{"id":4091,"date":"2023-11-29T19:42:07","date_gmt":"2023-11-29T19:42:07","guid":{"rendered":"https:\/\/apartmentsource.com\/blog\/?p=4091"},"modified":"2023-12-18T05:22:53","modified_gmt":"2023-12-18T05:22:53","slug":"the-legal-and-financial-risks-of-a-zillow-lease-a-landlord-story","status":"publish","type":"post","link":"https:\/\/apartmentsource.com\/blog\/the-legal-and-financial-risks-of-a-zillow-lease-a-landlord-story\/","title":{"rendered":"The Legal and Financial Risks of a Zillow Lease: A Landlord Story"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">When combined, Zillow and its subsidiaries capture over 50% of <a href=\"https:\/\/www.statista.com\/statistics\/381468\/most-popular-real-estate-websites-by-monthly-visits-usa\/\" target=\"_blank\" rel=\"noopener\">renter online-search traffic.<\/a> With more listings than any other internet listing service (ILS), it is <\/span><i><span style=\"font-weight: 400;\">the<\/span><\/i><span style=\"font-weight: 400;\"> go-to website to list and search for houses and apartments. Facilitating the apartment search process for over half of the country\u2019s renters and landlords comes with a tremendous amount of responsibility and means that one seemingly minor error can have a major impact on its customers.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For landlords who don\u2019t care to draft their own lease, Zillow offers a convenient and accessible lease template for landlords to use, which Zillow claims is drafted \u201cby Zillow, together with local law firms.\u201d Both new and seasoned landlords frequently take advantage of their offering not only for convenience, but also because they assume it to be fully compliant with its respective city, thus eliminating any potential risks. Who would doubt the integrity of a lease recommended by an $9.5 billion company and all of the attorneys that prepared it?<\/span><\/p>\n<h4><b>The Risks of Non-Compliant Leases<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">Your leases are arguably the most important element of your property portfolio. Without a compliant lease, both the landlord and the tenant carry risks they\u2019re often unaware of. Common lease mistakes include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Incomplete or outdated lease terms<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Inadequate property descriptions<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Misunderstanding renewal periods<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Neglecting sublet clauses and termination penalties<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Failure to clearly assign responsibilities (utilities, maintenance, etc.)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Failure to comply with city security deposit requirements<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">It\u2019s that last bullet point that leads us to the start of our landlord story. In order to respect the privacy of all parties, we will not be listing any names or addresses.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Earlier this summer, a Chicago landlord listed their former house for rent at over $6,000. This home is gorgeous! A young couple sees it on Zillow, tours it, signs a Zillow-provided lease and moves in. The landlord just locked in a 12-month lease at a great rate and the couple finally found the home of their dreams. Everyone wins!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Fast-forward a few months later, the couple decides to go their separate ways and vacate the home (alleging their pet\u2019s anxiety was not compatible with the space). When something like this happens, it\u2019s common for changes to be made to the original lease. Most often, one of the following actions is taken:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">One tenant is removed from the lease, while the other assumes full responsibility.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The tenants collectively break their lease and pay a penalty.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The tenants seek alternatives such as subletting or reletting.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This couple had a different idea. Instead of taking one of the actions above, they got out their magnifying glass and searched for loopholes, which they found.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s zoom out to contextualize the situation. In Chicago, landlords can either take a move-in fee or a security deposit to protect their properties against damages caused by tenants. Because of the strict laws surrounding security deposits in Chicago, many landlords choose to collect non-refundable move-in fees. This is what The Apartment Source\u2019s management division &#8211; <a href=\"https:\/\/apartmentsource.com\/property-management.html\" target=\"_blank\" rel=\"noopener\">TAS Management<\/a> &#8211; collects from their tenants.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Security deposits are governed by the <a href=\"https:\/\/www.chicago.gov\/city\/en\/depts\/doh\/provdrs\/landlords\/svcs\/residential-landlord-and-tenant-ordinance.html\" target=\"_blank\" rel=\"noopener\">Chicago Residential Landlord and Tenant Ordinance<\/a> (commonly referred to as RLTO). According to the RLTO, <\/span><b>even if the landlord does not collect a security deposit, they\u2019re still legally required to fill out and attach an updated Security Deposit Summary to the lease. <\/b><span style=\"font-weight: 400;\">Remember the key word here, \u201cupdated.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Back to the story. The landlord, diligent as they are, completed this required summary as provided in the Zillow lease, and did not collect a security deposit from the tenants. They should be covered, right? Not quite.