Annual Budget Notification Requirements - Updated in 2016

The Illinois Condominium Property Act, which is the master set of laws that control condo associations in Illinois, is updated on a regular basis. Any changes to the Act automatically override and supercede rules that may be contained in your association's governing documents. (Declaration / Bylaws)

Effective June 1, 2016, one such change to the Act is related to the requirements for when notices must be sent to unit owners when a Board adopts the annual budget. As a Board it is important that you are aware of this change, and follow the new rule, so that any budget that you pass cannot be argued to be invalid or unenforcable. 

The change is easiest to understand by comparing the "old requirement" to the new. 

Old Process (Prior to June 2016)

Step 1: Copies of the proposed annual budget must be mailed to all unit owners no earlier than 30 days prior to the date of the board meeting where the budget is to be voted on. This means that you can mail copies of the proposed budget 35, 45, 60 days or more prior to the meeting. You could not send copies of the budget 20 days prior to the meeting, however, since this would be less than 30 days prior to the date of the meeting. Make sense? 

Step 2: Notices about the upcoming meeting must be mailed to all unit owners 10 to 30 days prior to the date of the meeting. This is a notice making the unit owners aware of the the date/time/location/purpose of the meeting. These notices could not be mailed 8 days prior to the meeting, nor could they be mailed 35 days prior to the meeting. The postmark date on the envelopes must be between 10 and 30 days prior to the meeting. 

Step 3: Meeting occurs and the board members vote on the budget. 

New Process (After June 2016)

Step 1: Copies of the proposed annual budget must be mailed to all unit owners no earlier than 25 days prior to the date of the board meeting where the budget is to be voted on. This means that you can mail copies of the proposed budget 30, 40, 60 days or more prior to the meeting. You could not send copies of the budget 20 days prior to the meeting, however, since this would be less than 25 days prior to the date of the meeting.  

Step 2: No changes. Notices about the meeting must be sent 10 to 30 days prior to the date of the meeting. 

Step 3: No changes. Meeting occurs and the board members vote on the budget. 

How does this change affect a Board?

The change to the law is minor and simply modifies the requirement of when copies of the proposed budget must be mailed to unit owners from 30 days to 25 days. In practice, however, this does help the Board a great deal in performing the steps required to pass an annual budget. 

Under the "Old Process" it would typically be required to mail two rounds of letters to the unit owners. First, copies of the proposed budget would be mailed to all unit owners 30+ days prior to the meeting date. Second, a handful of days later, the meeting notices would be mailed to the unit owners.  

If everything was planned perfectly, the two documents (budget and meeting notice) could be included in a single envelope and mailed to the unit owners. This would only work if the items were postmarked exactly 30 days prior to the date of the meeting. This was often difficult to accomplish, especially if "day 30" landed on a weekend. 

With the change to the law, the Board now has an additional 5 days to work with. The proposed budget and meeting notices can now be included in the same mailing if the envelopes are postmarked 25 to 30 days prior to the date of the meeting. 

This may seem like a minor difference, but can make the life of a Board member much easier by reducing the number of mailings by 50%. This still takes careful planning to pull off, but is much easier than before.

Note: Many readers may be wondering about sending notices via email. There have been changes to the law that do allow notices to be sent via email, in some instances, but it is not as straight forward as you may think. In order for emailed notices to replace mailed notices, the association must perform a number of steps. First, the association must adopt rules in their governing documents documenting the fact that emailed notices are allowed. Second, each owner must "opt in" for emailed notices. If an owner has not opted-in to receive notices via email, the Board must continue to send notices to that owner via mail. This inevitably leads to a list of certain owners that must receive notices via postal mail and a list of owners that can receive notices via email. Due to the complexity of the requirements, and the burden of tracking each owner's preference, it is easier for most associations to continue to use postal mail. 

For full details on properly adopting an annual budget you can refer to our article here: https://www.connectedmanagement.com/index.php/blog/2014/03/15/condo-association-annual-budgets-an-overview