Chicago Tenants In Foreclosed Homes To Get Either $10.6K 'Walking Money' Or Annual 12-Month Lease Renewals Until Premises Is Sold To Bona Fide 3rd Party Purchaser Under New Ordinance

From a client alert from the law firm Holland & Knight:

• In early June, the City of Chicago passed the "Keep Chicago Renting" ordinance (SO2012-5127), which requires that the owner of foreclosed properties offer existing tenants renewal of their lease or pay expenses to the tenant for relocation. (The ordinance amends Chicago Municipal Code §2-25-050.)
  
  "Keep Chicago Renting" Ordinance
  
  The directive applies to any owner of a foreclosed property, defining an "owner" as someone who acquires title by a foreclosure sale or deed in lieu/consent foreclosure.
  
  Relocation or Renewal
  
  The ordinance requires that the owner post and deliver notices in four languages (English, Spanish, Polish and Chinese) no later than 21 days after becoming the owner, offering tenants either of the following:
  
  * 12-month renewal or extension of the tenant's existing lease (with a rent increase of no greater than 2 percent above the current rent)
  
  ** a relocation payment of $10,600 (per unit), paid by certified funds or cashier's check within seven days after the tenant vacates.
  
  The offer to extend or renew for 12-month periods (at a rate that is not greater than 2 percent above the current rent) continues until the property is sold to a bona fide third-party purchaser.

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• Scope of Ordinance and Prohibitions
  
  The ordinance applies to all dwelling units that are rented, not just rental buildings, but it does exclude the borrower, the borrower's family members, and others with below-market leases from its reach. It also prohibits a non-complying owner from collecting any rent until the owner complies.

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• Effective Date
  
  The ordinance is effective 90 days from passage — on September 3, 2013 — so lenders should be prepared to comply or challenge its validity.

For more, see Chicago Continues To Aggressively Regulate Foreclosed Properties With New Requirements On Tenant Leases.