Illinois Condo and HOA Boards Should Prepare for New Collection Policy Requirements

A recently passed Illinois bill, SB3527, would add a new requirement before condominium, homeowner (HOA), and townhome community associations can pursue legal action to collect delinquent assessments. If signed into law, Illinois associations would be required to adopt and follow a written collection policy (containing due dates, late fees, payment plans, referral thresholds, payment application, etc.) before initiating legal collection efforts. the policy must contain.

What is the Current Status of This New Illinois Law?

The legislation received unanimous support in both chambers of the Illinois General Assembly, passing the Senate by a vote of 54-0 and the House by a vote of 108-0. The bill amends both the Illinois Condominium Property Act and the Common Interest Community Association Act. SB3527 is expected to take effect on January 1, 2027.

What Must Be Included in a Collection Policy?

The legislation would prohibit an Illinois community association from taking legal action to collect unpaid assessments unless the association has first adopted and follows a written collection policy.

Under SB3527, a formal written collection policy would need to address several key collection practices, including:

• When assessments are due and when they become delinquent
• Any late fees or interest that may be imposed
• Charges for returned checks or failed payments
• Whether payment plans are available and the minimum terms of those plans
• When delinquent accounts are referred to legal counsel for collection action
• How payments are applied to outstanding balances
• Collection remedies available under the association’s governing documents and Illinois law

As a result, boards and managers need to partner with their association’s legal counsel to ensure that collection practices are applied consistently and in accordance with the association’s legally adopted procedures.

Illinois community associations that do not adopt a compliant policy are likely to face delays and owner challenges when attempting to pursue legal collection remedies.

Illinois Condominium Associations Face an Additional Requirement

The bill also proposes changes to Section 22.1 of the Illinois Condominium Property Act. Condominium associations would be required to include a copy of their formal collection policy as part of the resale disclosure documents provided to prospective purchasers.

As a result, condominium boards and managers should expect collection policies to become part of their standard disclosure and document-production processes along with paid assessment letters and lender questionnaires.

What Steps Can Illinois Associations Take Now?

Since assessments are the primary source of funding for most community associations, the inability to pursue delinquent assessments could affect:

• Routine maintenance
• Vendor payments
• Reserve funding
• Capital improvement projects

Taking proactive steps to adopt and implement a legally compliant formal collection policy can help Illinois associations protect their financial stability and continue providing the services and amenities owners expect.

To help Illinois community associations prepare for SB3527, KSN has developed CLEAR or Community Legal Evaluation for Assessment Recovery.

Through CLEAR, KSN attorneys can assist Illinois association board members and managers by:

• Determining whether a formal written delinquent assessment collection policy already exists
• Identifying any procedural and legal inconsistencies between the association’s current collection practices and governing documents
• Preparing legally compliant collection policies and association documents
• Satisfying the requirements of the proposed legislation in anticipation of the January 1, 2027 effective date

Legal Resource

With SB3527 expected to take effect on January 1, 2027, Illinois community associations should begin evaluating their collection procedures now rather than waiting until the last minute.

A compliant collection policy requires more than simply adopting a document – it must be consistent with the association’s governing documents, current collection practices, and applicable Illinois law.

Through CLEAR (Community Legal Evaluation for Assessment Recovery), KSN attorneys can help boards and managers identify potential compliance issues, develop legally compliant collection policies, and implement procedures that preserve the association’s ability to collect delinquent assessments.

Early legal review can help reduce risk, avoid owner challenges, and ensure associations are prepared before the new requirements become effective.

Questions about this proposed law, delinquent assessment collection, owner disputes, or other legal issues?

Please call 855-537-0500 or visit www.ksnlaw.com.

Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We represent thousands of clients and community associations throughout the US with offices in several states including Florida, Illinois, Indiana, and Wisconsin.

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