Obligations of small HOAs in Illinois
Small or large, all homeowner associations share obligations and responsibilities to the owner members, the state and federal governments, and to the healthy financial and maintenance operation of the association.
The value of every owner’s property, and often the ability to sell or refinance your HOA property may depend on keeping up with these obligations.
Assessment collection: Set up regular billing and process for payment of owner assessments; deposit funds; collect delinquencies.
Bill payment: All association bills, such as insurance, landscaping, or utilities, need somewhere to send a bill and someone responsible for paying it.
Bookkeeping: Association financial records must be kept beginning with turnover.
Common area maintenance: Maintain grounds and buildings as defined in declaration; maintain, repair, and replace the common elements of the association.
Budgeting: A community budget should be made prior to the beginning of the next fiscal year. Any changes to expenses should be included.
Insurance: Insurance policy for the association is required by state law and the association bylaws.
Annual meeting: A minimum annual meeting to record association business and governance decisions. By law, meeting minutes and association records must be accessible by owners.
Record keeping: All association business records, communication, meeting minutes, and contracts must be kept and available for owner inspection upon request.
Resale reporting: Processing of financial and other reporting for resale/refinances in the community, and adding new owners to the association for dues payment and communication.
Reserve study: HOAs with shared elements such as buildings or amenities must have a plan to maintain and fund repairs and replacement of those elements.
State registration annual renewals: Your HOA is a small business and requires a business registration with the Secretary of State.
Compliance: Maintaining compliance with HOA bylaws and state laws, including new statutes that affect HOA governance in your state.
Tax filing: Federal tax filing annually.
These are the fundamentals of HOA operations, although your state may---and likely will---have additional obligations. Find a list of requirements specific to your state here.
These are the laws that govern HOAs in Illinois:
Illinois Condominium Property Act, 765 ILCS 605/1, et seq.: This Act governs the formation, operation, and management of all condominium developments in Illinois. Under the Act, any provisions of a condominium declaration that contains provisions inconsistent with this Act's provisions are void as against public policy and ineffective. See 765 ILCS 605/2.1 (Applicability).
Illinois Common Interest Community Association Act, 765 ILCS 160/1, et seq.: The Act regulates the operation and management of common interest community associations (an attached or detached townhome, villa, or single-family home) that have at least 11 private residences and annually collects more than $100,000 from its members. The act does not apply to condominiums or cooperatives. See 765 ILCS 160/1-5 (Definitions), and 765 ILCS 160/1-75 (Exemptions for small common interest communities). chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://idfpr.illinois.gov/content/dam/soi/en/web/idfpr/ccico/pdfs/cicaa-full-act-2022-effective-may-27-2022.pdf
Condominium and Common Interest Community Ombudsperson Act, 765 ILCS 615/1, et seq. The Act fosters dispute resolution alternatives for homeowners and condominium associations governed by the Condominium Property Act and all common interest community associations governed by the Common Interest Community Association Act. The Act is scheduled to be repealed on July 1, 2022.
General Not For Profit Corporation Act of 1986, 805 ILCS 105/101.01, et seq.: The Act regulates non-condominium common interest community associations organized as not for profit corporations with ten (10) units or less, or an annual budget of $100,000 or less unless a majority of its directors or members elect to be governed by the Illinois Common Interest Community Association Act. 765 ILCS 160/1-75. Condominium associations may organize as not-for-profit corporations under 765 ILCS 605/18.1 of the Condominium Property Act (CPA). Whether or not it is incorporated, an association has the powers and responsibilities specified in the General Not For Profit Corporation Act of 1986 that are not inconsistent with the CPA or the condominium instruments. 765 ILCS 605/18.3.
These are the federal laws that apply to all HOAs in the United States:
https://www.hopb.co/federal-laws
The Community Associations Institute(CAI) is the international association for homeowner associations. CAI provides information, education, and resources to the homeowner volunteers who govern communities and the professionals who support them. Illinois chapter: http://www.cai-illinois.org
This basic information about HOAs in your state is a helpful start, but should not be used as legal advice. If you have questions about interpreting your state’s legal requirements or the association’s governing documents, please contact an attorney in your state who specializes in community association law. Reach out for a referral if you’re not sure who to contact.
If you would like additional information about our small HOA management services, please contact us. We are here to help and have great resources for small HOAs!