Illinois Property Management Regulations: Complete Compliance Guide

Illinois property management operates under strict licensing requirements and comprehensive landlord-tenant laws. Whether managing a single rental or a large portfolio, understanding Illinois property management regulations is essential to avoid penalties, maintain compliance, and protect your business.

This guide covers licensing requirements, security deposit laws, eviction processes, Chicago-specific regulations (RLTO), and compliance strategies for Illinois property managers.

Quick Facts:

• License Required: Yes (with limited exceptions)
• Governing Body: Illinois Department of Financial and Professional Regulation (IDFPR)
• License Type Needed: Real Estate Broker or Leasing Agent
• Total Initial Cost: $800-$1,200
• Pre-License Education: 75 hours (broker) or 15 hours (leasing agent)
• Exam Required: Yes (state + national portions for broker)
• Renewal Period: Every 2 years
• Continuing Education: 12 hours per cycle
• Penalty for Unlicensed Activity: Up to $25,000 per violation

Who Needs a Property Management License in Illinois?

Activities Requiring a License

Under Illinois Real Estate License Act (225 ILCS 454), you need a license to perform these activities for compensation:

Activity	License Required	Legal Reference
Negotiating lease terms	✓ Yes	225 ILCS 454
Executing leases	✓ Yes	225 ILCS 454
Showing rental properties	✓ Yes	225 ILCS 454
Collecting rent for others	✓ Yes	225 ILCS 454
Handling security deposits	✓ Yes	225 ILCS 454
Advertising rental properties	✓ Yes	225 ILCS 454
Screening tenant applications	✓ Yes	225 ILCS 454
Marketing rental properties	✓ Yes	225 ILCS 454

Important: There is NO separate “property management license” in Illinois. Property managers must hold a real estate broker license or residential leasing agent license.

License Types for Property Managers

License Type	What You Can Do	Requirements	Best For
Real Estate Broker	Full property management independently	75 hrs education + exam	Operating PM business
Managing Broker	Supervise other brokers, run office	Broker license 2+ years + 45 hrs education	Senior PM professionals
Residential Leasing Agent	Residential leasing ONLY	15 hrs education + exam	Leasing specialists

Exemptions: Who Doesn’t Need a License

Illinois law provides limited exemptions:

Exemption	Requirements	Strict Limitations
Property Owner	Managing own property	No compensation from third parties
On-Site Resident Manager	Single property, leasing only	Must live on-site; cannot negotiate terms for multiple owners
Licensed Attorney	Acting within legal practice	Must be licensed Illinois attorney
Court-Appointed	Receivers, trustees, executors	Court order required

Critical: Administrative tasks (contracting for maintenance, paying utilities) do NOT require a license. However, ANY activity involving lease negotiation, rent collection, or security deposit handling DOES require a license.

Illinois Property Management License Types

1. Real Estate Broker License (Most Common)

Authority:

• Operate independently
• Manage all property types
• Collect fees directly from owners
• Must work under sponsoring managing broker

Requirements:

• Age 21+
• High school diploma or equivalent
• Complete 75 hours pre-license education (60 hrs + 15 hrs applied principles)
• Pass Illinois broker exam (state + national portions)
• Criminal background check
• Sponsored by Illinois managing broker

Timeline: 3-6 months

Cost Breakdown:

Expense	Amount
Pre-license education (75 hrs)	$400-$600
Exam fee	$121
License application	$125
Fingerprinting	$50-$75
Total Initial	$696-$921

Post-License Requirement: 30 hours of post-license education required before first license renewal.

2. Managing Broker License

Authority:

• Supervise other brokers
• Operate brokerage independently
• No sponsoring broker needed

Requirements:

• Active Illinois broker license for 2+ years
• Complete 45 hours managing broker education (30 hrs + 15 hrs applied)
• Pass managing broker exam
• Age 21+

Cost: $600-$900 (education + exam)

Use Case: Required to operate your own property management company independently.

3. Residential Leasing Agent License

Authority:

• Residential leasing activities ONLY
• Must be sponsored by licensed broker
• Cannot handle sales or commercial properties

Requirements:

• Age 21+
• Complete 15 hours leasing agent education
• Pass leasing agent exam
• Sponsored by Illinois broker

Cost: $300-$500 total

Limitation: Cannot perform full property management—leasing activities only.

