Illinois Condo Association Rules and Regulations: Assessments and Fines

The Illinois Condominium Property Act (765 ILCS 605) is the statute that sets the rules and regulations every Illinois condo association must follow. It governs how the board adopts and changes rules, how assessments are set and collected, what insurance the association must carry, what records owners can see, how violations are enforced, and what happens when someone stops paying. Both boards and owners run into trouble when they assume their declaration or bylaws are the last word: the Act sits above those documents and, in many places, dictates their contents.

How Rules, Bylaws, and the Declaration Get Changed

Three different documents govern a condo association, and each one is amended a different way. Mixing them up is the single most common mistake boards make.

Board-Adopted Rules

The board can adopt operational rules on its own: noise limits, pet policies, pool hours, guest parking, and similar day-to-day matters. Owners do not vote on these. But before adopting or amending any rule, the board must hold a meeting of unit owners to discuss the proposed language, and the meeting notice must include the full text of the proposed rule.¹ No owner quorum is required at that discussion meeting unless the condo instruments say so. After the discussion, the board votes at its own meeting.

Rules cannot restrict rights protected by the First Amendment or the Illinois Constitution, including the free exercise of religion, and they cannot conflict with the Act or the declaration.¹

Bylaw Amendments

The bylaws set the association’s governance framework: how the board is elected, how meetings run, how budgets are approved. Amending them requires a unit owner vote at the percentage the bylaws themselves specify.² Certain substantive provisions listed in Section 18 must always remain in the bylaws regardless of what amendments pass.

Declaration Amendments

The declaration is the founding document. It defines the units, common elements, and each owner’s rights. Changing it is harder. Unless the declaration sets a different threshold, amendments require two-thirds of those voting, and the Act caps any higher threshold the declaration might impose at three-quarters of all unit owners.³ If mortgagee approval is required, any lender who receives a written request and does not respond within 60 days is deemed to have consented.

Assessments and the 115% Owner Check

The board has authority to levy assessments to fund the budget.¹ Every unit owner must receive the proposed annual budget at least 25 days before the board adopts it, and it must show what portions go to reserves, capital expenditures, repairs, and real estate taxes.² After the fiscal year ends, owners get an itemized accounting of actual expenses versus amounts collected.

When the board adopts a budget or special assessment that pushes total assessments for the year above 115% of the prior year’s total, owners can push back. If unit owners holding 20% of the votes deliver a written petition within 21 days, the board must call a meeting within 30 days. The budget or assessment stands unless a majority of all unit owners vote to reject it.²

Two categories of spending face a higher bar. Assessments for additions or alterations to the common elements not included in the adopted annual budget require approval of two-thirds of all unit owners.² And if a board-approved improvement exceeds 5% of the annual budget, owners holding 20% of the votes can petition within 21 days to force a meeting where a majority of all unit owners can reject it.¹

What Happens When an Owner Falls Behind

Ignoring assessment bills is dangerous. The Act gives associations some of the strongest collection tools in Illinois real estate law.

Unpaid common expenses or fines, together with interest, late charges, reasonable attorney fees, and collection costs, become a lien on the owner’s unit. That lien takes priority over almost every other claim on the property except government taxes and mortgages recorded before the delinquency. Once the board records a notice of the lien, it can foreclose in the same manner as a mortgage, and the board can bid on the unit at the foreclosure sale on behalf of the other owners.⁴

The board can also bring an eviction action against the defaulting owner or that owner’s tenant.⁵ Eviction is not limited to nonpayment; it applies to any default under the Act, the declaration, the bylaws, or the rules.

Board Meetings and Owner Access to Records

Every board meeting must be open to unit owners. The board can close a portion of a meeting only for a narrow list of reasons: pending or likely litigation, employment decisions, rule violations, an individual owner’s unpaid assessments, or consulting with the association’s attorney. Any vote on those matters still has to happen in the open portion.² Notice must be posted in conspicuous common areas and sent to participating owners at least 48 hours in advance. Owners can record the open portions.

The board must maintain a defined set of records at the association’s principal office: the declaration, bylaws, plats, and amendments; the rules; articles of incorporation if applicable; meeting minutes for the prior seven years; current insurance policies; contracts and leases in effect; a current member list with contact information and voting weight; ballots and proxies from the past 12 months; financial books for the current and prior 10 fiscal years; and any reserve study.⁶

To inspect records, a member submits a written request describing what they want. The board must produce the records within 10 business days; failing to do so is treated as a denial.⁶ Access to the membership list and ballots requires the owner to certify in writing that the request relates to association business.

Fines and the Notice-and-Hearing Requirement

Boards can charge late fees on delinquent assessments and can levy reasonable fines for rule violations. The procedural rule that trips up many boards: the owner must get notice and an opportunity to be heard before any fine is imposed.⁷ The hearing does not have to look like a courtroom, but the owner needs a real chance to respond. Fines imposed without that step, or fines applied inconsistently across similar violations, are vulnerable to challenge.

