Illinois HOA Budget Approval

Section 1: Overview, how HOA budgets are approved in Illinois

In Illinois, a community association's budget takes effect the moment the board adopts it. Owners never pre-approve it. They can overturn it just one way — by petitioning for a meeting and then voting it down, a process the statutes call petition-to-reject. Two separate laws spell it out: the Condominium Property Act (765 ILCS 605) for condominiums, and the Common Interest Community Association Act, or CICAA (765 ILCS 160), for non-condominium planned and townhome communities. Under both, the board adopts the proposed annual budget. If that budget, together with any separate (special) assessments, would push the year's total regular and separate assessments past 115% of what owners paid the year before, owners holding 20% of the association's votes can petition for a meeting. The budget still stands unless a majority of all the association's votes are cast to reject it. Illinois is not a negative-option (UCIOA) state, and it is not an increase-cap state. The 115% figure caps nothing and forces no advance owner approval; it simply unlocks the owners' right to demand a rejection vote. Reserves work the same practical way: the Condominium Property Act ties the reserve amount to the board's judgment and a set of enumerated factors, not to a fixed reserve-study or minimum-funding mandate. CICAA leaves the smallest communities out entirely — those organized under the General Not For Profit Corporation Act of 1986 with 10 or fewer units, or with annual budgeted assessments of $100,000 or less — unless they choose to opt in. Illinois runs all of this through its own detailed statutes rather than the uniform act, which gives it a distinctive budget-override mechanism instead of the negative-option ratification model. The table and the per-statute walkthrough below lay out the mechanics for each law.

Section 2: The budget approval mechanism

The table below maps the Condominium Property Act (765 ILCS 605) for condominiums against CICAA (765 ILCS 160) for common interest communities; CICAA leaves smaller associations out of its coverage.

2A. Quick-Reference Budget Mechanics Table

2B. The petition-to-reject sequence under each statute

The two statutes run the same play, and they differ in only two details. For condominiums, the board first hands the proposed annual budget to every unit owner at least 25 days before it adopts the budget. The board then adopts the budget, and the budget is effective on adoption. If the adopted budget — or any separate assessment the board adopts — would push the sum of all regular and separate assessments payable in the current fiscal year past 115% of the sum payable the year before, unit owners holding 20% of the association's votes may deliver a written petition to the board within 21 days of the board action. The board must then call a meeting of the unit owners within 30 days of delivery. Unless a majority of the association's total votes are cast at that meeting to reject the budget or separate assessment, it is ratified. The Condominium Property Act lays out these steps at 765 ILCS 605/18(a)(8).

For common interest communities, the board distributes the proposed annual budget at least 30 but not more than 60 days before adoption, adopts the budget (effective on adoption), and works under the same 115% trigger. Two things change. Under CICAA, members holding 20% of the votes must deliver the petition within 14 days of the board action, not 21; the board then calls a member meeting within 30 days, and unless a majority of the total votes are cast to reject, the budget is deemed ratified. CICAA sets out these steps at 765 ILCS 160/1-45(c).

Some assessments sit outside the 115% calculation. Under the Condominium Property Act, the board may adopt separate assessments for emergencies or for expenditures the law mandates without exposing them to the 115% petition-to-reject; the Act defines an "emergency" as an immediate danger to the structural integrity of the common elements or to the life, health, safety or property of the unit owners (765 ILCS 605/18(a)(8)(iv)). CICAA carries a parallel exclusion for emergency or legally mandated separate assessments and defines "emergency" as a danger to or compromise of the structural integrity of the common areas or facilities, or a danger to the life, health or safety of the membership (765 ILCS 160/1-45(e)).

This is petition-to-reject — not negative-option ratification, and not an increase cap. No required meeting automatically ratifies the budget the way the UCIOA negative-option model does, and no ceiling forces advance owner approval before an increase takes effect the way California's cap does. The budget is effective on board adoption; the 115% threshold only decides whether owners may force a rejection vote. Adopting the budget is one step; levying the assessment is another. The board adopts the budget and then assesses each owner's proportionate share, and it separately assesses any common expense the budget left out or any increase over the budgeted amount (765 ILCS 605/18(a)(8)(iii)).

2C. Reserves, CICAA exemptions, and variation

Under the Condominium Property Act, every budget a board adopts on or after July 1, 1990 must provide reasonable reserves for capital expenditures and deferred maintenance to repair or replace the common elements. To set the amount, the board weighs five enumerated factors: the repair and replacement cost and estimated useful life of the property the association must maintain; the current and anticipated return on the association's invested funds; any independent professional reserve study the association obtains; the financial impact on unit owners, and on unit market value, of any assessment increase needed to fund reserves; and the association's ability to borrow (765 ILCS 605/9(c)(2)). That is a board-judgment-plus-factors standard, not a fixed reserve-study mandate or a minimum-funding percentage. An association whose condominium instruments set no reserve requirement may waive the reserve requirement in whole or in part by a 2/3 vote (765 ILCS 605/9(c)(3)). CICAA requires the proposed budget to indicate the portion intended for reserves (765 ILCS 160/1-45(a)) but carries none of the enumerated-factor standard found in the Condominium Property Act.

CICAA also exempts the smallest communities. A common interest community association organized under the General Not For Profit Corporation Act of 1986 with either 10 units or fewer or annual budgeted assessments of $100,000 or less falls outside CICAA unless a majority of its directors or members elects coverage (765 ILCS 160/1-75(a)).⁶ A separate, narrower exemption — 10 units or fewer, or annual budgeted assessments of $50,000 or less — relieves certain associations from specified board, meeting and fidelity-insurance sections (765 ILCS 160/1-75(b)). Many budget provisions default to the recorded declaration, bylaws or operating agreement, which governs administration except where the Act controls. On top of all this sits a corporate-law layer: many Illinois associations are organized under the General Not For Profit Corporation Act of 1986 (805 ILCS 105), which supplies corporate formalities but imposes no budget-approval threshold of its own.

