An Illinois bill would have turned reserves into a payout fund for board negligence; it died
An Illinois bill would have turned reserves into a payout fund for board negligence; it died
2026-09-10 · Illinois · Legislation · Did not pass
What happened. SB 1914 would have amended the Condominium Property Act so that where board negligence causes a unit owner to lose use of the unit, a portion of the reserves must be designated to help that owner cover the resulting expenses — if the owner does not carry Category D loss-of-use insurance. It died in committee.1
A parallel House measure, HB 5585, is grouped with it in CAI's session report. As we note below, that grouping is wrong.
Two unusual design choices
It converts reserves into a contingent liability fund. Reserves in Illinois exist to fund future major maintenance, repair and replacement of the common elements — the “reasonable reserves” duty at 765 ILCS 605/9(c)(2). SB 1914 would have carved out a portion for something categorically different: compensating an owner for a loss the board caused.
It makes the owner's insurance election decide who pays. The obligation attaches only where the owner does not carry Category D loss-of-use coverage. Two owners with identical losses caused by identical board negligence would have different remedies depending on what each bought from their own carrier.
The scenario it addresses is real
A board defers a roof or plumbing repair it knew about. Water enters a unit. The unit is uninhabitable for four months. The owner pays for somewhere else to live while continuing to pay assessments on a unit they cannot occupy.
That owner's existing options are all slow. They can claim on their own HO-6 policy if they carried loss-of-use coverage. They can sue the association for breach of its repair obligation and for breach of fiduciary duty. Neither pays the hotel bill in month one.
Why the insurance-election trigger is the flaw
It creates an incentive precisely backwards. An owner who declines loss-of-use coverage gains access to the association's reserves; an owner who buys it does not. Over time that is an argument for not buying the coverage — which raises the association's aggregate exposure, since the reserves are everyone's money.
It also sits awkwardly against the way Illinois courts have handled the overlap between owner and association coverage. In a 2025 decision the appellate court held the collateral source rule did not bar an association from offsetting what an owner's own insurer had already paid, where the declaration and the Act's waiver-of-subrogation provision at 765 ILCS 605/12(e) contemplated owner-carried coverage coordinated with the association's policies. The court expressly said whether owner property coverage is mandatory or merely advised is not the controlling factor.
SB 1914 would have made the owner's coverage election controlling — the opposite of where the case law has been heading.
The proof problem nobody addressed
The trigger is “board negligence.” Who determines that, and when? The bill contemplated a payment from reserves, which is a board decision — so the board would be adjudicating its own negligence before releasing association funds to a claimant.
A board that pays has arguably conceded liability. A board that refuses has changed nothing: the owner still has to sue. Without an independent trigger — a court finding, an insurer's determination, an agency adjudication — the mechanism does not function, and none of the bills that would have created such an adjudicator passed either.
What it means for owners and boards
Owners: check whether your HO-6 carries loss-of-use coverage and what it pays. That is currently the only reliable route to a hotel bill in month one, and the legislature has just declined to create another.
Boards: the fact pattern the bill describes — known defect, deferred repair, uninhabitable unit — is the fact pattern that produces both the largest claims and the strongest ones. It is also the fact pattern that the reserve-study bills were meant to prevent. Reserves are cheaper than litigation, and the legislature's failure to mandate either does not change that arithmetic.
A caption correction
CAI's session report describes SB 1914 and HB 5585 together as reserve-fund allocation mandates. SB 1914 is one. HB 5585 is a meeting-conduct and anti-retaliation bill with nothing to do with reserves.
What to watch next
Whether a 2027 version drops the insurance-election trigger and keys instead to a court finding. That version is coherent; this one was not.
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