The Keep Chicago Renting Ordinance (the "KCRO") requires owners of Chicago rental buildings acquired through foreclosure to offer existing tenants a new lease in good faith, and to pay $10,600 toward relocation costs to each tenant that does not sign one. On July 22, 2026, the Seventh Circuit held in BBLI Edison v. City of Chicago that the KCRO and its fees do not amount to an unconstitutional taking, leaving the fees in force and removing the main federal constitutional argument owners had raised against it.
What You Need to Know:
- Buyers and lenders who take title to an occupied Chicago rental building through foreclosure must offer each existing tenant a twelve-month renewal or pay that tenant $10,600 to relocate.
- Failure to give the required notice or pay the relocation amount can cost double the amount plus attorney's fees, City fines of up to $1,000 per tenant per day, and personal liability for the individuals behind the owner.
Background
BBLI Edison bought an apartment property on North Sheridan Road out of foreclosure in February 2024, notified its roughly 220 tenants of their KCRO rights, and saw a number choose a $10,600 payment over a new lease. BBLI refused to pay and sued, arguing the KCRO took its property in violation of the Fifth Amendment. The Seventh Circuit disagreed. The court acknowledged that BBLI's position "has something to it," but concluded that a rule governing the economic relationship between landlords and tenants is not a taking, likening the fees to an indirect and clunky form of rent control. BBLI is weighing a Supreme Court petition, and a separate tenant class action seeking the fees remains pending.
When the KCRO Applies, and Consequences of Non-Compliance
The KCRO applies to whoever takes title to an occupied residential rental building through foreclosure, including a purchaser at a confirmed judicial sale, a buyer during a pending foreclosure, a mortgagee acquiring by deed in lieu or consent foreclosure, and any agent managing the property or collecting rents. It does not reach owner-occupants, a later good-faith purchaser buying from the foreclosure owner (unless that buyer is the foreclosure mortgagee or an affiliate), a bona fide, five-year affordable-housing nonprofit (with the purpose of providing financing for the purchase or rehabilitation of affordable housing), a receiver holding a receiver's certificate, or pre-ordinance owners. A qualified tenant is one who occupied the unit as a primary residence under a genuine, arm's-length, market-rate lease when the owner took title, excluding the former owner, close relatives sharing the unit, and below-market or non-arm's-length leases. A tenant offered a renewal may decline and still collect the full $10,600 amount.
Within 21 days of taking title, the owner must locate the occupants, serve a written relocation assistance notice and post it at the main entrance, and it must register the property with the Department of Housing within 30 days. The notice carries several content requirements, among them that it states it is not a notice to vacate and explains the right to $10,600 or a twelve-month renewal. The one-time $10,600 fee is due within seven days after the tenant moves out.
An owner that skips the notice or withholds payment can be sued for twice the fee amount on each violation plus attorney's fees, and the City can add fines of $500 to $1,000 for each tenant and each day a lapse continues, with joint-and-several liability that can reach the officers and directors behind the owner.
Relevance to Potential Purchasers
The Seventh Circuit recognized that a rational buyer would account for the possibility of paying these fees to tenants. The fees are a real cost that can affect how a foreclosure acquisition is valued, priced, and structured, and how much they matter depends on the number of occupied units and the deal terms. For now, the ordinance is in force across Chicago.