A published fine schedule in the rules gives the board a defensible standard and puts owners on notice of consequences before they act. For repeat or serious violations, the board can move on to lien enforcement or eviction.

Insurance the Association Must Carry

Illinois condo boards do not get to decide whether to insure the property. The Act mandates specific coverage:

Property insurance on the common elements and units (including bare walls, floors, and ceilings unless the board decides otherwise) at full insurable replacement cost, plus coverage for demolition and increased cost of construction after a loss. The combined demolition and increased construction coverage must be at least 10% of each building’s insured value or $500,000, whichever is less.⁸
Commercial general liability coverage of at least $1,000,000, covering the board, association, management agent, employees, and unit owners for claims connected to the common elements.⁸
A fidelity bond for associations with six or more units, covering anyone who controls or disburses association funds. The bond must equal the full amount of association funds and reserves.⁸
Directors and officers liability insurance.

One boundary worth flagging for owners: the association’s property policy covers the building structure but generally does not cover personal belongings, interior upgrades, or loss-of-use expenses. Those gaps are filled by a separate HO-6 condo policy the owner buys.

Fair Housing and Assistance Animals

Condo associations are housing providers under federal and Illinois fair housing law, and those laws override an association’s own rules when the two conflict. The most frequent flashpoint is assistance animals.

The federal Fair Housing Act makes it unlawful to refuse a reasonable accommodation in rules or policies when the accommodation is necessary for a person with a disability to have an equal opportunity to use and enjoy housing.⁹ A “no pets” rule does not apply to assistance animals, including emotional support animals, when the owner has a disability-related need. HUD guidance says associations cannot charge pet fees or deposits for assistance animals, and online “registration” certificates do not by themselves establish a disability or a need for the animal. Reliable documentation typically comes from a licensed health care professional with personal knowledge of the individual’s condition.¹⁰ Breed restrictions, weight limits, or demands for registration papers directed at a legitimate assistance animal invite fair housing complaints.

The Illinois Human Rights Act mirrors the federal rule and adds a right for disabled residents to make reasonable modifications to their unit at their own expense.¹¹

Resale Disclosure Rules

When an owner other than the developer sells a unit, Illinois law requires the seller to obtain a specific disclosure package from the board and provide it to the buyer on request. Delays here can hold up closings.

The package includes the declaration, bylaws, rules, and other condo instruments; a statement of any liens and the unit’s account status, including unpaid assessments; anticipated capital expenditures for the current and next two fiscal years; the status and amount of any reserve fund, including money earmarked for specific projects; the most recent financial statement; the status of any pending lawsuits involving the association; a statement of insurance coverage; a statement that any unit improvements are believed to comply with the condo instruments; and the name and address of the association’s principal officer or designated agent.

The designated officer must furnish this information within 10 business days of a written request. The association can charge up to $375 for preparing the package, adjusted annually for inflation, plus an additional $100 for rush service within 72 hours.¹²

Dispute Resolution

The declaration or bylaws can require mediation or arbitration for disputes valued at $10,000 or less, or for disputes arising from rule violations. Assessment collection is excluded from mandatory alternative dispute resolution. Parties can also submit any dispute voluntarily.¹³ Arbitration proceeds under the Illinois Uniform Arbitration Act and mediation under the Uniform Mediation Act. The association may require the disputing parties to bear the costs.

When informal resolution fails, the circuit courts have jurisdiction over condo disputes.¹⁴ Common claims include breach of fiduciary duty by the board, challenges to fine or lien enforcement, and financial mismanagement. Courts can order injunctions, award damages, or set aside improper board actions. Litigation is slow and expensive next to mediation, which is why the Act builds informal paths in first.

1
Illinois General Assembly. Illinois Code 765 ILCS 605/18.4 – Powers and Duties of Board of Managers
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Illinois General Assembly. Illinois Code 765 ILCS 605/18 – Contents of Bylaws
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Illinois General Assembly. Illinois Code 765 ILCS 605/27 – Amendments to Declaration
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Illinois General Assembly. Illinois Code 765 ILCS 605/9 – Common Expenses
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Illinois General Assembly. Illinois Code 765 ILCS 605/9.2 – Board Remedies for Default
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Illinois General Assembly. Illinois Code 765 ILCS 605/19 – Availability of Records
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Illinois General Assembly. Illinois Code 765 ILCS 605/18.4 – Powers and Duties of Board of Managers
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Illinois General Assembly. Illinois Code 765 ILCS 605/12 – Insurance
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Office of the Law Revision Counsel. 42 USC 3604 – Discrimination in the Sale or Rental of Housing
10
HUD. Fact Sheet on Assistance Animals Notice
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Illinois General Assembly. Illinois Code 775 ILCS 5/3-102.1 – Disability
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Illinois General Assembly. Illinois Code 765 ILCS 605/22.1 – Resale Disclosure
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Illinois General Assembly. Illinois Code 765 ILCS 605/32 – Alternate Dispute Resolution
14
Appellate Court of Illinois. Exchange Condominium Association v Isaiah Hatcher Jr