News and Resources

Community Association Lending

By: Linda J. Schiff, Senior Vice President, COMMUNITY ADVANTAGE®, Barrington Bank & Trust

Background

Community associations are home to 1 in 6 Americans and consist of condominiums, townhomes, and homeowners associations, and there are more than 12,000 associations in Illinois. The Illinois Condominium Act provides the basis upon which associations exist and operate in the state. A condominium association collects assessments from unit owners to pay for operating expenses (management, landscaping, snow removal, insurance, maintenance, etc.) and reserves for future capital expenditures (roof repair, balcony replacement, new siding, new windows, etc.). As the development ages, one or more of the capital improvements may be required.

When a capital expenditure is required, the association generally has four choices:

• Fund the repair from reserves
• Impose a one time special assessment (collect the pro-rata share of the expense from each unit owner)
• Obtain financing
• Or a combination of the above

For a complete copy of this article, please contact Linda Schiff by phone at 847-842-7980 or by email at lschiff@communityadvantage.com.

This article appeared in the Illinois Institute for Continuing Legal Education - Practice Handbook 1999/2000

February 1, 1999