Section 3: Budget-adjacent obligations

A. Reserves in the budget

The Condominium Property Act requires condominium budgets to provide reasonable reserves, sets the amount by board judgment under five enumerated factors, and lets a board waive that requirement only by a 2/3 vote (765 ILCS 605/9(c)). CICAA requires the proposed budget to identify the portion intended for reserves but fixes no funding formula (765 ILCS 160/1-45(a)). Both are mandatory disclosure obligations rather than fixed-percentage funding mandates.

B. Special assessments

Under the Condominium Property Act, the board may adopt separate (special) assessments, which count toward the 115% calculation and so can trigger the same petition-to-reject right; assessments for additions and alterations not in the budget require 2/3 of total votes, and emergency or legally mandated assessments are exempt (765 ILCS 605/18(a)(8)). CICAA treats separate assessments the same way for the 115% trigger, requires a simple majority of total members for additions and alterations, and exempts emergency or legally mandated assessments (765 ILCS 160/1-45(e), (f)).

C. Assessment increase limits

No statutory cap requires advance owner approval before an assessment increase takes effect. The 115% figure in both statutes is the trigger for the owners' petition-to-reject right, not a ceiling. A board may adopt a budget that exceeds 115% of the prior year, and the increase takes effect on adoption unless owners petition and then reject it (765 ILCS 605/18(a)(8); 765 ILCS 160/1-45(c)).

D. Financial review, audit, and disclosure tied to the budget cycle

The Condominium Property Act requires the board to give unit owners an annual itemized accounting of common expenses, reserves, capital expenditures and real estate taxes, with a tabulation of amounts collected and the net excess or deficit (765 ILCS 605/18(a)(7)); it does not mandate an annual independent audit, though Section 18.10 applies generally accepted accounting principles. CICAA requires a reasonably detailed annual summary of receipts, common expenses and reserves, with either an itemized accounting available for review or a consolidated annual independent audit, and it requires associations of 100 or more units to use generally accepted accounting principles (765 ILCS 160/1-45(b), (i)).

Section 4: Recent legislative and judicial activity

A. Recent bills

No bill that would change the budget-approval mechanism — the 115% petition-to-reject right — or the reserve-funding standard became law in the past 24 months. The most active budget-adjacent proposal was a reserve-study mandate.

B. Recent appellate rulings

One recent appellate decision speaks directly to a board's authority over the common elements and to its power to bill enforcement costs; an older, non-precedential ruling rounds out the picture on the limits of unilateral assessment power.

A separate, older decision — Morgan's Orchard Lake Homeowners' Ass'n v. Morgan, 2022 IL App (3d) 220006-U — held that a CICAA board could not collect regular assessments it levied on its own where the declaration handed that authority to the voting members. It predates the 36-month window and is a non-precedential Rule 23 order, but it makes the point plainly: CICAA does not displace declaration-based assessment authority.

C. Active legislative debates

Reserve-study mandates remain the most active area of debate, and lawmakers keep reintroducing bills modeled on the failed HB2563 and HB220. Separately, the Illinois Supreme Court granted leave to appeal in Greenswag v. Lieberman Management Services, Inc. (No. 1-24-0289) on September 24, 2025, taking up Section 22.1 resale-disclosure fees — a budget-adjacent disclosure question that is still pending.

Section 5: National positioning and related coverage

Illinois is a non-UCIOA state that runs on its own detailed statutes — the Condominium Property Act and CICAA — with a distinctive petition-to-reject budget mechanism. That model parts ways with the UCIOA negative-option family, in which a required member meeting automatically ratifies a board-proposed budget unless owners reject it; with California's increase-cap model, which limits how much a board may raise assessments without an owner vote; and with declaration-only states, which leave budget approval entirely to recorded documents. The contrast with the negative-option states is sharp: in Illinois the budget is effective on board adoption, and no meeting happens at all unless owners petition after the 115% trigger is met, while the negative-option model requires a ratification meeting and treats owner silence as approval. For a multi-state operator entering Illinois, the practical point is simple — the budget takes effect on adoption, and the questions that decide everything are whether the increase crosses the 115% threshold and whether owners exercise the petition right.

HOA Weekly's Illinois budget-approval coverage updates quarterly as the General Assembly and the Illinois courts act. Federal frameworks — the FHA, the ADA, the FDCPA, the SCRA, and OTARD — apply to Illinois associations no matter what the state budget rules say.

1. 765 ILCS 605/18, Condominium Property Act, Contents of bylaws (Illinois General Assembly) ↩
2. 765 ILCS 160/1-45, Common Interest Community Association Act, Finances (Illinois General Assembly) ↩
3. 765 ILCS 605/18(a)(6) (Illinois General Assembly) ↩
4. 765 ILCS 605/9(c), Budget and reserves (Illinois General Assembly) ↩
5. 765 ILCS 605/18.10, Generally accepted accounting principles (Illinois General Assembly) ↩
6. 765 ILCS 160/1-75, Exemptions for small common interest communities (Illinois General Assembly) ↩
7. Illinois HB2563, 104th General Assembly, CONDO-RESERVE STUDY (status and synopsis) ↩
8. Claymoor Condominium Ass'n v. Majewska, 2024 IL App (3d) 230171 (Illinois Courts) ↩