New law requires HOAs to adopt, follow collection policy
Illinois Senate Bill 3527 will change how condominium, homeowner and townhome associations pursue delinquent assessments. Passed unanimously by both chambers (Senate 54-0, House 108-0), the bill amends the Illinois Condominium Property Act and the Common Interest Community Association Act. Assuming Gov. JB Pritzker signs the bill into law in the next few weeks, it will likely become effective as of Jan. 1, 2027.
Under SB3527, associations must adopt and follow a written collection policy before taking legal action to collect unpaid assessments. This policy must address:
- Assessment collection procedures and timelines
- The association's rights and remedies for delinquent accounts
- Payment processing and application practices
- Standards for payment plans
- Delinquency resolution efforts
- Thresholds for pursuing legal action
- Compliance with Illinois law and the association's governing documents
Importantly, the bill does not ban collection efforts entirely for associations without a policy, but it does require a compliant policy to be in place before legal remedies can be pursued. Failure to do so may provide a delinquent owner with a valid defense to the collection action.
January 1, 2027 may feel far off, but compliance takes real lead time. Associations that delay may run into:
- Cash flow strain. Interruptions in assessment collection directly affect an association's ability to meet financial obligations.
- Reserve funding pressure. Prolonged delinquencies make it harder to fund reserves and plan for future repairs and replacements.
- Weaker collection leverage. Without a compliant policy, associations may struggle to enforce collections; clear, consistent procedures reduce disputes and strengthen enforcement.
- Last-minute scrambling. Associations that wait risk a rushed process — reviewing existing policies, consulting counsel, adopting revisions, and notifying owners — all before the deadline.
While the law specifies required topics, association should not treat this as a generic template. Because the policy directly affects the association’s ability to pursue legal remedies, boards and managers should work with an association attorney to ensure it’s properly drafted, legally sound, and aligned with governing documents and actual practices.
This potential new law also requires associations to include their written collection policy in resale disclosure documents. This means the policy will be reviewed by everyone involved in a sale — buyers, lenders, attorneys, insurance underwriters, brokers, and management professionals — alongside paid assessment letters and lender questionnaires. In other words, the collection policy is no longer just an internal document; it becomes part of the association's public-facing transaction paperwork. That makes professional drafting even more important.
Since assessments fund most association operations, an inability to collect them could disrupt routine maintenance, vendor payments, reserve funding, and capital projects. Many associations currently lack a standalone written collection policy — or have one that doesn't meet the new requirements. Boards need time to:
- Review governing documents and current collection practices
- Identify gaps against the new legal requirements
- Draft or revise a compliant policy
- Formally adopt it and communicate changes to owners
Associations that wait too long risk discovering compliance gaps right before the deadline, potentially losing their ability to pursue delinquent assessments in the interim.
Not all current collection policies are equal. Some associations have policies missing key provisions required the anticipated law; others have informal procedures that were never formally adopted in writing. Because these policies directly affect an association's collection rights, boards should work with an experienced community association attorney to review or draft a policy that aligns with:
- The association's governing documents
- Current collection practices
- Illinois state law
- Applicable local jurisdiction requirements
Acting now — rather than waiting until late 2026 — gives associations time to get this right and protect their financial stability ahead of the anticipated Jan. 1, 2027 deadline.
• Matthew Moodhe is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at condotalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.