icon on The Illinois General Assembly has passed Senate Bill 3527, which will require condominium associations, homeowners associations, master associations, and common interest community associations to adopt a formal written assessment collection policy before pursuing legal remedies against delinquent owners. The law will take effect on January 1, 2027.
This legislation represents a significant change in how associations handle the collection of unpaid assessments and will affect association boards and property managers throughout Illinois.
Why This Matters
Under the new law, an association that has not adopted a compliant written collection policy may be prohibited from pursuing legal action to collect unpaid assessments.
In practical terms, failing to adopt a properly drafted and approved collection policy could delay or impair an association’s ability to collect delinquent assessments through traditional remedies, including liens, possession actions, and other enforcement procedures authorized by Illinois law and the association’s governing documents. Therefore, all associations should take steps now to ensure compliance before the law takes effect.
What Must Be Included in the Collection Policy?
At a minimum, the new law requires associations to adopt a written collection policy that addresses:
- The date assessments are due and when they are considered late.
- Applicable late fees and interest charges.
- Returned check fees and similar charges.
- Available payment plan options and their associated terms.
- The amount of delinquency or length of time that must pass before an account may be referred for legal action.
- How owner payments will be applied to outstanding balances.
- The legal remedies available to the association for collecting unpaid assessments.
Existing Policies May Not Be Sufficient
Many associations already have some form of collection procedure or policy in place. However, existing policies should not be presumed to comply with the new legislation.
The law’s requirements extend beyond simply having a collection policy. The policy must be properly drafted, formally adopted, and consistent with the association’s declaration, bylaws, rules, and established collection procedures. A policy that conflicts with governing documents or omits required provisions may create significant challenges when an association later seeks to enforce its collection rights.
Additional Disclosure Requirements
The legislation also requires associations to include a copy of their collection policy in the resale disclosure documents provided to prospective purchasers.
As a result, collection policies will become documents that are regularly reviewed by purchasers, lenders, real estate professionals, attorneys, and unit owners. A well-drafted policy can help reduce confusion, promote consistency in collection practices, and better position an association when collection issues arise.
How We Can Help
Compliance is not simply a matter of adopting a generic form document. Every association’s governing documents, collection practices, and financial circumstances are unique. A collection policy should be carefully tailored to the specific needs of the community and coordinated with existing declaration provisions, bylaws, rules, and collection procedures.
Our firm assists condominium and community associations by reviewing existing collection procedures, identifying potential compliance concerns, preparing collection policies tailored to the association’s governing documents, and advising boards and property managers regarding the proper adoption and implementation of those policies.
With the January 1, 2027 effective date approaching, now is an ideal time for associations to review, draft, and implement compliant collection policies.
If your association or management company has questions regarding these new requirements or would like assistance with preparing a collection policy that complies with the new law, please contact our firm.