Illinois condo and HOA late fees and interest

Section 18.4(l) gives a condo board the power to impose charges for late payment of common expenses. The same sentence requires notice and a chance to be heard before a fine, but that requirement attaches to fines, not to late charges. The Common Interest Community Association Act, which covers non-condo HOAs other than the smallest, does not mention late charges at all, so an HOA's power to charge one comes from its declaration.

Illinois came close to a cap once. A 2005 bill would have limited condo late fees to the greater of $25 or 10% of the amount due, charged once per late payment. It passed both chambers and was vetoed, and the veto stood. Nothing has replaced it, so the figure lives in your association's documents.

In Hidden Grove, the association billed $88.23 a month and charged $25 for each month a payment ran late, then kept adding $25 for every month the same assessment stayed unpaid. One January payment that arrived in October drew $225 in late fees. The appellate court called the cumulative charge an unenforceable penalty, said a one-time $25 late fee would be reasonable, and sent the case back to recalculate.

So if your documents say a late fee repeats every month on the same missed assessment, that clause is exposed to challenge. A single late fee for each late payment is the structure Illinois courts have accepted.

Collection charges have their own rule. A condo can add its attorney's fees to an owner's account under 605/9.2(b), but other collection fees, including a manager's fees, only if they cover the cost of collecting common expenses, appear in the management contract, and the declaration or bylaws specifically allow adding them (605/9.2(c)). The HOA statute, 160/1-30(h), has the same three conditions.

Public Act 104-734 takes effect January 1, 2027, for condos (605/18.4) and for associations under the Common Interest Community Association Act (160/1-45(j)). After that date, no association, and no one who buys its debt, can take legal action to collect common expenses without a written collection policy that it has adopted and follows.

The policy has to state when an assessment is due and when it becomes delinquent, any late fees and interest, returned-check charges, whether owners can get a payment plan and on what minimum terms, how long before an account goes to a lawyer, the order payments are applied in, and the remedies the association can use. It does not cap any of those numbers. It puts them in writing.

The law also adds a copy of the policy to the resale documents an association must give or make available to a buyer (605/22.1(a)(10) for condos and 160/1-35(d)(8) for other associations). For a sale after January 1, 2027, expect to see it in your package.

Read these before you make an offer:

• The late fee and interest rate in the declaration, bylaws, rules or collection policy.
• Whether a late fee repeats each month on the same unpaid assessment, the structure rejected in Hidden Grove.
• For a sale on or after January 1, 2027, whether the collection policy is in the package.
• Any management company or collection fees charged to owners, and whether the declaration or bylaws allow them.
• The seller's account statement, so late fees and interest are cleared at closing and not left on the unit.

With no statutory number, the late fee is whatever the board wrote down, and in a condo unpaid assessments, interest and late charges become a lien on the unit under 605/9(g). A heavy fee schedule is a cost you take on the day you close.

An HOA Notes brief pulls the late fee, interest rate and collection terms out of your package, flags a monthly stacking late fee, checks for the 2027 collection policy, and cites the page behind each finding.

765 ILCS 605/18.4(l) and P.A. 104-734 (collection policy, effective January 1, 2027) (Late fees and collection policy). Illinois sets no statutory cap on late fees or interest: the CPA lets the board 'impose charges for late payment' (605/18.4(l)) with no figure, and a cumulative monthly late charge on one assessment is an unenforceable penalty (Hidden Grove Condo. Ass'n v. Crooks, 318 Ill. App. 3d 945 (2001)). From January 1, 2027, the association may not take legal action to collect common expenses unless it has adopted, and follows, a written collection policy specifying any late fees and interest, payment plan terms if any, and how payments are applied; a copy of the policy is part of the resale disclosures (605/22.1(a)(10), 160/1-35(d)(8)). The association may charge late fees and interest at the amounts its declaration, bylaws, or collection policy set, without a prior hearing (the notice-and-hearing requirement in 18.4(l) applies to fines); it may set its own payment order and decide whether to offer payment plans; it may add attorney's fees to the owner's share, but other collection or management fees only if the 605/9.2(c) or 160/1-30(h) conditions are met.

When you read the disclosure packet, watch for a late fee of $X shall be assessed each month until the delinquent assessment is paid in full, no written collection policy in the resale package for a sale after January 1, 2027, and management company collection fees charged to the owner without authority in the declaration or bylaws. HOA Notes flags each of these against the statute and tells you which restrictions are actually enforceable.