The annual budget can become a contentious part of living in a Chicago condo association. No one wants their fees to increase, and everyone wants the budget to be equitably allocated. It’s nearly impossible for the board to please everyone. What the board can and must do, however, is act in the best interests of the entire HOA community when making financial decisions and preparing the annual budget. If they don’t, unit owners may take action.
How are HOA Budgets Approved?
Unless condo unit owners serve on their HOA’s board, they have little say in how a budget is prepared and approved. In general, the way owners’ voices are heard in an HOA is by how they vote at board member election time.
In terms of decisions and action, it’s the elected board of directors that draft the annual budget, share it with the greater community and then vote on the proposed budget. A budget is approved if passed by a majority vote of the board when a quorum of board members is present.
But what if condo owners disagree with the proposed budget? Do they have any recourse?
Can Owners Reject a Budget?
While the board maintains voting power when it comes to the budget, there are certain situations in which condo owners can reject an association budget in Illinois.
In short, if assessments are greater than 15% from the previous fiscal year, owners have an opportunity to veto the special assessment increase.
Per the ICPA, “If an adopted budget or any separate assessment adopted by the board would result in the sum of all regular and separate assessments payable in the current fiscal year to exceed 115% of the sum of all regular and separate assessments from the preceding fiscal year, unit owners with 20% of the votes of the association may deliver a written petition to the board of managers within 14 days of the board action.”
The annual budget process is one of the most complex responsibilities board members face. Whether or not you serve on your association’s board, it’s essential to be up to speed on your HOA’s bylaws and processes. Our team at First Community Management is here to make condo living and fiscal management easier. Get in touch with us for help with all aspects of association management. We partner with more than 115 HOAs in the greater Chicago area and are here to help your association.