What is the Illinois Condo Property Act? What you should know

What is the Illinois Condominium Property Act?

The Illinois Condominium Property Act (ICPA) is the legal framework that governs how condominium associations in Illinois are formed and operated. The Act provides a roadmap for everything from governance structures to financial responsibilities and owners' rights in condominium properties across the state.

At its core, the ICPA aims to bring clarity and consistency to condominium life. It defines what a condominium is under state law, establishes procedures for creating associations, and lays out guidelines for day-to-day management, including budgets, insurance, and board meeting protocols.


This article is not intended to and does not constitute legal advice or create an attorney-client relationship. Board members should consult their association’s attorney to discuss the legal implications of their decisions or actions prior to proceeding.
 

What should community associations know?

The Illinois Condominium Property Act affects virtually every aspect of governance and operations for community associations. The Act provides detailed directions on how boards are elected, what rights owners have, and what financial practices are required. Associations must operate in compliance with these statutes to help minimize legal complications.

Some of the key provisions include:

• Requirements for recordkeeping and making association documents available to owners upon request
   
• Protocols for board elections, including notice, eligibility, and proxy rules
   
• Budgeting guidelines and the necessity of maintaining a reserve fund
   
• Rules around assessments, including the process for late fees, liens, and collection
   
• Specific insurance coverage that associations must maintain

Because every association is unique, it’s essential to consult with your association’s attorney to determine how the Act affects your unique community.
 

How does the ICPA define unit owner rights?

Under the Illinois Condominium Property Act, unit owners in Illinois condominiums may have the ability to:

• Inspect key association documents, including financial statements, board meeting minutes, and insurance policies
   
• Receive timely notices about board meetings, elections, assessments, and major decisions
   
• Participate in annual meetings and cast votes on important community matters
   
• Access a current list of unit owners, ballots, and proxies, particularly during election periods
   
• Challenge certain board decisions or pursue legal action in situations where their rights have been violated under the Act

What financial responsibilities do boards have under the ICPA?

Boards are generally responsible for adopting a budget, collecting assessments, funding reserves, and maintaining proper insurance.

Each year, associations must adopt a proposed budget and distribute it to owners. This budget should reflect actual operating costs, anticipated maintenance, insurance premiums, and reserve contributions. While the Act does not mandate a specific percentage for reserve funding, it requires the budget to include “reasonable” reserves for capital expenditures and deferred maintenance.

The Act also gives associations the authority to levy assessments and pursue legal remedies, including liens, if owners fall behind on payments. However, the board must follow notice and collection procedures outlined in the Act and applicable governing documents.
 

What are the requirements for insurance coverage?

To protect shared property and minimize liability, the ICPA requires associations to carry certain types of insurance. At a minimum, associations must maintain:

• Property insurance covering the common elements and units, including limited common elements, up to the full replacement cost of the insured property.
   
• General liability insurance against claims and liabilities arising in connection with the ownership, existence, use, or management of the property, with a minimum coverage amount of $1,000,000.
   
• Associations with six or more dwelling units must obtain and maintain a fidelity bond covering persons, including the managing agent and its employees who control or disburse funds of the association, for the maximum amount of coverage available to protect funds in the custody or control of the association, plus the association reserve fund.

Additional policies such as umbrella liability may be advisable depending on the association's size and exposure. Boards should work with insurance professionals and legal counsel to assess appropriate coverage levels.
 

How are amendments to governing documents handled?

Typically, proposed changes must be approved by a specified percentage of unit owners before they take effect, though the specific percentage can vary based on the association’s governing documents.

Amendments may cover a range of topics, such as rental restrictions, pet policies, or changes in board composition. Typically, modifications must be recorded with the local county to be enforceable. Boards are usually responsible for notifying owners of proposed changes and providing sufficient time for review and voting.
 

What is condominium deconversion?

Condominium deconversion occurs when a condominium property is sold to a single investor or entity, typically to convert the units into rental apartments. The ICPA provides a structured process for this transition, which may include:

• A minimum approval threshold, typically at least 75% of unit owners (for condominiums with four or more units) based on their percentage of ownership in the common elements
   
• Required notice to all unit owners of the proposed sale, including financial details and the buyer’s plan
   
• An option for owners who oppose the sale to contest the process within a defined period

Deconversions have become more common in recent years, particularly in urban areas where rental demand is high. Notably, in Chicago, a local ordinance has increased the required approval threshold to 85% of unit owners for deconversion sales. Boards should always consult their association attorney for advice specific to their situation when considering deconversion.
 

What disclosures are required for condo sales in Illinois under ICPA?

When a unit is sold, the ICPA requires the association to provide a series of disclosures to the prospective buyer. These may include:

• Governing documents: A copy of the condominium’s declaration, bylaws, and any rules or regulations that govern the community.
   
• Financial statement for the unit: A summary of any unpaid assessments, fees, or other charges tied to the unit, as allowed by the governing documents or Section 9 of the Act.
   
• Planned capital expenditures: Information about any capital improvements or large expenses the association anticipates within the current or next two fiscal years.
   
• Reserve fund details: A breakdown of the association’s replacement reserves, including any portion that’s been earmarked for a specific project.
   
• Recent financials: The most recent available annual financial statement for the association.
   
• Legal disclosures: A summary of any pending lawsuits or judgments involving the association.
   
• Insurance coverage summary: A statement of what types of insurance are carried by the association that apply to all unit owners.
   
• Unit modifications: A statement confirming, to the best of the board’s knowledge, that any changes made to the unit or its limited common elements comply with the governing documents.
   
• Board contact information: The name and mailing address of the board president, or another designated officer, who is responsible for receiving official notices.

These disclosures are designed to give buyers a better understanding of the community they are joining. Boards or community association managers typically fulfill these requests and may charge a reasonable fee for the service (initially capped at $375, with adjustments tied to inflation).
 

How is the ICPA enforced?

Enforcement of the ICPA can take place in several ways. Unit owners may bring legal action against an association or board if they believe a provision has been violated. Courts can order damages, injunctions, or compel the board to comply with the law.

Boards are expected to act in good faith and within the bounds of the Act. Qualified legal counsel and an association management partner familiar with Illinois condominium law can help minimize disputes and maintain compliance.

In addition to legal remedies, state agencies or local courts may weigh in on disputes when requested by one of the parties.

Navigating the Illinois Condominium Property Act doesn’t have to feel overwhelming. At FirstService Residential, we work alongside boards to simplify property management, streamline operations, and support compliance with Illinois regulations. If your condo association could benefit from expert guidance and hands-on support, contact our team today to learn how we can help.