New Illinois Legislation Requires Written Collection Policies for Community Associations - ProManage Experts

Illinois community associations are facing an important change in the way delinquent assessments must be handled. Public Act 104-0734, formerly Senate Bill 3527, was signed into law on July 31, 2026, and will take effect on January 1, 2027. The legislation amends both the Illinois Condominium Property Act and the Common Interest Community Association Act (CICAA).

For condominium associations, homeowners associations, and other community associations subject to these laws, the new legislation makes a written collection policy an important part of the association’s collection process.

What Does the New Law Require?

Beginning January 1, 2027, an association must adopt and follow a written policy governing the collection of unpaid assessments before the association, or a holder or assignee of the association’s debt, may take legal action to collect delinquent common expenses.

This is more than a recommendation to have a collection policy. The law specifically provides that legal collection action cannot be taken unless the required written policy has been adopted and is being followed. The requirement applies even if an association’s governing documents contain provisions that state otherwise.

In other words, associations should not wait until an account becomes seriously delinquent before reviewing their collection procedures. The policy should be in place and incorporated into the association’s regular collection practices before legal action becomes necessary.

What Must Be Included in the Collection Policy?

The new law establishes minimum requirements for what the written collection policy must address.

At a minimum, the policy must specify:

• Assessment due dates: The date assessments or common expenses are due and when an assessment is considered delinquent.

• Late fees and interest: Any late fees and interest the association is authorized to charge on delinquent accounts.

• Returned-payment charges: Any charges that may be imposed for returned checks or similar payments.

• Payment plans: The circumstances under which an owner may enter into a payment plan and the minimum terms of that plan.

• Attorney referral: The amount owed or length of time an account must remain delinquent before it is referred to an attorney for legal action.

• Application of payments: How payments received from a delinquent owner are applied to the account.

• Collection remedies: The legal remedies available to the association for collecting delinquent assessments under the association’s governing documents and Illinois law.

These requirements are intended to create a more consistent and transparent process for handling delinquent accounts.

Why Is This Important for Association Boards?

Collection of assessments is one of the most important financial responsibilities of a community association. Associations rely on assessments to pay for insurance, utilities, maintenance, repairs, reserves, vendors, management, and other operating expenses.

When owners do not pay their assessments, the financial burden can ultimately affect the entire community.

The new law places greater emphasis on having a consistent, documented collection process. Boards should be careful to ensure that the collection policy reflects the association’s governing documents, applicable law, and the actual procedures being followed by management and the association’s collection attorney.

Importantly, simply adopting a policy may not be enough. The statute requires the association to adopt and follow the written policy.

That means boards and management should review their day-to-day collection practices to ensure they match the written policy.

What Should Associations Do Now?

Although the law does not become effective until January 1, 2027, boards should begin preparing well in advance.

1. Review Your Existing Collection Procedures

Associations should determine whether they currently have a formal written collection policy.

Some associations may have collection procedures spread across their declaration, bylaws, rules, management agreement, board resolutions, or informal practices. Those documents and practices should be reviewed together to determine whether they satisfy the new statutory requirements.

2. Review the Policy With Legal Counsel

Because collection procedures can involve assessment charges, payment plans, liens, attorney referrals, and other legal remedies, the association should have its proposed policy reviewed by its Illinois community association attorney.

Legal counsel can help ensure that the policy is consistent with the association’s governing documents and applicable Illinois law.

3. Establish Clear Collection Timelines

Boards should clearly establish when an account becomes delinquent and when different collection steps occur.

For example, the policy may establish procedures for:

Assessment due → delinquency → late charges → collection notice → payment-plan opportunity, if applicable → attorney referral → legal remedies

The exact timeline should be determined based on the association’s governing documents, existing practices, and legal advice.

4. Make Sure Management and the Board Follow the Policy

Once adopted, the policy should become part of the association’s standard operating procedure.

Management, the board, accounting personnel, and the association’s collection attorney should all understand the procedures and apply them consistently.

A written policy that is not followed could create problems when the association later attempts to pursue legal collection remedies.

The Collection Policy Will Also Affect Resale Documents

The new legislation also adds the association’s collection policy to the information that must be made available to prospective purchasers.

For CICAA communities, a copy of the adopted collection policy must be included among the documents available to a prospective purchaser upon request.

For condominiums, the resale disclosure requirements under Section 22.1 of the Illinois Condominium Property Act will also include a copy of the association’s collection policy.

This means associations should make sure their management company, board, and resale disclosure process are prepared to provide the current collection policy when required.

Does This Change an Association’s Ability to Collect Assessments?

The new legislation does not eliminate an association’s ability to collect unpaid assessments. Rather, it establishes a statutory requirement that must be satisfied before legal collection action can be pursued.

Associations will continue to have collection remedies available under their governing documents and Illinois law. However, the association must first have an appropriate written collection policy in place and must follow that policy.

For this reason, boards should view the new law as an opportunity to make their collection procedures more organized, consistent, and transparent.

Final Thoughts

Public Act 104-0734 represents an important change for Illinois condominium and community associations. Effective January 1, 2027, associations will need to have a written collection policy addressing specific collection procedures, and they must follow that policy before pursuing legal action to collect delinquent assessments.

For boards, this is an opportunity to review existing collection practices before the law takes effect rather than waiting until a delinquent account reaches the attorney-collection stage.

ProManage Experts recommends that each association consult with its Illinois community association attorney regarding the development or review of its collection policy and coordinate with its management company to ensure the policy is properly implemented.

This article is intended for general educational purposes only and does not constitute legal advice. Community associations should consult with their attorney regarding how Public Act 104-0734 applies to their specific circumstances.

Source: Illinois General Assembly, Public Act 104-0734.