Can an Illinois community association sue an owner for delinquent assessments if it has never adopted a written collection policy? Beginning January 1, 2027, the answer is no. Senate Bill 3527 (SB3527), signed into law on July 31, 2026, as Public Act 104-0734, makes a written collection policy a legal precondition to taking legal action to collect delinquent assessments for Illinois condominium and common interest community associations.
Assessments are the financial backbone of every Illinois community association, and the ability to collect delinquent assessments is essential to keeping an association solvent. For years, an association’s collection practices have been largely shaped by its declaration, bylaws, and collection policies, which, although highly recommended by attorneys, were at the board’s discretion to adopt.
The new law amends both the Illinois Condominium Property Act and the Common Interest Community Association Act (CICAA), making a written collection policy a legal precondition to pursuing collection litigation. This article summarizes what the new law requires, explains how it will affect Illinois community associations, answers questions boards are likely to have, and offers practical guidance for getting ahead of the January 1, 2027, effective date. Hirzel Law drafts SB3527-compliant collection policies for a flat $600. Learn more on our Illinois collection policy page.
What Is the New Illinois HOA Collection Policy Requirement?
SB3527 adds new Section 18.4(t) of the Illinois Condominium Property Act, and new Section 1-45(j) of CICAA. Both provisions state that, to promote responsible governance, the board must adopt policies and procedures concerning the collection of unpaid assessments.
Under both amendments, an Illinois community association, or a holder or assignee of the association’s debt, may not take legal action to collect common expenses unless it has adopted, and follows, a written policy governing the collection of unpaid assessments. The prohibition applies notwithstanding any contrary provision in the association’s governing documents. Under the Condominium Property Act, it also overrides any contrary rules and regulations the association has adopted.
What Must the Collection Policy Include?
At a minimum, the policy must specify:
- The date on which common expenses must be paid and when an assessment is considered delinquent;
- Any late fees and interest that may be imposed on a delinquent owner’s account;
- Any returned-check charges that may be imposed;
- The circumstances, if any, under which an owner may enter into a payment plan, and the minimum terms of that plan;
- The amount owed, or the length of the delinquency, before the account is referred to an attorney for legal action;
- The method by which payments are applied to a delinquent account; and
- The legal remedies available to collect on a delinquent account under the association’s governing documents and Illinois law.
Collection Policies Become Part of Resale Disclosures
The new law also works the collection policy into the resale disclosure process. It adds a copy of the adopted collection policy to the documents that must be made available to a prospective purchaser on demand under Section 22.1 of the Condominium Property Act and Section 1-35(d) of CICAA.
How Illinois Community Associations Should Prepare
- Determine whether the association has formally adopted a written collection policy or has relied on its governing documents and informal practices when handling collection cases.
- Have an Illinois community association attorney prepare or review the policy. An existing policy should be reviewed against the seven required elements and the association’s governing documents. If there is no policy, the attorney should review the governing documents and prepare one that complies with them and with the new statutory requirements.
- Adopt the policy at a properly noticed board meeting. Because the collection policy will become part of the association’s rules and regulations and is not an amendment to the declaration and bylaws, the association may follow the rule adoption process. This process does not require a unit owner vote.
- Add the policy to the association’s rules and regulations.
- Add the collection policy to the resale disclosure packet so the association is prepared when a unit sells.
Frequently Asked Questions About the New Collection Policy Requirement
When does the new law take effect?
The new requirements take effect on January 1, 2027.
Does this apply to every Illinois association, including smaller ones that are exempt from most of CICAA?
It applies to every Illinois condominium, regardless of size, but not to every common interest community. The Illinois Condominium Property Act has no small-association exemption, and Section 18.4 applies to all condominium instruments recorded under the Act.
CICAA is different. A common interest community association organized under the General Not For Profit Corporation Act with 10 units or fewer, or an annual budgeted assessment of $100,000 or less, is exempt from CICAA entirely unless its directors or members elect to be covered. Because the new requirement lives in CICAA Section 1-45(j), a fully exempt association is not directly subject to it. However, it is good practice for exempt associations to adopt a written collection policy.
Does it matter if the association has sold or assigned its delinquent accounts?
No. The prohibition applies equally to a holder or assignee of the association’s debt, whether that holder is a company or an individual. A buyer of the debt cannot take legal action unless the association or the holder has adopted, and follows, a compliant written policy.
We already collect delinquent assessments in a certain way. Do we still need to do anything?
Yes. An informal practice, or a policy tucked into board meeting minutes years ago, may not satisfy the statute’s specific content requirements. The safer course is to have a written policy reviewed against the applicable statutes.
Do the owners have to vote on the policy?
No. The statute places the duty to adopt the policy on the board, so an owner’s vote is not required.
Does the policy need to go to all owners, or just be adopted and included in resale disclosures?
The statute requires only that the board adopt the policy, follow it, and include it in the resale disclosures. It does not require delivery to every owner. That said, community associations should circulate a copy of the policy to each owner upon adoption.
Can associations still send late notices and demand letters without a policy, or does it only affect legal action?
The prohibition is limited to taking “legal action to collect common expenses.” Routine billing, account statements, and late notices are not legal action, and boards keep their existing authority to collect assessments and impose late charges.
However, “legal action” is not defined. The 30-day demand that must be served before an eviction case is a statutory step in that legal proceeding, so it should be served only after a compliant policy is in place. Second, once a policy is adopted, the association must follow it. Notices, late fees, and referrals to the attorney should match the policy’s terms, including its threshold for sending an account to legal counsel.
What happens if we file a collection case without a compliant policy?
The Condominium Property Act and CICAA prohibit legal action to collect common expenses in that circumstance. A delinquent owner could raise the absence of a policy, or the association’s failure to follow it, as a defense. That can delay recovery, add attorney fees, and put an otherwise straightforward collection matter at risk.
Conclusion
SB3527 elevates the collection policy from an optional internal document to a statutory prerequisite for the collection of delinquent assessments in Illinois. Although the statutory language appears straightforward, Illinois community associations should coordinate with their legal counsel to review existing policies or prepare new collection policies that comply with Illinois state law. Given the importance of assessments to an Illinois community association’s financial health, it is vital that Illinois community associations properly adopt a written collection policy that complies with Illinois state law in the event the community association has to pursue a delinquent unit owner. The attorneys at Hirzel Law, PLC regularly counsel Illinois condominium and community associations on collections and can prepare or review a policy that complies with SB3527 while fitting the association’s governing documents and practices.
