Can an HOA in Illinois Add New Fees Without Changing the Bylaw

This question came from one of our users:

My HOA claims the board has the power to create new fees without a vote by updating the fee schedule. The bylaws only specify a move-in fee for using the freight elevator, but the board changed the fee schedule to include any move-in, without changing the bylaws. Is this legal?"

Generally, an HOA is allowed to govern its own fees through its association’s declaration and bylaws. However, there are some very important restrictions that HOA members should monitor when determining whether the Board is assessing authorized and legal fees and assessments. Assessments should be approved during board meetings, which should be generally open to all members and unit owners.

Members and unit owners should receive notice at least 48 hours prior to the meeting. Fees assessed by the Board must be reasonable, must be tied to real costs or damages, must not be punitive, must reasonably related to promoting the health, happiness, and peace of mind of the unit owners, must be universally applied and should not be selectively enforced, must not be arbitrary or capricious, and must not be a disguised means to increase assessments to the members or unit owners without going through the proper channels.

HOA Board Meetings

By Illinois law, the Board must give the members notice at each Board meeting at least 48 hours prior to the meeting. This notice can be delivered using a specified delivery method or posted in entranceways, elevators, and other obvious common areas (if there is no common entranceway for 7 or more units, the board can designate a location for notices).

These notices must be given for any board meeting concerning the adoption of a proposed annual budget, a regular assessment, or a separate or special assessment. Additionally, notice of a meeting involving a special or separate assessment must be provided at least 10 days and no more than 60 days prior to the meeting.

HOA Budget Approval

HOAs are required to adopt a budget each year. The proposed annual budget must be delivered to each member between 30 and 60 days prior to the board’s adoption of the budget. This proposed copy of the annual budget must indicate what portions of collected funds are intended for reserves, capital expenditures, repairs, or the HOA’s payment of real estate taxes.

The Board must also provide its members with a reasonably detailed summary of the previous year’s receipts, common expenses, and reserves. Increases in common expense assessments (which may include move-in fees) are generally included in the budget and must be approved in accordance with the procedures outlined in the HOA’s declaration and bylaws. These documents can also help determine the purpose for which fees are being collected.

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The Board’s Right to Collect Reasonable Fines

So long as the Board provides notice and an opportunity for its members to be heard, they have the authority and power to levy and collect reasonable fines from its members or unit owners for violations of the declaration, bylaws, operating agreement, and rules and regulations of the common interest community association.

What is a “Reasonable Fee”?

It can be difficult to determine what is a “reasonable fine” and what is an unreasonable fine. A “reasonable fee” must be reasonably related to promoting the health, happiness, and peace of mind of the unit owners. Although this is a low bar, it shows that a fee must at least serve the HOA's interests.

Reasonable fees must be tied to real costs or damages. Reasonable fees should not be punitive. This can be obvious, for example, if someone chops down a tree in a community area. This can get more complicated when the damages in question involve theoretical reductions in property value.

If someone paints their house purple or plays loud music all night, this could, in theory, cause real damage by lowering the property values of neighboring properties. Accordingly, such behavior could be subject to a reasonable fine, even though it involves abstract damages.

For a fee to be reasonable, it should be universally applied and should not be selectively enforced by the Board. Reasonable fees should not be arbitrary or capricious. Reasonable fees should also not be a disguised means of increasing assessments to members or unit owners without going through the proper channels to authorize such increases.

Further By-Law or Articles Limitations

Again, it is important to review the bylaws and articles, as they may impose further restrictions on the fees the HOA Board is authorized to charge.  

The Board Usually Cannot Pass Along Collection Expenses

Usually, the Board cannot add fees for collecting a member or unit owner’s financial obligation to the HOA. This includes fees charged by a manager or managing agent. Fees related to collection may only be added to a member or unit owner’s respective share of common expenses if:

1. It involves managing fees related to the costs of collecting common expenses for the HOA.
2. The fees were explicitly included in a contract between a managing agent and the HOA.
3. It is specifically stated that in the HOA’s declaration, bylaws, or operating agreement, the Board has the authority to add management fees to a member or unit owner’s share of the common expenses.
4. The collection fees are attorney’s fees.
5. The collection fees are arbitration costs.

Therefore, it is important to ensure that any fees are assessed exclusively for the violation and not for their collection, unless one of the five exceptions applies.

Challenging HOA Fees

What you are able to challenge in HOA fees is likely entirely governed by the HOA governing documents, but there may not be a strict or formal appeals process. If the HOA Board is unwilling to hear your argument, the main remedy would likely be to file a complaint against the HOA.

Filing a Complaint Against an HOA

To file a complaint against an HOA, you will need to contact the Illinois Department of Financial and Professional Regulation. Through them, you will either need to use the state's dispute resolution service (depending on the issue) or take legal action.

Intended solely for general informational purposes. The content above does not create a lawyer/client relationship or serve as legal advice.

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