For four months, Russell Carter and his son couldn’t safely use the bathroom in their South Side apartment.
In early February, the bathroom ceiling and walls suddenly collapsed from chronic water damage. Building maintenance came the next day to clean up the debris. Carter assumed they would come back the day after to patch up the gaping holes in his drywall.
But no one came.
Carter repeatedly called every number he knew for the property management company, but no one ever answered. Some numbers were disconnected. Even the online tenant portal stopped taking maintenance requests.
From February through May, the 56-year-old Carter and his 36-year-old son, who has autism, had to shower and shave at family members’ homes because chunks of loose building material would fall from the ceiling, Carter said. On some mornings, when they went to the bathroom to brush their teeth, they’d find mice writhing in the sink after falling from under the floorboards of the unit above.
“We definitely shouldn’t have to live like that, I mean, four months with no walls, taking mice out of [sink] bowls, it’s ridiculous,” Carter said.
At the time, Carter had no idea that his former property management company, CKO Real Estate, had shut down in late February. It wasn’t until late May, when a new company took over, that maintenance fully repaired his bathroom, he said.
Like many tenants, Carter knew the name of his property management company. But he didn’t know the names of the people who hired them: the investors ultimately accountable for the caved-in bathroom ceiling, the recurring heat shut-offs and litany of other building code violations he had endured in the past two years.
A current search of county records shows his 13-unit building is owned by 7655 S COLES LLC and SALINA INVESTMENT PARTNERS LLC.
They’re LLCs, short for limited liability company, a form of corporate ownership that protects property owners from personal legal liability.
Owners of LLCs are not required to disclose who they are, and it’s this feature that has made it easier than ever for problem landlords to hide in the housing market and harder for tenants to find out basic information about who owns their buildings.
In some cases, the anonymity that LLCs provide makes it next to impossible to find out what other buildings a landlord owns, impeding the city’s ability to go after neglectful property owners in a systematic way.
“This opacity, this lack of transparency, makes it hard for members of a community to know who owns that terrible building that’s causing all kinds of problems for tenants and neighbors,” said Dan Immergluck, a professor emeritus at Georgia State University who has studied housing markets for decades.
In the last two decades, LLCs have become an increasingly common way to own real estate in Chicago, according to a first-of-its-kind analysis of 26 million property records by WBEZ, Injustice Watch and the Mansueto Institute for Urban Innovation at the University of Chicago.
The share of multifamily rentals owned by LLCs increased from 3% in 2006 to 16% in 2022, the analysis shows. Their share of ownership among larger apartment buildings with seven or more units, like the one where Carter resides, increased from 9% in 2006 to 34% in 2022.
The analysis counts all tax parcels with two or more units where the taxpayer name includes the phrase “LLC”. Researchers say the findings are likely an underestimate because some LLC owners leave off the term “LLC” in their tax filings.
Nationally, about 23% of all properties with two or more units were owned by LLCs, limited liability partnerships or limited partnerships, according to a 2021 survey from the U.S. Census Bureau. In Chicago, LLPs and LPs own less than 1 percent of multifamily properties, according to WBEZ’s analysis.
‘The wizard behind the curtain’
Limited liability companies have their origins in the 1970s, when oil exploration companies wanted a way to retain legal liability protections while avoiding corporate tax rates.
“It wasn’t created at all with real estate in mind,” said Susan Pace Hamill, a professor at the University of Alabama School of Law who has studied LLCs since the 1990s.
But LLCs gained traction with real estate investors in the 1990s when they realized LLCs had very minimal disclosure requirements, Hamill said. In Illinois, for example, only the manager and agent of an LLC — neither of whom are necessarily owners — are required to be publicly disclosed.
Nowadays, putting each investment property in a different LLC is preached as a standard practice for landlords. Numerous real estate blogs, podcasts and courses teach it. Many commercial lenders require it. It’s relatively inexpensive, too. In Illinois, it only costs $150 to file for a new LLC.
“There’s two big advantages with LLCs. One is the tax advantage that you’re not taxed as a corporation. The other big one is the ability to isolate liability and isolate financial assets,” Immergluck said.
That means if a landlord who owns a property using an LLC gets sued, a judge or lender can’t come after any other properties the landlord owns.