How to Get an Illinois Property Management License

Step 1: Complete Pre-License Education (4-8 weeks)

For Real Estate Broker:

• Required: 75 hours IDFPR-approved education
  • 60 hours: Broker Pre-License Topics
  • 15 hours: Applied Real Estate Principles

Topics Covered:

• Illinois real estate law and regulations
• Property management fundamentals
• Contracts and lease agreements
• Fair housing and discrimination law
• Agency relationships
• Real estate finance
• Ethics and professional standards

Approved Providers:

• The CE Shop
• Real Estate Express
• Kaplan Real Estate Education
• College of DuPage
• Other IDFPR-approved schools

Format: Online or in-person

Cost: $400-$600

Step 2: Pass the Illinois Broker Exam

Exam Format:

Section	Questions	Passing Score	Time
National Portion	80 questions	75%	150 min
Illinois State Portion	40 questions	75%	90 min
Total	120 questions	Both must pass	4 hours

Key Topics:

• Illinois Real Estate License Act (225 ILCS 454)
• Property ownership and interests
• Laws of agency
• Contracts and leases
• Fair housing law
• Illinois landlord-tenant law
• Property management practices

Exam Provider: PSI Services LLC

Scheduling: Register at psiexams.com

Cost: $121 per attempt

Pass Rate: Approximately 50-60% first-time

Step 3: Submit License Application

Process:

1. Create account at IDFPR Online Services
2. Complete broker license application
3. Upload required documents:
   • Education completion certificate
   • Exam passing scores
   • Fingerprint results
   • Photo ID
   • Sponsoring broker agreement
4. Pay application fee: $125

Processing Time: 2-4 weeks

NEW 2026 Requirement: Starting January 1, 2026, out-of-state brokers apply via Endorsement Process (no longer Reciprocal Process).

Step 4: Find a Sponsoring Broker

All Illinois brokers must be sponsored by a managing broker.

Sponsoring Broker Responsibilities:

• Supervise all brokerage activities
• Maintain errors & omissions insurance
• Ensure compliance with Illinois law
• Review all contracts and agreements

Finding a Sponsor:

• Property management companies
• Real estate brokerages offering PM services
• Independent managing brokers

Step 5: Complete Post-License Education

Required: 30 hours within first renewal cycle (2 years)

Topics:

• Transactional issues
• Risk management
• Brokerage operations
• Advanced contracts

Cost: $300-$500

Illinois Continuing Education Requirements

Renewal Cycle: Every 2 years

Required CE:

Requirement	Hours	Details
Total CE	12 hours	Every 2-year cycle
Core Topics	6 hours	Fair housing, agency, license law
Elective	6 hours	Any approved topics

Renewal Deadline: Based on license issue date (check IDFPR account)

Late Renewal: Grace period available but subject to additional fees

NEW 2025: Enhanced fair housing content now required in core curriculum.

Cost: $150-$300 for 12 hours

Illinois Security Deposit Laws

State Law Requirements (765 ILCS 710 & 715)

Maximum Deposit:

Jurisdiction	Maximum Allowed
State Law	No statutory limit
Chicago (RLTO)	1.5 months’ rent
Evanston	Varies by unit size

Return Timeline:

Scenario	Deadline
No deductions	45 days after move-out
With deductions	30 days for itemized statement + 45 days for remaining balance

Interest Requirements

When Interest Required:

Buildings with 25+ units must pay interest if:

• Security deposit held 6+ months
• Building in city with 25,000+ residents

Interest Rate: Rate of Illinois’ largest commercial bank (published annually)

Payment Schedule: Within 30 days after each 12-month rental period

Penalty for Non-Compliance: Tenant can recover amount equal to security deposit + attorney fees

Permitted Deductions

✓ Unpaid rent
✓ Damages beyond normal wear and tear
✓ Unpaid utilities (if tenant-responsible)
✓ Lease violation costs
✓ Cleaning (if excessive)

Cannot Deduct:

• Normal wear and tear
• Pre-existing damage
• Improvements
• Aging/deterioration from ordinary use

Return Requirements

Within 30 Days:

• Provide itemized statement of deductions
• Include actual costs OR estimates
• If estimates provided, must supply receipts within additional 30 days

Within 45 Days:

• Return remaining security deposit
• Mail to tenant’s last known address

Penalty for Non-Compliance:

• Tenant can sue for 2x the deposit amount
• Plus court costs and attorney fees
• Applies to willful violations

