Are Reserve Studies Required in Illinois?

The information provided in this article is for educational purposes only and should not be construed as legal, financial, or professional advice. Laws, regulations, and industry standards governing HOA reserve studies vary by state and change frequently. Always consult with a qualified attorney, financial advisor, or reserve study professional before making decisions based on the information presented here. HOA Start does not provide legal or financial advisory services.

Not yet — but Illinois is actively moving in that direction, and boards that wait for a mandate to act are setting themselves up for a scramble.

As of early 2026, Illinois does not require formal reserve studies for condominiums or HOAs. Existing law focuses on general reserve-fund obligations and requires boards to consider “reasonable reserves” when setting budgets. 

But multiple legislative proposals would formalize reserve study requirements and create mandatory update cycles — and boards need to be tracking them.

Here’s where the law stands today, what’s changing, and what your board should be doing regardless of whether a mandate passes this year.

Important note: This guide reflects the legal landscape as of early 2026 and should not be treated as legal advice. Boards should consult counsel or management to confirm the latest requirements.

 

 

Current Illinois HOA Reserve Studies Law

Condominium Property Act

The Illinois Condominium Property Act (765 ILCS 605), Section 9(c), requires condo association boards to consider “reasonable reserves” when establishing budgets. 

The statute instructs boards to weigh five factors, including the estimated useful life and replacement cost of common elements and any independent professional HOA reserve report study the association may have obtained.

The key phrase is “may obtain” — the current law references reserve studies but does not require them. It leaves the decision to the board’s judgment.

The Condominium Act does allow associations, with a two-thirds owner vote, to waive the “reasonable reserves” requirement in limited circumstances. This decision must be disclosed to all members.

Common Interest Community Association Act

The Illinois Common Interest Community Association Act (765 ILCS 160) applies to HOAs and other non-condo common-interest communities. It requires associations to maintain reserves and include them as a budget line item, but does not mandate a formal reserve study.

What is the Gap?

Illinois law tells boards to plan for reserves. It does not currently tell them how to plan — no mandated studies, no required update schedules, no specified funding targets. That gap is what pending legislation aims to close.

Pending Legislation for Illinois HOA Reserve Studies

Multiple bills have been introduced in recent sessions that would require formal reserve studies. Two proposals are particularly significant.

House Bill 0220

This bill would require any Illinois condo, HOA, or townhome association with significant shared components that has had a reserve study done on or after January 1, 2020, to obtain an updated reserve study within five years — and at least every five years thereafter.

The bill targets associations that already have a study and establishes a recurring update obligation, creating a structured cycle rather than leaving updates to the board’s discretion.

House Bill 2563 and Senate Bill 1703

These companion bills would require community associations with major shared components or significant infrastructure to conduct reserve studies approximately every five years. Key provisions include:

• Associations that had a study done after January 1, 2024, must update within five years and every five years thereafter
• Associations without a recent study must complete one by a specified deadline
• Studies must be performed by qualified professionals
• The most recent study must be made available to prospective purchasers during resale
• Associations with 15 or fewer units would be exempt

What This Means for Boards

The direction is clear. Illinois is moving toward mandatory five-year reserve study cycles for most associations with significant shared infrastructure. The specific bills may evolve — provisions could be amended, timelines adjusted, exemptions narrowed or widened — but the trend is unmistakable.

Boards that commission a study now will be ahead of the curve. Boards that wait may face compressed timelines to comply once legislation passes.

Why Illinois Boards Should Act Now

Even without a current mandate, there are compelling reasons to commission a reserve study today.

Fiduciary Duty

Illinois law already requires boards to consider “reasonable reserves.” A professional reserve study is the most credible tool for meeting that obligation. 

If a homeowner ever challenges your board’s financial management, having a current study demonstrates informed judgment. Not having one raises the question of how the board determined that reserves were adequate.

Lender and Buyer Expectations

Mortgage lenders — particularly for condominiums — increasingly review reserve adequacy when underwriting HOA loans. A community without a reserve study may find that its units are harder to finance. 

Buyers and their agents also ask about reserves during due diligence, and the absence of a study raises concerns about financial planning and upcoming special assessments.