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Zillow\u2019s lease &#8211; which they encourage landlords to use &#8211; includes a Security Deposit Summary from 2022. Because the lease was executed in 2023, the summary is outdated, therefore the lease is invalid (despite the interest rate provisions being current). Per the landlord\u2019s comment, as a result of this, the tenant was entitled to terminate the lease immediately (which they did, <\/span><b>one<\/b><span style=\"font-weight: 400;\"> day before their rent was due), plus damages in the amount of $100.00 and attorney\u2019s fees.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That\u2019s right, the largest online real estate platform in the U.S., on which millions of renters and landlords rely, provided a lease that allows tenants to vacate the property for just $100.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is a problem that carries a substantial amount of risk for landlords all across Chicago. It is entirely possible that every landlord in the city who used a Zillow lease in 2023 is at risk of losing their tenants at a moment\u2019s notice. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">What could this mean for the Chicago real estate market? What happens if tenants are made aware of this before landlords are able to correct their mistakes? Time will tell.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the meantime, even if you didn\u2019t use a Zillow lease, it\u2019s important that you re-read your lease to check for costly errors.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">*If you did use a Zillow lease, contact your attorney as soon as possible to talk about how you can remedy the situation.<\/span><\/p>\n<h4><b>Avoiding and Mitigating Future Risks<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">As a private landlord who is not interested in using an online lease template, we recommend taking two alternative routes. Either contact your attorney to draft a lease, or work with a professional like The Apartment Source to receive an award-winning full-service leasing solution. Even if you already have a prospective tenant at the one-yard line and just want us to process the application, we offer our processing service for only $150; just a little bit cheaper than losing a tenant in the middle of the slow season.\u00a0<\/span><\/p>\n<h4><b>Final Word<\/b><\/h4>\n<p><span style=\"font-weight: 400;\">There\u2019s no question that what happened in this story was the result of an unusually aggressive effort to terminate a lease by two motivated tenants, therefore amplified to an extreme. Although it may not get this messy for you, we fear that this could be the first of many more instances of landlords losing tenants. The goal of this blog was not to scare you, but to make you hyper aware of the risks of using a non-compliant lease. The Apartment Source is a part of a professional association <a href=\"https:\/\/chicagorealtor.com\/\" target=\"_blank\" rel=\"noopener\">(C.A.R.)<\/a> that lobbies for accountability in situations like this, so these types of stories are important for us to hear.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Going forward, we\u2019re going to continue to tell this story with the hopes that more landlords are protected. Feel free to re-share this story to anyone and everyone who you feel would benefit from being aware of this significant risk. As always, if you have any questions regarding leasing, sales, redevelopment or <a href=\"https:\/\/apartmentsource.com\/property-management.html\" target=\"_blank\" rel=\"noopener\">property management<\/a>, contact us anytime.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">*The general information that The Apartment Source provides about Chicago landlord-tenant law is not intended as legal advice. While The Apartment Source aims to provide accurate information, the law is subject to change, and The Apartment Source is not a law firm or provider of legal services. Questions about your particular leasing situation should be directed to a lawyer.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>When combined, Zillow and its subsidiaries capture over 50% of renter online-search traffic. With more listings than any other internet listing service (ILS), it is the go-to website to list and search for houses and apartments. Facilitating the apartment search process for over half of the country\u2019s renters and landlords comes with a tremendous amount of responsibility and means that one seemingly minor error can have a major impact on its customers. For landlords who don\u2019t care to draft their own lease, Zillow offers a convenient and accessible lease template for landlords to use, which Zillow claims is drafted \u201cby [&hellip;]<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[144,199],"tags":[],"class_list":["post-4091","post","type-post","status-publish","format-standard","hentry","category-chicago-rental-market","category-landlord-guidance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.8.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Legal and Financial Risks of a Zillow Lease: A Landlord Story - The Apartment Source<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/apartmentsource.com\/blog\/the-legal-and-financial-risks-of-a-zillow-lease-a-landlord-story\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Legal and Financial Risks of a Zillow Lease: A Landlord Story - The Apartment Source\" \/>\n<meta property=\"og:description\" content=\"When combined, Zillow and its subsidiaries capture over 50% of renter online-search traffic. With more listings than any other internet listing service (ILS), it is the go-to website to list and search for houses and apartments. Facilitating the apartment search process for over half of the country\u2019s renters and landlords comes with a tremendous amount of responsibility and means that one seemingly minor error can have a major impact on its customers. 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