Complete guide: Security deposit communication

Chicago Residential Landlord-Tenant Ordinance (RLTO)

Chicago has stricter requirements than state law:

Requirement	Details
Maximum Deposit	1.5 months’ rent
Account Type	Federally insured, interest-bearing, separate account
Receipt Required	Within 14 days of receiving deposit
Bank Disclosure	Must provide bank name and address
Interest Payment	Annually (rate set by city)
Return Deadline	45 days (21 days for buildings with 4+ units in some suburbs)
Move-In Inspection	Itemized condition report required

RLTO Penalty: 2x deposit + interest + court costs + attorney fees

Illinois Eviction Process (735 ILCS 5/9-101 to 5/9-321)

Legal Grounds for Eviction

Reason	Notice Required	Timeline
Nonpayment of Rent	5-Day Notice to Pay or Quit	5 days to pay
Lease Violations	10-Day Notice to Comply or Quit	10 days to cure
Illegal Activities	5-Day Notice to Quit	No cure period
Holdover Tenancy	30-Day Notice to Vacate	Month-to-month leases
End of Fixed Term	60-Day Notice	Year-to-year leases

Illinois Eviction Timeline

Step	Timeline	Details
1. Serve Notice	5-30 days	Depends on violation type
2. File Complaint	After notice expires	File with circuit court
3. Serve Summons	3+ days before hearing	Sheriff or process server
4. Court Hearing	7-40 days after filing	Both parties present case
5. Judgment	Immediate	If landlord wins
6. Order of Possession	7-14 days after judgment	Tenant must vacate
7. Sheriff Eviction	Scheduled by sheriff	Physical removal

Total Timeline: 2 weeks to 5 months (average: 4-8 weeks)

Eviction Notice Requirements

5-Day Notice to Pay (Nonpayment):

• Must state exact amount owed
• Give tenant 5 days to pay in full
• If paid within 5 days, eviction stops

10-Day Notice to Comply (Lease Violations):

• Must specify violation
• Give tenant 10 days to remedy
• If cured within 10 days, eviction stops

Proper Service Methods:

• Personal delivery to tenant
• Certified or registered mail
• Posting on door (only if tenant absent + mail copy)

NEW 2025 Service Rule: Licensed private detectives can now serve civil process statewide (Public Act 103-0671).

Illegal Eviction Tactics

Landlords CANNOT:

• Change locks without court order
• Shut off utilities
• Remove tenant belongings
• Physically remove tenant
• Harass or threaten tenant

Penalty: Tenant can sue for damages + attorney fees

NEW 2025 Landlord Retaliation Act (765 ILCS 721/5)

Landlords CANNOT retaliate through eviction for:

• Tenant complaints to authorities
• Code violation reports
• Seeking community organization assistance
• Testifying in court
• Exercising legal rights

Protection Period: Applies throughout tenancy

Complete guide: Eviction process by state

Chicago RLTO: Critical Compliance Requirements

Applies To

• Most rental properties in Chicago
• Buildings with 6+ units (some exceptions)
• Does NOT apply: Owner-occupied buildings with 6 or fewer units (with exceptions)

Key RLTO Requirements

Requirement	Details
Security Deposits	Max 1.5 months; separate interest-bearing account; receipt within 14 days
Move-In Inspection	Itemized checklist required; tenant gets copy
Interest Payments	Annual payment within 30 days of rental anniversary
Notice for Entry	48 hours notice required (except emergencies)
Lease Renewals	30-120 day notice depending on tenancy length
Eviction Protections	Enhanced tenant protections beyond state law

RLTO Penalties

• Security deposit violations: 2x deposit + interest + attorney fees
• Other violations: Fines up to $500-$1,000
• Pattern violations: License suspension possible

Resources

• Chicago RLTO Summary: chicago.gov
• Chicago Department of Housing: Complaint line available

Lease Agreement Requirements in Illinois

Required Lease Elements:

✓ Property address
✓ All parties’ names
✓ Lease term dates
✓ Rent amount and due date
✓ Security deposit amount and terms
✓ Late fee provisions
✓ Maintenance responsibilities
✓ Entry notice requirements

Required Disclosures:

Disclosure	When Required
Lead-Based Paint	Pre-1978 properties (federal law)
Radon	All properties (Illinois disclosure recommended)
Security Deposit Bank Info	Chicago RLTO requirement
Bed Bugs	Chicago RLTO requirement (if history)

