Condo Move In Fees Create Budget Excess!

J.G. from Illinois writes:

I’ve tried submitting this blog question online, but I keep getting an error message saying I didn’t enter the “recaptcha” correctly.  It’s just a check box, so I’m not sure what I’m doing wrong.  I hope you’ll consider this question for your blog. We’re trying to determine the proper treatment of fees collected that are outside the normal monthly assessments.  We have a move-in fee and occasionally collect late fees for monthly assessments.

Our condo rules state:

“There is a $500.00 fee for moving in that is non-refundable to cover cleaning and future rekeying of the building. ”

Our condo declaration states:

“…the Board shall supply to all unit owners an itemized accounting of the common expenses for the preceding year actually incurred and paid, together with a tabulation of the amounts collected pursuant to the budget or assessments, and showing the net excess or deficit of income over expenditures plus reserves.  Any amount accumulated in excess of the amount required for actual expenses and reserves shall be credited … to the next monthly installments due…”

The IL Condo Act gives the Board the right to determine how to distribute excess as long as it’s not prescribed in the condo documents.

We’re expecting an excess this year due to a large number of unit turnovers.   Are we obligated to credit this to the owners?  Or, can we move any excess to reserves since it wasn’t “collected pursuant to the budget” (i.e. not part of the budget that all owners paid assessments for)? Thanks for any advice, opinions, or references!

Mister Condo replies:

J.G., I am sorry if the “recaptcha” tripped you up and I am glad that you emailed me instead. The “recaptcha” is needed due to deter the large amount of attempted SPAM that used to flood the website. Thank you for your vigilance. I am neither and attorney nor an expert in Illinois condo law so please accept my advice as friendly and not legal. For a legal opinion, you should contact a local attorney who specializes in community association law. At face value, I would say that you should return any monies that were over-collected before simply depositing them to the Reserve Fund. This would be in keeping with the spirit and intention of the law which is to protect homeowners from paying more than needed or agreed to in their vote to approve the budget at the Annual Meeting. At the very least, I would offer the unit owners a vote on how to use those funds at next year’s Annual Meeting. Chances are, it isn’t such a large amount that you would get much pushback to moving the funds to the Reserve Fund where it can be used to protect all unit owners. I salute your thinking and commend you for increasing your Reserve Fund but my advice is to follow the spirit and intention of the law and even your own governing documents so that no init owner can cry foul and demand their money back. All the best!

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