But experts say the issue with LLCs isn’t their protection against legal liability. They say the problem with LLCs is the lack of transparency.
“Somebody is managing the LLC. Somebody is investing in the LLC, and when there’s a problem and you want to find out who that somebody is, you run into a brick wall,” Hamill said. “You can’t find what I call ‘the wizard behind the curtain.’”
The CKO Tenant Union
Carter and other residents of buildings formerly managed by CKO Real Estate didn’t know who was their “wizard behind the curtain.”
For months — and in some cases, years — tenants say they dealt with rodent infestations, utility shut offs and water leaks left unaddressed for so long that mushrooms started growing in one tenant’s building.
Marla Blanton, 50, said squatters who were using drugs broke through the building’s back gate and lived in the garage and a basement room next to the laundry room. She said it took months for CKO Real Estate, her property manager at the time, to fix the broken locks on the back gate.
“As tenants, we should know who the actual landlords are so if something is happening and the property managers are not doing what they’re supposed to do, I should be able to alert the owners,” Blanton said.
After CKO Real Estate abruptly shut down in February, some tenants began to question who actually owned their buildings. On paper, their buildings were owned by different LLCs named after their respective street addresses.
They began digging into public records. Eventually, the tenants linked a group of 31 buildings together through a name that appeared on nearly every mortgage and property deed: Chikoo Patel. Patel is a real estate investor that was part of the investment group that owned the 31-building portfolio, said Ald. Desmon Yancy (5th).
For the tenants, knowing which buildings were connected through a common investor was critical for their next step: forming a tenants union.
“Going door to door and talking to folks in all of these 31 buildings was a very unique canvassing experience,” said Sahar Punjwani, a housing organizer with Southside Together, a community organization that helped tenants unionize.
“The only thing you had to say was ‘CKO’ or ‘conditions issues in your building,’ and people would be like, ‘Yeah, I’m going to talk to you, I want to be part of the union,’” Punjwani said.
In the last two years, 21 buildings in the portfolio have failed building code inspections for violations ranging from rotting porches to broken boilers, city building records show. The city has also sued several of the LLCs that own the buildings in the portfolio for serious code violations, and several tenants have sued Patel and CKO Real Estate for wrongful eviction and breach of contract, court records show.
The tenants’ organizing efforts paid off. In early June, roughly 150 tenants living across the 31 buildings formed the CKO Tenant Union.
After unionizing, tenants began to make some inroads. They had meetings with Yancy, the city’s buildings commissioner Marlene Hopkins and even Mayor Brandon Johnson.
Residents also met some of the other investors in the portfolio, including husband-and-wife investors Shai Wolkowicki and Lauren Lampert. Lampert, who has had weekly check-ins with Yancy over the past few months, agreed to a few changes, like relocation support for some tenants and forgiving some unpaid back rent from March through May, according to Southside Together and Yancy.
However, the ownership group declined most of the union’s other demands, like a 24-hour repair window for critical services and annual building inspections, according to Punjwani.
And the tenants still don’t know who all the other investors are or what other buildings they own in Chicago.
“We know the names of some of these people,” Punjwani said. “Everything else is really murky.”
A few other buildings associated with members of the ownership group have turned up in WBEZ’s search of public records, but neither Patel, Wolkowicki or Lampert returned WBEZ’s requests for comment.
The city’s buildings department directed all of WBEZ’s questions about the former CKO Real Estate portfolio to the law department, which declined to comment because it’s involved in ongoing litigation.
For Russell Carter, being involved with the tenant union has come at a personal cost.
On Aug. 13, he received an eviction notice for two months of unpaid rent he temporarily withheld for not receiving certain repairs — something that often happens to tenants who try to assert their legal rights to withhold their rent when landlords fail in their obligations to provide safe housing.
Carter, who is an elected member of the union’s bargaining committee, believes the eviction notice is retaliation for speaking up. Court records show his eviction was filed just a few hours after he identified himself at a union negotiation with Wolkowicki and Lampert.
“These owners, Lauren Lampert and Shai Wolkowicki and whoever else is involved, whose names they have not decided to share with us, have proven to me who they are,” Carter said at a news conference in August. “Their agenda is to get the rent and tell the tenants to shut the hell up.”
