Illinois SB3527: Mandatory Collection Policies for Community Associations

The Illinois General Assembly has passed Senate Bill 3527 (SB3527), which will require that all Illinois condominium, homeowner, master, and common interest community associations adopt a formal, written policy regarding collection of unpaid assessments. SB3527 requires that associations adopt this written collection policy as a prerequisite to pursuing collection remedies against their members. SB3527 also requires that associations furnish a copy of the collection policy to all prospective purchasers.

SB3527 passed both chambers unanimously, including a 54–0 Senate vote and a 108–0 House vote. This margin constitutes a veto-proof majority, which means that the legislation will become law regardless of whether the Governor signs it. We anticipate that SB3527 will be signed into law shortly and (likely) effective January 1, 2027. SB3527 will amend the Illinois Condominium Property Act (ICPA) and the Illinois Common Interest Community Association Act (CICAA).

Key Takeaways

No association will be permitted to pursue legal action to collect unpaid assessments unless it has first adopted a compliant written collection policy. All associations will need to include a copy of their collection policy with any resale document packages requested pursuant to Section 22.1 of the ICPA and Section 1-35 of the CICAA.

Core Policy Requirements

At a minimum, a collection policy adopted pursuant to SB3527 must include a disclosure of the date on which monthly common expenses are deemed late, the amount of any late fees or interest applied to a delinquent owner’s account, any returned check charges that the association may impose, acceptable payment plan terms, if any, a disclosure of the amount or duration of time before the association refers delinquent accounts for legal action, how payments are applied, and a statement of the legal remedies available to the association to collect common expenses pursuant to the association’s governing documents and Illinois law.

Failure to adopt a compliant policy may result in an association being barred from pursuing legal remedies to collect unpaid assessments.

Specific Issues Requiring Legal Review

Creating a policy requires analysis of the association’s governing documents. Declarations and rules may contain payment due dates, late fee and interest amounts, and specific remedies for collections. It is important that the collection policy be adopted properly and not contradict the governing documents or applicable state law. Further, model payment plan terms will be unique for each community and its particular financial circumstances. Existing collection policies are unlikely to fully comply and should be reviewed and revised to ensure that they comply with this new law.

Recommended Action

All associations should contact legal counsel immediately to begin preparation of a compliant collection policy in advance of the anticipated January 1, 2027, deadline and update their presale disclosure packets to include the collection policy once enacted.