If you own a rental property in Logan Square, Avondale, Hermosa, West Town, Humboldt Park, Pilsen, or any other area nearby, you may need to know about new city ordinances that may affect how you sell your property. The Chicago City Council has recently approved a pilot program aimed at combating gentrification and protecting renters from being displaced. Here’s what you need to know in simple terms.
1. New Rules for Selling Rental Properties
Before you list your rental property for sale:
You must notify the city’s Department of Housing (DOH) and your tenants in writing.
If your property has four or fewer units, you must give the landlord 30 days’ notice before putting it on the market.
If your property has five or more units, you must give the landlord 60 days’ notice before putting the property on the market.
The city will provide official forms for these notices and you will also have to post a notice at the building’s entrance.
When you accept an offer from a buyer, you have to inform the DOH and the tenants about the purchase price, rent roll, and income/expense reports.
2. Tenants Have First Rights to Buy Your Property
It is a legal requirement that tenants in buildings with five or more units are allowed 90 days to form a group or association and attempt to purchase the building before you can sell it to someone else.
In three or four-unit buildings, tenants have 30 days to organize and make an offer.
In one or two-unit properties, tenants have 15 days to express interest.
If tenants decide to buy, they must match the third-party offer, but you can’t demand proof of funds before signing a contract.
If tenants fail to complete the transaction within the permitted time, you can sell to another buyer; however, if there is a significant change in the sale terms, tenants get one more chance to purchase.
3. Extra-legal Provisions for New Owners
If a buyer uses public funds to purchase a rental property, they have to keep it as affordable housing for at least 30 years.
The ordinance also implements just cause eviction, which means that landlords cannot terminate the tenancy of the tenants without a proper cause, including frequent violations of the lease terms.
4. Penalties for Non-Compliance
If a seller or landlord fails to follow these rules, they can be fined between $200 and $1,000 per violation.
Every day that a violation occurs is considered as a separate offense, which will attract more fines.
5. Higher Demolition Fees
If you intend to tear down a home or small structure, say a two-flat, the fee is now $60,000 from $15,000.
For multiunit buildings, the fee is now $20,000 per unit, up from $5,000.
This fee increase shall apply at least up to December 31st, 2029.
Which Neighborhoods Are Part of the Gentrification Ordinance in Chicago (2025)?
The 2025 ordinance applies to several neighborhoods on Chicago’s Northwest and West Sides, particularly those near the 606 Trail. Affected areas include Logan Square, Avondale, Hermosa, Humboldt Park, Lower West Side (Pilsen), and West Town, see map for more details. These neighborhoods have seen rising property values and redevelopment, prompting the city to introduce new measures to slow displacement and protect renters.
Why You Need an Experienced Realtor
Due to these new regulations, it is essential to consult with a real estate professional who is familiar with the market and the latest changes. Some realtors may not yet be aware of this ordinance, which can result in costly errors or setbacks. A professional realtor who is familiar with the new city ordinance and neighborhoods can help you through the process, make sure that all the legal requirements are met, and navigate the tenant rights correctly.
What This Means for You
This new ordinance makes it harder to quickly sell or redevelop rental properties near the 606 Trail. If you are planning on selling, then make sure to follow the notice requirements. The pilot program begins on March 1, 2025, and the tenant purchase provision has no set expiration date.
If you want to know more or need information on how to sell your rental property in these areas, please don’t hesitate to contact our team of experts in Chicago real estate!
