Planning the annual budget for your Illinois condo association is always a bit of a guessing game. Even with good data to base your predictions on, it can be hard to hit the nail exactly on the head.
If your association happens to end the fiscal year on a high note – with a surplus of funds in hand – your next question is likely what to do with those funds.
First, Check the Law
Before taking any action, it’s important to know what the law says regarding surplus funds, as these laws vary from state to state. Here in Illinois, the law governing condo associations – the Illinois Condominium Property Act (ICPA) – stipulates four ways a Chicago association may handle surplus funds, provided there are not any contrary provisions in the association’s declaration and bylaws.
Per the ICPA, a condo’s board of managers has the authority to dispose of the surplus in one or more of the following ways:
1. Contribute the surplus to the association’s reserve fund;
2. Return the surplus to the unit owners as a credit against the remaining monthly assessments for the current fiscal year;
3. Return the surplus to the unit owners in the form of a direct payment to the unit owners; or
4. Maintain the funds in the operating account, in which case the funds shall be applied as a credit when calculating the following year’s annual budget.
Regardless of how your association board chooses to proceed with the surplus, it must remain transparent. Making decisions that benefit the entire community is an essential responsibility of any board member.
To learn more about working with an association management company to assist with your financial management needs, get in touch with our team at First Community Management in Chicago.