Checklist · Real Estate · Chicago

Checklist: Chicago Condominium Closing Documents and Association Issues

Buying a condominium means buying a unit and a share of an association. These are the documents that reveal the risk, and when to read them.

By Lincoln Square Law · 8-minute read

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Buying a condominium in Chicago means buying two things at once: the unit, and a share of an association that controls the building, the budget, and many of the rules you will live under. Most of the legal risk in a condominium purchase sits in the second part. A clean unit in a building with thin reserves, a pending special assessment, or a lawsuit over the facade can cost more than any inspection finding. This checklist lists the documents to obtain, what to look for in each, and when in the transaction each one matters.

The statute that makes the documents available

When a unit is resold, the Illinois Condominium Property Act requires the unit owner to make specified association documents and information available to the prospective buyer, and the association’s board must provide them to the seller on request (765 ILCS 605/22.1). The list includes:

• the declaration, bylaws, and rules
• the current operating budget and financial information
• information about capital expenditures the board anticipates
• the status of the reserve fund
• any unpaid assessments on the unit
• pending lawsuits and judgments involving the association
• the association’s insurance
• any right of first refusal or other restraint on the sale

The association may charge a reasonable fee for preparing the materials, and the statute sets time limits for providing them.

In practice, buyers should ask for the complete package as early as possible, ideally before attorney review ends, because the review period is when problems in the documents can still change the contract.

Governing documents

• Declaration, bylaws, and rules and regulations. Confirm what you are actually buying, including the unit boundaries and any limited common elements such as a balcony, parking space, or storage unit assigned to the unit.
• Rental and use restrictions. Many Chicago associations limit leasing, short-term rentals, pets, or business use. If you plan to rent the unit now or later, read these provisions closely.
• Amendments. Recorded amendments can change leasing rules, assessments, and use restrictions. Make sure you have the current documents, not an old copy.
• Parking and storage. Confirm whether parking is deeded, a limited common element, or a license, and that the contract and title commitment describe it correctly.

Financial documents

• Current budget. Compare regular assessments with actual costs. A budget that has not increased in years while the building ages is a warning sign.
• Financial statements and reserves. Reserves pay for roofs, masonry, elevators, and mechanical systems. Low reserves make special assessments more likely.
• Reserve study, if one exists. A professional reserve study estimates when major components will need replacement and what they will cost. Compare its recommendations with actual reserve balances.
• Special assessments. Ask about assessments already approved, proposed, or being discussed. The contract should say who pays assessments approved before closing and payable after it.
• Delinquency rate. If many owners are behind on assessments, the association’s cash flow and some lenders’ willingness to finance units may be affected.
• Paid assessment letter. Near closing, the association confirms that the seller’s assessments are paid through a stated date. The title company typically requires it.

Legal and insurance documents

• Pending litigation. Lawsuits by or against the association, including construction defect claims, can affect finances, insurance, and financing.
• Master insurance policy. Understand what the association’s policy covers and what it leaves to the unit owner, including deductibles that may be charged back to an owner after a loss. Your unit-owner policy should fill the gap.
• Board minutes. Minutes from the past year or two often reveal what the financial statements do not: planned repairs, disputes, insurance claims, water infiltration, and upcoming votes.
• Right of first refusal or approval requirements. Some declarations give the association a right to purchase or approve sales. The seller must address any such right before closing.

The unit and the building

• Inspection. Inspect the unit, and ask the inspector to note visible building issues such as water staining, masonry, windows, and mechanical equipment serving the unit.
• Seller disclosure report. Residential condominium units are covered by the Residential Real Property Disclosure Act, so the seller’s report should arrive before the contract is signed (765 ILCS 77/20). If it arrives later and discloses a material defect, the buyer has five business days after receipt to terminate (765 ILCS 77/40).
• Recent and planned building projects. Ask what work has been done, what is planned, and how it will be paid for.
• Move-in rules. Many buildings require elevator reservations, move-in fees, and certificates of insurance from movers.

Lender requirements

Lenders review condominium projects, not only borrowers. A lender may ask the association to complete a questionnaire about owner occupancy, delinquencies, litigation, commercial space, and insurance, and some loan programs require the project to meet specific eligibility standards. A building that does not meet a lender’s requirements can delay or derail financing, so the buyer’s lender should receive the association’s contact information early, and any questionnaire should be requested promptly.

Title and closing items specific to condominiums

• Title commitment. Expect the declaration and its amendments to appear as exceptions. Confirm that the legal description includes the unit, its percentage interest in the common elements, and any parking or storage rights.
• Assessments at closing. Regular assessments are prorated. Any capital contribution or working capital fee charged to buyers should be identified in advance.
• Transfer taxes. State, county, and Chicago transfer taxes apply to Chicago condominium sales as they do to houses (35 ILCS 200/31-10). The settlement statement should show which party pays each portion.
• Keys, fobs, and access. Arrange delivery of keys, fobs, garage remotes, and mailbox keys, and confirm how the management company registers new owners.

Questions to ask the management company

Documents answer some questions and raise others. A short written list of questions to the managing agent, sent through the seller’s side during attorney review, often fills the gaps faster than another round of documents:

• Are any special assessments approved, proposed, or under discussion, and for what projects?
• When were the roof, masonry, windows, elevators, and main mechanical systems last replaced or repaired, and what is planned in the next five years?
• Has the building had water infiltration, sewer backups, or insurance claims in the past three years?
• What percentage of units are rented, and are there caps or waiting lists for leasing?
• What is the master policy deductible, and can it be charged to a unit owner?
• Is the association involved in any lawsuit, or aware of a claim that may become one?

Keep the written answers with your closing file. If an answer later turns out to be wrong, a written record of what you were told matters.

Warning signs worth pausing on

No single document decides whether a building is a good purchase, but some combinations deserve a pause and a conversation with your attorney before attorney review ends:

• reserves that are low relative to the building’s age
• minutes that mention water infiltration, masonry, or roof problems without a funded plan
• a special assessment under discussion but not yet approved
• significant litigation
• a high share of delinquent owners
• insurance deductibles large enough to become an owner’s problem after a loss

Each of these can be addressed through price, credits, contract terms, or a decision not to proceed, but only while the contract still allows it.

Timing summary

• Before signing: seller disclosure report. Ask for the association package.
• During attorney review: review governing, financial, legal, and insurance documents, and request credits or terms based on what you find.
• During financing: lender questionnaire and project review, and unit-owner insurance.
• Before closing: paid assessment letter, prorations, move-in arrangements.
• After closing: register with management, confirm assessment payment method, keep the governing documents with your closing file.