Illinois Reserve Studies

Illinois Reserve Studies: What’s Required Today and What’s Being Proposed

Illinois reserve studies are receiving increased legislative attention, but association boards must distinguish current law from pending proposals.

As of August 5, 2026, Illinois has not enacted a statewide requirement directing every condominium, common interest community, or master association to obtain a reserve study on a fixed five-year schedule.

Current law does impose reserve-related duties, particularly on condominium associations. The proposed five-year mandate for Illinois reserve studies, however, remains pending legislation.

Boards should not tell owners that five-year Illinois reserve studies are already required. They also should not treat the absence of a current statutory deadline as a reason to postpone long-term capital planning.

What Illinois Reserve Studies Examine

Illinois reserve studies evaluate the major components an association is responsible for maintaining. The study estimates each component’s remaining useful life, projects repair or replacement costs, and recommends an annual reserve contribution.

Depending on the community, Illinois reserve studies may examine roofs, masonry, siding, elevators, boilers, mechanical equipment, pavement, private roads, stormwater facilities, pools, clubhouses, lighting, fencing, and other association-maintained property.

The study connects the physical condition of the property with the association’s financial plan.

Without that connection, annual reserve contributions can become arbitrary. The board may continue collecting approximately the same amount each year even though construction costs, component conditions, and projected replacement dates have changed.

Illinois reserve studies do not guarantee that every estimate will prove exact. Construction prices change. Components may fail early or last longer than expected. Projects can be accelerated or deferred.

A reserve study is a planning model. It should be updated when property conditions, costs, or association maintenance responsibilities materially change.

What the Condominium Property Act Requires Today

The Illinois Condominium Property Act currently requires condominium budgets adopted on or after July 1, 1990, to provide reasonable reserves for capital expenditures and deferred maintenance involving repair or replacement of the common elements.

When determining an appropriate reserve amount, the board must consider:

• Repair and replacement costs
• The estimated useful lives of association-maintained property
• Current and anticipated investment returns
• Any independent professional reserve study the association obtains
• The financial effect of assessment increases on owners and unit values
• The association’s ability to obtain financing or refinancing

The statutory wording is significant. An independent professional reserve study is one factor the board must consider if the association obtains one. Current law does not state that every condominium association must commission Illinois reserve studies every five years.

The absence of a mandatory study cycle does not eliminate the reasonable-reserve requirement.

A condominium board should still be able to explain how it determined that the budgeted reserve contribution was reasonable. A figure copied from the previous year without reviewing known capital obligations may not provide a defensible basis for that decision.

Can Condominium Owners Waive Reserves?

A condominium association whose condominium instruments do not contain a separate reserve requirement may elect to waive all or part of the statutory reserve requirement.

The waiver requires approval by two-thirds of the total association votes. It is not a decision the board can make independently.

The waiver must also be disclosed in the association’s financial statements and highlighted in the resale disclosures provided under Section 22.1 of the Condominium Property Act.

Waiving reserve contributions does not eliminate the association’s physical obligations.

Roofs, pavement, masonry, elevators, boilers, and mechanical systems will still require repair or replacement. The waiver changes how those costs will be financed. It does not make the costs disappear.

Illinois reserve studies can be particularly important when owners are being asked to consider a waiver. A current study shows the likely cost and timing of the obligations that would remain unfunded.

What CICAA Requires Today

The Common Interest Community Association Act, commonly called CICAA, currently requires the proposed annual budget to identify the amounts intended for reserves, capital expenditures, repairs, or real estate taxes.

CICAA also requires financial reporting concerning receipts, common expenses, and reserves. It does not currently impose a general five-year requirement for Illinois reserve studies on every covered common interest community.

The association’s declaration, bylaws, or other community instruments may create stronger requirements.

A loan agreement, developer-turnover document, board resolution, insurance condition, or existing reserve plan may also affect the association’s obligations.

For that reason, a board should not ask only whether Illinois reserve studies are required by statute. It must also determine what its governing documents, contracts, existing reports, and known capital responsibilities require.

Small CICAA Associations May Be Exempt

Certain small common interest communities are exempt from CICAA unless they affirmatively elect to be covered.

The exemption may apply to an association organized under the Illinois General Not For Profit Corporation Act that has either 10 units or fewer or annual budgeted assessments of $100,000 or less.

An exemption from CICAA does not mean the association has no reserve obligations.

The declaration, bylaws, corporate law, contracts, and the board’s fiduciary responsibilities may still require long-term financial planning. A small association can face the same roof, pavement, drainage, or structural expenses as a larger community, but with fewer owners available to absorb the cost.

What SB 3401 Would Change

Senate Bill 3401 is the most significant current proposal affecting Illinois reserve studies.

