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Nadine · Guest

I live in a small 8 unit Condominium Association in IL. In our bi-laws it states that the reserves amount should be of a "reasonable" amount. I have searched, without success, for a definition of "reasonable". Are there any state laws that specifically outline how much a reserve should hold? Do you know of maybe a website I can check out. I have put more than 25 hours into this already and can not find any guidelines.

Thanks very much for your help and time,

Nadine Carr
Yender Association, IL

nemmar · Site Admin

Nadine,

The Illinois Condominium Property Act requires a board of directors to establish a reasonable reserve account. Contrary to popular belief, Illinois law does not delineate a specific dollar amount for reserves, but rather leaves the amount to the board's discretion. However, state law does set forth several guidelines to use in determining the amount of reserve funding:

- The repair and replacement costs of the association's common elements.
- The current and anticipated return on investment on association funds.
- A reserve study that the association may obtain.
- The financial impact on unit owners of any assessment increase needed to fund reserves.
- The ability of the association to obtain financing.

Your board should use these guidelines to help determine the amount of its reserve account. If the board believes that the current reserve level is reasonable, then it's not required to continue funding the account.

Here are some articles in my site online RE Library that might help also:

http://www.nemmar.com/rel-0003-r-t/article-realty-times-0858.shtml

http://www.nemmar.com/rel-0003a-r-t/article-realty-times-1231.shtml