If your community association is located in Cook, DuPage, or Will County, a critical piece of legislation is changing the financial landscape of every HOA and Condominium Association (COA). The era of deferring major capital decisions is officially coming to an end.
For years, many Illinois associations operated without a formal roadmap for their long-term expenses, often leading to sudden, financially painful Special Assessments. Driven by legislative urgency and national standards, Illinois is now moving toward mandating regular Reserve Studies.
At PMI Beyond the Loop, we recognize that compliance is vital, but opportunity is the real prize. This mandate is not just a burden; it is the single best tool for stabilizing assessments, protecting property values, and shielding your volunteer board from liability.
Here is what every board member in the Chicago suburbs needs to know about the new Illinois Reserve Mandate and how to ensure your association is fully prepared.
What is the New Illinois Reserve Study Mandate?
While reserve studies have long been considered industry best practice, Illinois is solidifying its position to require them by law. Current and proposed legislative amendments (like HB0220/HB2563) aim to amend both the Condominium Property Act and the Common Interest Community Association Act (CICAA).
The Core Requirements (Expected to Take Effect in 2025/2026):
Mandatory Study: Most associations with "major shared components or significant infrastructure" will be required to conduct a comprehensive Reserve Study.
Required Frequency: The study must be updated at least every five years.
Initial Deadlines:
If no study exists (since Jan 1, 2024): Associations must complete their initial study by a set deadline (e.g., January 1, 2028).
If a recent study exists (since Jan 1, 2024): It must be updated within five years of that study date, and every five years thereafter.
Qualified Professionals: The study must be performed or compiled by a qualified person or entity with expertise in assessing the useful life and replacement costs of the components being studied.
Transparency: The most recent study must be made available to prospective purchasers upon request during the resale disclosure process.
Exemption: Smaller associations, typically those with 15 or fewer units, are often exempt from the study mandate but must still comply with existing "reasonable reserves" budgeting requirements.
Defining "Major Shared Components"
This mandate applies to shared infrastructure that has a limited useful life and requires substantial replacement costs. This includes:
Roofs, foundations, and structural elements.
Paving (roads, sidewalks, parking lots in Schaumburg, etc.).
Mechanical systems (HVAC, boilers, plumbing, electrical).
Elevators, pools, clubhouses, and other amenities.
The Single Biggest Risk: Confusing the Study Mandate with the Funding Mandate
It is crucial for boards to understand the difference between the legal requirement to HAVE a reserve study and the requirement to FUND it.
The Mandate to Study is Firm: Once the law is effective, your board must complete and update the study on the five-year cycle to be legally compliant.
The Mandate for Funding is Subjective: Currently, Illinois law does not mandate a specific funding percentage (like 70% or 100% funded). Instead, both the Condominium Act and the CICAA require boards to maintain "reasonable reserves for capital expenditures and deferred maintenance," using the study's findings to determine that amount.
The Condominium Waiver Caveat
For condominium associations (where no reserve requirement exists in the original governing documents), there is a limited statutory provision that allows the board to waive the requirement to set "reasonable reserves" (in whole or in part) by a vote of 2/3 of the total votes of the association.
The Cost of the Waiver: While this option exists, exercising it is often considered fiscally irresponsible. Waiving reserves must be prominently disclosed in the association's financial statements and to prospective buyers. This disclosure can severely hinder unit sales and negatively impact the market value of homes in communities across the Naperville and Bolingbrook area.
Why Compliance is Your Association's Best Asset
For boards in the competitive Chicago suburbs, the reserve study is more than just compliance—it is the ultimate tool for strategic governance and financial health.
1. Shielding Your Board from Liability
A primary duty of a board is fiscal responsibility. Failing to plan for major, predictable expenses—especially after a professional study identifies them—can expose volunteer board members to potential breach of fiduciary duty claims from homeowners down the road. By commissioning the study and developing a funding plan, you demonstrate due diligence and shield yourselves.
2. Protecting Property Values and Resales
Lenders and potential buyers are increasingly scrutinizing association financials due to post-Surfside national guidelines (Fannie Mae/Freddie Mac).
Lender Confidence: Well-funded reserves based on a recent study dramatically increase the likelihood of a community meeting lender requirements, making it easier for homeowners to sell and secure financing.
Realtor Confidence: As a licensed Realtor and CMCA Manager, I can confirm that a clear, positive reserve status is a powerful selling point that reassures buyers that they won't face a massive special assessment immediately after closing.
3. Ending the Special Assessment Crisis
The study provides a 30-year financial roadmap, allowing the board to calculate true costs and integrate them into the annual budget. This eliminates guesswork and helps transition the association from reactive crisis management (special assessments) to proactive, sustainable financial planning.
How PMI Beyond the Loop Ensures Seamless Compliance
Navigating this new mandate requires not just a manager, but a professional partner with the technical resources and local expertise to handle the project from start to finish.
Our Comprehensive Reserve Study Services:
Project Management & Coordination: We handle the logistics of selecting and working with a qualified reserve study professional (as required by law), managing the entire process for you.
Strategic Review: As a CMCA-certified firm, we don't just file the report; we analyze the findings and integrate them into a 30-year financial plan, advising on the "reasonable reserve" amount that fits your community’s long-term goals.
Flexible Budgeting: We can then assist with annual financial budgeting, ensuring the new reserve contributions are accurately calculated, explained, and implemented—whether you choose baseline, threshold, or full funding models.
We combine this expertise with the strength of our national franchise and the transparency of a BBB Accredited, woman-owned business deeply familiar with the unique needs of Cook, DuPage, and Will County associations.
Your 90-Day Compliance Checklist
If your association hasn't had a recent study, the time to start is now:
Review Governing Documents: Determine if your bylaws already mandate a reserve contribution amount.
Budget for the Study: Allocate funds in your current or next budget cycle to hire a professional.
Engage a Partner: Contact a professional partner like PMI Beyond the Loop to start the process and coordinate the vendor selection.
Integrate Findings: Once the study is complete, hold a board meeting to formally adopt the report and integrate the recommended funding into your budget for the next fiscal year.
Communicate: Clearly communicate the findings and the funding strategy to all homeowners to foster trust and buy-in.
The new Illinois Reserve Mandate is a challenge, but it is one that guarantees a healthier, more financially stable future for your community. Don't wait until the deadline to act—proactive compliance is the ultimate defense against liability and the clearest path to protecting home values.
Call to Action (CTA): Is your association prepared for the Illinois Reserve Mandate? Contact PMI Beyond the Loop today for a free consultation on reserve planning and let us guide your community toward financial stability.
PMI Beyond the Loop. Management Beyond the Ordinary.