Illinois Lease Laws:

• No statewide rent control
• No statutory grace period (unless in lease)
• Late fees must be “reasonable”
• Entry requires “reasonable notice” (48 hours in Chicago)

Complete guide: Lease agreements by state

Professional Organizations

Organization	Focus	Benefits
Illinois Association of REALTORS®	Real estate professionals	Education, advocacy
Chicagoland Apartment Association	Multifamily housing	RLTO guidance, education
NARPM	Residential property management	Certifications, best practices
IREM	All property types	CPM designation

Learn more: Property management certifications

Common Compliance Violations

Violation	Penalty	How to Avoid
Operating without license	Up to $25,000	Obtain proper broker license
Late security deposit return	2x deposit + fees	Track 45-day deadline
Missing interest payment	Deposit amount + fees	Calculate and pay annually (25+ units)
Improper eviction notice	Case dismissed	Use correct notice type and timeline
Self-help eviction	Tenant lawsuit	Always use court process
Fair housing violation	$16,000-$150,000 federal fines	Consistent criteria, training
RLTO violations (Chicago)	2x deposit + $500-$1,000	Follow all RLTO requirements

Frequently Asked Questions

Q. Do I need a license to manage property in Illinois?

Yes, with limited exceptions. Illinois requires a real estate broker license to perform property management activities for compensation, including negotiating leases, collecting rent, screening tenants, or handling security deposits. Exceptions: property owners managing their own properties, on-site resident managers (leasing only), and attorneys. Administrative tasks (maintenance contracting, utility payments) do NOT require a license.

Q. What type of license do I need?

Most property managers need a real estate broker license (75 hrs education + exam). To operate your own company independently, you need a managing broker license (requires 2 years as broker + 45 hrs education). For residential leasing only, a residential leasing agent license (15 hrs education) works, but limits your activities significantly.

Q. How much does it cost to get licensed in Illinois?

Broker license total: $696-$921 (education $400-$600, exam $121, application $125, fingerprinting $50-$75). Add post-license education ($300-$500) required before first renewal. Managing broker (after 2 years): additional $600-$900. Leasing agent: $300-$500 total.

Q. How long does it take to get licensed?

3-6 months for broker license: 4-8 weeks pre-license education (75 hours), 1-2 weeks exam scheduling and passing, 2-4 weeks application processing. Must find sponsoring managing broker before practicing. Leasing agent: 4-8 weeks total.

Q. What are continuing education requirements?

12 hours every 2 years: 6 hours core topics (fair housing, agency, license law) plus 6 hours electives. Enhanced fair housing content required starting 2025. Cost: $150-$300. Plus 30 hours post-license education required before first renewal.

Q. What is the security deposit return deadline in Illinois?

45 days to return deposit. BUT must provide itemized statement of deductions within 30 days. If providing estimates, must supply actual receipts within additional 30 days. Interest required for buildings with 25+ units (held 6+ months). Chicago RLTO stricter: 1.5 months max deposit, separate interest-bearing account, annual interest payments.

Q. How long is the eviction process in Illinois?

2 weeks to 5 months (average: 4-8 weeks). Timeline: 5-30 day notice period (depends on reason) → file complaint → 3+ days to serve tenant → 7-40 days to hearing → 7-14 days for order of possession → sheriff schedules eviction. Contested cases take longer. Never use self-help eviction—always follow legal court process.

Q. Does Chicago have different rules than the rest of Illinois?

Yes. Chicago Residential Landlord-Tenant Ordinance (RLTO) is stricter than state law: security deposit max 1.5 months, separate interest-bearing account required, annual interest payments, move-in inspection checklist required, 48-hour entry notice, enhanced eviction protections. RLTO penalties: 2x deposit + interest + attorney fees. Always check if property subject to RLTO.

Q. What interest must I pay on security deposits?

State law: Buildings with 25+ units must pay interest on deposits held 6+ months, at rate of Illinois’ largest commercial bank (published annually). Payment within 30 days after each 12-month rental period. Chicago RLTO: ALL covered properties must pay interest annually regardless of building size. Rate set by city.

Q. Can I operate without a sponsoring broker?

No, unless you’re a managing broker. All Illinois real estate brokers must be sponsored by a licensed managing broker who supervises their activities. To operate independently, you must obtain a managing broker license (requires 2+ years as broker + additional education/exam). The managing broker is responsible for all brokerage activities and compliance.