Illinois Tests Statewide Multifamily Right of First Refusal

Illinois lawmakers are testing a statewide anti-gentrification proposal mirroring Chicago policies that are drawing the ire of the city’s commercial real estate professionals.

Two bills, SB 3674 and SB 3762, currently proposed in the state Senate lay out a process for tenants to gain the right of first refusal when a landlord decides to sell their apartment building.

The anti-gentrification efforts come as state and local lawmakers are trying to curb the effects of Illinois’ rising rents and low supply of affordable housing.

Members of an Illinois legislative subcommittee last week held a hearing on those and other housing proposals and heard opposition from industry insiders.

“[Tenants] can wake up to a sale and suddenly face rising rent, redevelopment or displacement with no opportunity to remain,” said Senator Rachel Ventura, D-Joliet, who is a sponsor of both bills.

If passed, SB 3674 would require landlords to give tenants about 60 days to match the terms of a third-party offer when selling a multi-unit building. If the landlord accepts a third party offer that is more than 20 percent lower than their original asking price, tenants receive an additional 10 days to match the offer.

SB 3762 is a similar proposal but has broader reach. It requires landlords to notify tenants before listing a property and gives them time to organize, make an offer and secure financing. The bill includes longer timelines for larger buildings, allows tenants to act individually or through an association and caps required deposits at 5 percent of the purchase price.

Both bills allow tenants to take legal action if landlords fail to follow the required process.

Industry lobbyists recorded opposition to the bills but did not comment directly on them.

The statewide effort echoes a similar process unfolding within the City of Chicago. A policy known as the Northwest Side Housing Preservation ordinance was passed in 2024 but soon faced pushback from industry groups and aldermen.

Last year, Chicago City Council removed parts of the 31st and 36th wards from the Northwest Side ordinance’s coverage area, at the request of the aldermen of each ward.

More recently, the council passed a similar ordinance covering parts of the South Side near the forthcoming Obama Presidential Library. In New York City, a movement to pass a Community Opportunity to Purchase Act, with similar regulations, stalled out earlier this year after the real estate industry panicked over its potential passage.

“By layering a highly technical and time-sensitive process onto already complex transactions, the policy introduces additional uncertainty for tenants, nearby residents, sellers and buyers already faced with the rising cost to own property in Chicago,” Tom Benedetto, Illinois Realtors’ Senior Director of Local Advocacy, said in a statement about the South Side ordinance.

Still, some ongoing statewide housing proposals have been welcomed by the industry.

A package of bills known as Building Up Illinois Development (BUILD) plan, proposed by Governor JB Pritzker, backed by Illinois Realtors, calls for eliminating single-family zoning on lots of a certain size statewide and legalizing accessory dwelling units across the state. Other pieces of the agenda include cutting building regulations, streamlining impact fees and allocating state funding to building projects.

All of the bills discussed last week are in early stages of development and will need additional review before passage.