Avoid falling victim to Chicago rental services – check cashing edition

One of the recurring horror stories you’ll read in reviews of Chicago’s shark-like rental services is the difficulty renters have in getting refunds when their checks have been cashed or credit / debit cards charged and an apartment they’ve applied for has already been rented or their application has been rejected.

When you apply for an apartment in Chicago you’ll usually write two checks: one for a non-refundable application / processing fee and a separate one for the first month’s rent. Your application is an offer to lease the unit and the rent check won’t be cashed until your offer is accepted by the landlord. Additional funds for security deposit / administration fees and other charges will typically be due at lease signing.

In the optimum scenario, a renter will never make a payment to a rental service. Most large landlords / management companies don’t trust rental services to process applications and perform their own credit and background checks. Renters pay the landlord / management company directly. With the exception of some disreputable companies, the landlord / management company won’t cash the rent deposit until the application has been approved.

Some landlords allow rental services to accept funds and process applications. That’s a mistake that naïve landlords make, and a policy that landlords with difficult-to-rent apartments often adopt. The rental services want to cash the rent check for their commission rather than invoice the landlord for it and wait for payment.

Rental services a/k/a apartment locators a/k/a apartment finders have been known to cash a renter’s funds immediately upon receipt, even before confirming that the apartment applied for is still available for rent or that the applicant qualifies for it. That’s outrageous conduct, but it happens frequently. The reasons are varied: the company may be desperate for cash to fund its operations or may cynically be seeking to lock a renter into using its services. The rental agent a renter is dealing with may be acting in good faith and being lied to by the rental service’s management about the status of the application / apartment. The agent may be as dishonest as the company that employs him.

How can you as a renter protect yourself against having your funds held hostage by a rental service or being improperly charged an application fee?

Don’t trust any information you’ve been given by a rental service. Section 13-12-030 of the Chicago Municipal Code requires owners of multi-family buildings to post the name, address and telephone number of the owner or managing agent in a publicly-visible spot at the building. Note that information on each building you visit and consider it a warning flag if you don’t see it.

Before handing over any funds to a rental service you should verify directly with the landlord / management company that the apartment is still available, that the availability date, rent and other charges conform to what you’ve been told, and that there are no credit blemish / pet / co-signer / etc barriers to your qualifying for the apartment. If a rental service objects to your verifying information with the landlord, that’s a warning sign that you ignore at your peril.

Another issue that frequently arises is renters being kept on the hook for extended periods of time without knowing whether their application has been approved. A rental application is an offer to lease property and it should be considered withdrawn if not accepted within a specific, reasonable period of time, say 48 to 72 hours.

We’ve prepared an Addendum (PDF) to the application forms that rental services use. Print out a copy, fill it out and have the rental service sign it if you’re completing an application with a rental service and giving them funds. If a rental service objects to signing it, move on.

If you’re looking for an apartment in one of the areas covered by our at-a-glance lists, you’ll find all of your options on the lists, together with links to reviews, videos where available, and property websites.

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