Carter is currently awaiting his next court date, Sept. 30. He’s also dealing with the same building issues. Recently, he found water dripping down from the ceiling into his bathtub.
Who owns your property?
For apartment renters in Chicago, there is no simple way to look up who owns a particular property and what other properties they own.
Figuring that out is a time-consuming process that requires toggling between property deeds, tax documents and LLC filings. And there’s no guarantee that you’ll find all the owners and their properties.
It’s a challenge for the city, too.
“It is industry standard for owners to form shell companies to protect individuals from liability, which complicates the process of locating a person to hold accountable for building code violations,” wrote Nefsa’Hyatt Brown, the department’s director of public affairs, in an email to WBEZ.
Some citizen data scientists and academic researchers have tried to solve the problem with technology.
“We’ve been working on a tool for the last year that allows people to enter their property address, and it finds the network of ownership that exists around their property address,” said Divij Sinha, a data scientist and researcher with the Mansueto Institute for Urban Innovation at the University of Chicago.
Sinha and a team of researchers at the Mansueto Institute developed an algorithm to identify corporate ownership networks in Chicago and suburban Cook County by matching parcels and LLCs with common mailing addresses, taxpayer names and manager names. It’s an ongoing project that they hope to expand to other cities.
Landlord Mapper, developed by Dylan Pederson, and Dese Guys, developed by Anthony Moser, are similar network-mapping tools for Chicago properties and Illinois businesses.
But all of these tools are just estimates. Data inconsistencies across a patchwork of agency databases and the lack of any transparency requirements make it difficult to draw direct links between a property, an LLC and an investor.
“At the end of the day, if a landlord has enough money, they can just pay lawyers to completely hide themselves,” Pederson said.
Advocates want a rental registry
Researchers, tenants and advocates say a more comprehensive solution to the lack of transparency around LLCs is a rental registry.
“The idea behind the rental registry is to know who’s renting what buildings, what the rents are, and who to contact if there’s a problem, because what that allows us to do is hold bad actors accountable,” said Yancy, who introduced a registry proposal in May. The proposed ordinance would also require LLC owners to disclose all individuals with at least a 20% ownership stake in the LLC. It’s currently stalled in committee.
Dozens of cities across the country already have versions of a rental registry that require landlords to pay a small fee and disclose the owner, their contact information and data on the building such as rents and the number of units available.
Advocates say the ways the city currently tracks problem landlords are incomplete because they rely on tenants to self-report building conditions.
The city’s current system of building code enforcement requires tenants to submit complaints to 311, a fraction of which then bubble up to the attention of city building inspectors. If inspectors show up and find multiple serious violations, the property can be ticketed or go to building court where judges can order daily fines for owners until issues get fixed. However, Injustice Watch found building court judges are often hesitant to take punitive measures against landlords.
Many tenants don’t call 311 for fear of eviction or retaliation, and city inspectors sometimes show up when tenants aren’t home, said John Bartlett, executive director of the Metropolitan Tenants Organization, a tenants’ rights group in Chicago.
“The tenants [currently] have to be the ones to enforce and to make things better, and they’re in the least position to do so,” Bartlett said.
The two programs the city uses to track problem landlords both require initial advocacy by residents to draw the city’s attention to a property.
The city’s Troubled Buildings Initiative is a program that rehabilitates distressed properties referred by tenants, community groups and city agencies. The Building Code Scofflaw List is a public database of properties that repeatedly end up in building court for chronic building code violations, which are initially identified through tenant complaints.
However, in spite of numerous building code violations, none of the 31 buildings in the CKO Tenant Union are among the 616 properties on the Building Code Scofflaw List. And just seven are among the 1,349 listed troubled buildings, according to a WBEZ review of records obtained from a public records request.
Buildings owned by LLCs are also overrepresented among those included on the scofflaw list. A WBEZ analysis finds nearly one-third of buildings on the scofflaw list are owned by LLCs.
Bartlett says landlords’ use of LLCs as a real estate investment tool calls into question what the purpose of housing should be.
“Should housing be an investment, or should housing be housing?” he said. “Right now, it’s first and foremost an investment as opposed to, first and foremost, a place for a person to live.”
Maya Dukmasova, senior reporter for Injustice Watch, contributed to this story.