The Illinois Senate passed SB 3401 by a 55-0 vote on April 15, 2026. The bill then moved to the House, where it was re-referred to the Rules Committee on May 15, 2026.

As of August 5, 2026, SB 3401 has not passed both chambers and is not Illinois law.

Under the Senate-passed version, associations with qualifying major shared components or significant infrastructure would be required to conduct and periodically update Illinois reserve studies.

The proposal covers structural, mechanical, electrical, and plumbing components, along with association-maintained infrastructure such as:

• Private roads and street lighting
• Hardscape and certain landscaping
• Ponds, lakes, and water features
• Pools
• Accessory buildings
• Other qualifying common components

The proposed definition generally applies when the restoration or replacement cost exceeds $10,000 and the item is treated as a capital expense.

What the Proposed Reserve Study Must Contain

Under SB 3401, qualifying Illinois reserve studies would need to identify the association-maintained components included in the study.

For each covered component, the study would state:

1. Its normal useful life
2. Its estimated remaining useful life
3. Its anticipated maintenance, repair, or replacement cost
4. The estimated annual reserve contribution needed to fund the future work

The proposal would therefore require more than a simple list of expected projects. The study would connect the component inventory and physical condition with an annual funding recommendation.

The Proposed January 1, 2028 Deadline

Under the Senate-passed version of SB 3401, an association that completed a reserve study on or after January 1, 2024, would need to update that study within five years and at least every five years thereafter.

An association that had not completed a reserve study on or after January 1, 2024, would be required to complete one by January 1, 2028.

Future Illinois reserve studies would then need to be updated at least every five years.

Associations with 15 or fewer units would be exempt from the proposed study requirement. Those associations would still need to comply with any other applicable budgeting and reserve requirements.

These remain proposed deadlines. The House could amend the bill, the proposal could remain in committee, or later legislation could establish different requirements.

Boards should not create a legal compliance calendar based on an unfinished bill without confirming the final enacted language.

Who Could Prepare Illinois Reserve Studies?

SB 3401 would require Illinois reserve studies to be based on qualified expertise, but it would not necessarily require a single professional to evaluate every component.

The Senate-passed language describes a qualified person, organization, or business as one with relevant experience and knowledge concerning the useful life, function, condition, maintenance, repair, replacement, and cost of the components being studied.

An association could prepare the final report internally if it compiled the underlying information from qualified sources.

That structure could allow the association to combine information from engineers, roofing consultants, paving contractors, elevator specialists, accountants, and other professionals.

The practical risk is fragmentation. Someone must reconcile different pricing dates, escalation assumptions, useful-life estimates, project scopes, and funding calculations into one coherent capital plan.

Proposed Resale Disclosure Requirements

SB 3401 would also make the most recent reserve study, if one exists, available to prospective purchasers upon request during a resale.

This would make Illinois reserve studies more visible to buyers, lenders, attorneys, and real estate professionals. Prospective purchasers could compare anticipated capital obligations with the association’s actual reserve balance and funding plan.

A study showing substantial future expenses does not automatically mean an association is poorly managed. It may indicate that the board recently completed a thorough inspection and is beginning to confront obligations that had previously been overlooked.

The greater concern is usually the combination of an outdated study, inadequate reserves, deteriorating components, and no documented funding plan.

Why Boards Should Not Wait for the Legislature

Waiting for legislation is usually the weakest reserve strategy.

A board cannot prepare a credible long-term budget without understanding the useful lives and probable costs of the property it must maintain.

Without Illinois reserve studies or another disciplined capital-planning process, reserve contributions often become a repetition of the previous year’s number rather than a calculation based on actual obligations.

The result is predictable. Contributions remain artificially low until a major component fails. The association must then rely on a large special assessment, emergency financing, project deferral, or some combination of the three.

Boards should review the age of their current study, confirm that every association-maintained component is included, update construction costs, reconcile recommendations with actual reserve balances, and compare the funding plan with the proposed annual budget.

Illinois reserve studies should also be coordinated with engineering reports, structural inspections, insurance recommendations, maintenance histories, and governing-document requirements.

A financial projection based on an incomplete component inventory is not a reliable reserve plan.

Building a Defensible Reserve Program

The legal requirements governing Illinois reserve studies may change, but the board’s financial problem already exists. Every association has physical assets, and those assets have finite service lives.

Williamson Management helps Illinois condominium, townhome, homeowner, and master association boards connect reserve planning with annual budgeting, financial reporting, maintenance history, project scheduling, and owner communication.

The reserve study provides the forecast. Effective association management converts that forecast into a funded, monitored, and regularly updated capital plan.

Boards should have association counsel evaluate their current statutory and governing-document obligations and monitor SB 3401 or any successor legislation.

Until a reserve-study proposal becomes law, it should be treated as an indication of possible future Illinois policy, not as an enacted compliance requirement.