental housing stock, went into foreclosure between 2009 and 2011.

In many cases, the foreclosures resulted in banks owning properties and evicting the tenants. The Lawyer's Committee said 90 percent of foreclosure auctions result in bank-owned properties. Following foreclosure, “banks systematically empty foreclosed buildings, leaving them vacant for months or years.’’

The report added that the resulting vacant properties contributed to an escalation of crime in many neighborhoods. Between 2005 and 2012, the Lawyers Committee said, criminal activity in abandoned buildings jumped 48 percent.


Full text of the ordinance can be found at http://chicago.legistar.com/LegislationDetail.aspx?ID=1156573&GUID=4F709387-96EE-4BD0-9950-C692DE714378&Options=Advanced&Search.

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