Courts Expect Informed Judgment

Even without a statutory mandate, Illinois courts evaluate board decisions based on the business judgment rule. 

A board that sets reserve contributions without any professional analysis is harder to defend than one that relied on an independent study. The study doesn’t have to be perfect — it has to exist and demonstrate that the board exercised reasonable care.

Getting Ahead of the Mandate

If legislation passes requiring studies every five years, boards that already have a current study are immediately compliant. 

Boards that don’t have one will need to engage a provider on a timeline that may be shorter than ideal — potentially competing with every other unprepared association in the state for a limited pool of qualified professionals.

Best Practices for Illinois Boards

Commission a Professional Study

Even without a mandate, a professional reserve study gives your board the data it needs to set defensible contribution levels, avoid special assessments, and demonstrate fiduciary responsibility. For most Illinois communities, an HOA reserve study will cost between $1,500 and $6,000 — a fraction of the cost of the financial surprises it prevents.

Plan for Five-Year Updates

Whether or not legislation passes this session, a five-year update cycle aligns with industry best practice and the clear direction of Illinois law. Build update costs into your long-term budget as a recurring line item.

Track Legislation

Assign a board member or your HOA management company to monitor the status of pending bills. Knowing when a mandate takes effect — and what it specifically requires — gives your board time to comply without rushing.

Disclose Reserve Information Voluntarily

Even though Illinois doesn’t yet require the level of reserve disclosure that California does, proactive transparency builds homeowner trust. 

Share reserve fund balances, contribution levels, and study summaries with your community. It reduces pushback on assessment increases and positions your board as responsible and forward-thinking.

Ready to get ahead of Illinois’s evolving requirements? Start your free trial with HOA Start and give your board the tools to manage documents, track finances, and communicate with homeowners — before the mandate arrives.

FAQ

Note: This FAQ reflects the legal landscape as of early 2026 and should not be treated as legal advice. Boards should consult counsel or management to confirm the latest requirements.

Does Illinois currently require reserve studies?

• No — as of early 2026, Illinois does not mandate formal reserve studies for condos or HOAs
• Existing law requires boards to consider “reasonable reserves” when setting budgets
• The Condominium Property Act references reserve studies but does not require them
• Multiple bills have been introduced that would create mandatory five-year study cycles
• Boards should monitor pending legislation and consult counsel for the latest requirements

What bills are pending in Illinois regarding reserve studies?

• House Bill 0220 would require updated studies every five years for associations with existing studies done since 2020
• House Bill 2563 and Senate Bill 1703 would require studies approximately every five years for associations with significant shared infrastructure
• The companion bills include a small-association exemption for communities with 15 or fewer units
• Both proposals require studies to be performed by qualified professionals
• Studies would need to be made available to prospective purchasers during resale

Should my Illinois HOA get a reserve study even though it’s not required?

• Yes — a reserve study provides the data your board needs to set defensible contribution levels
• It demonstrates fiduciary responsibility and protects board members from liability
• Lenders and buyers increasingly expect reserve study documentation regardless of state mandates
• Getting a study now puts your community ahead of likely future requirements
• The cost of a study ($1,500 to $6,000) is a fraction of the special assessments it can prevent

Would small Illinois HOAs be exempt from new reserve study requirements?

• Pending legislation (HB 2563/SB 1703) includes an exemption for associations with 15 or fewer units
• The exemption recognizes that the cost of a professional study may be disproportionate for very small communities
• Even exempt communities benefit from reserve planning — smaller associations are often the most vulnerable to underfunded reserves
• Boards of exempt associations should still consider voluntary studies or at minimum use online calculator tools for rough planning
• Final exemption thresholds may change as legislation evolves

How should Illinois boards prepare for a potential mandate?

• Commission a professional reserve study now to get ahead of compressed compliance timelines
• Build reserve study update costs into your long-term budget as a recurring line item
• Assign a board member or management company to track the status of pending legislation
• Begin disclosing reserve fund information to homeowners voluntarily to build transparency
• Consult legal counsel to understand how specific bills would apply to your community type