Thinking about buying a condo in Chicago and wondering if the monthly assessment tells the whole story? You are not alone. The real story lives inside the association’s budget and reserves, which you inherit the day you close. In this guide, you will learn how to read a Chicago condo budget, spot red flags before you make an offer, and ask the right questions to protect your wallet. Let’s dive in.
Why the budget matters
A condo association’s budget shows how the building pays for daily operations and big-ticket repairs. It directly impacts your monthly assessments and your risk of special assessments. When you read it well, you can avoid surprise costs and choose a building that fits your plans.
In Illinois, condo ownership follows the Condominium Property Act along with each association’s declaration, bylaws, and rules. Chicago buildings also follow local building and safety requirements that can add costs, especially for high-rises. Your goal is to read both the numbers and the narrative behind them.
Key parts of a condo budget
Revenue to watch
- Regular assessments: Monthly or quarterly owner dues. Confirm what they include, especially if heat, gas, or water are covered by the building.
- Other income: Parking, storage, laundry, guest suites, or event rentals. These help, but the building should not depend on one-time income to balance the budget.
- Special assessment income: If you see it in recent statements, ask what triggered it and if more are expected.
What to flag: Heavy reliance on one-time income or frequent special assessments to cover normal expenses.
Operating expenses
- Building services: Utilities, elevator maintenance, janitorial or concierge, landscaping, snow removal, trash, and common area lighting.
- Administrative costs: Property management, office, legal, accounting, payroll or contract labor, routine maintenance.
- Insurance: The master policy, plus fidelity bond and directors and officers coverage.
What to flag: Big jumps in utilities or insurance without a clear reason, rising legal fees that hint at disputes, or large professional fees that lack explanation.
Reserves and capital plan
- Reserve contributions: Money set aside for major repairs and replacements like roofs, façades, elevators, boilers and chillers, windows, and parking structures.
- Reserve study: A professional roadmap that shows component life cycles, estimated costs, and recommended annual funding.
What to flag: No recent reserve study, a near-zero reserve balance, reserve funding below recommendations, or a known big project with no funding plan.
Balance sheet clues
- Delinquent assessments: Owners behind on dues reduce cash flow. Compare the total to annual assessment revenue.
- Accounts payable: Unpaid vendor bills can signal cash strain.
- Surplus or deficit: Repeated operating deficits suggest the budget is unrealistic.
Heuristic: Delinquency above roughly 5 to 10 percent of annual assessment revenue is a caution sign. Very high levels can lead to service cuts or special assessments.
Chicago high-rise costs to expect
Climate and building systems
Chicago’s weather and building height add wear and cost. Expect periodic spending on façade work and tuckpointing, window and seal replacement, roof and parapet repairs, balcony and railing fixes, boilers and chillers, elevator modernization, and parking garage restoration.
City rules that affect budgets
Taller buildings may face periodic exterior inspection programs and repair timelines. Local permits, licensing, and fire and safety compliance can also impact budgets. Ask for recent inspection reports and whether any corrective work is required.
Utility metering structure
- Master-metered buildings: The association pays for certain utilities and recovers costs through assessments. This can make utility expenses volatile.
- Individually metered units: Owners pay their own usage. Confirm what your monthly assessment does and does not include.
Documents to request early
- Current budget and 2 to 3 years of budgets and actuals
- Year-to-date profit and loss and recent bank statements
- Current reserve study and reserve balance statement
- Board minutes from the last 12 to 24 months
- Special assessment history and any pending proposals
- Master insurance declarations and deductibles
- Declaration, bylaws, and rules, with a focus on assessment authority
- Management and major vendor contracts
- Litigation disclosures and any open claims or violations
- Engineer, architect, and inspection reports
- Owner delinquency schedule and collection policy
- Unit allocation schedule for expense sharing
Read the numbers step by step
Compare assessments. Are monthly assessments rising year over year, and why?
Scan the operating P and L. Identify recurring costs and any big spikes. Check board minutes for explanations.
Check reserves. Compare contributions and the reserve balance to the reserve study’s recommendations. If the fund is far below target, expect higher fees or special assessments.
Measure delinquency. Calculate outstanding dues as a percent of annual assessments. Higher levels reduce cash and raise risk.
Read the minutes. Look for upcoming repairs, bids, or disputes that could impact costs.
Review insurance. Understand coverage and deductibles. A high building deductible can lead to a large special assessment after a claim.
Red flags to pause on
- No reserve study in the last 3 to 5 years
- Very low reserves with replacements due soon
- Large unpaid special assessments or vendor bills
- Active, unresolved litigation
- Unusually high insurance deductibles
- Repeated operating deficits or transfers from reserves to cover basics
- Sudden spikes in legal or engineering costs without context
- Major projects planned with no clear funding source
Green flags to value
- A recent professional reserve study with contributions at recommended levels
- Low, stable delinquency under 5 percent and an active collections policy
- Transparent budgets and minutes that outline a capital plan
- Adequate insurance with reasonable deductibles and clear claims history
- Professional management and consistent vendor contracts with documented maintenance
Real-world scenarios to learn from
Older elevator building
The reserve study shows elevator modernization and façade work due in 2 to 3 years, but reserves are low and contributions are minimal. Minutes show no funding plan. You should expect a large special assessment unless a loan or assessment increase is planned.
Vintage building with master-metered heat
Utility expense lines spike year to year. Reserves are moderate, but there is no plan to convert meters. Ask for usage history, consider cost volatility, and review whether a conversion is being studied.
Newer high-rise with solid planning
Recent reserve study, reserves near recommended levels, low delinquency, and clear project planning in minutes. Near-term special assessment risk is lower, but still confirm insurance deductibles and the age of elevators and roof.
Smart buyer next steps
- Get documents early. Start your review before you finalize an offer timeline.
- Ask for explanations. Request line-item reasons for big jumps in expenses or assessments.
- Time major projects. If a replacement falls in the first 1 to 2 years after closing, factor that into your offer and your cash plan.
- Verify funding. Request vendor bids and confirm whether reserves, a special assessment, or a loan will pay for the work.
- Know the rules. Read the declaration and bylaws to see when owner votes are required for assessments or borrowing.
- Bring in pros if needed. For older or complex buildings, consider a building inspector, structural engineer, or reserve study professional.
Buying a condo in Chicago should feel exciting and informed. If you want a second set of eyes on a budget, reserves, and board minutes, let’s talk through it together and build a smart offer strategy. Connect with Tatiana Hernandez to get buyer coaching, mortgage-savvy guidance, and local insight across Chicagoland.
FAQs
What is a condo reserve fund?
- It is money set aside for major repairs and replacements like roofs, façades, elevators, boilers, and windows, ideally based on a professional reserve study.
How much delinquency is too high in an association?
- As a general guide, delinquent assessments above roughly 5 to 10 percent of annual assessment revenue are a caution sign and can signal higher risk of special assessments.
What Chicago-specific costs should I expect in a high-rise?
- Façade and masonry work, balcony repairs, elevator modernization, roof and waterproofing, boilers and chillers, window replacements, and parking garage restoration are common.
Why do some buildings have volatile utility costs?
- Master-metered buildings pay for utilities centrally and recover costs through assessments, which can make expense lines rise or fall with usage and energy prices.
How can I tell if reserves are adequate?
- Compare the actual reserve balance and annual contributions to the reserve study’s recommended funding levels and the timing of upcoming projects.
What should I ask before I make an offer?
- Ask about current or planned special assessments, the date of the last reserve study, delinquency rate, insurance deductibles, any lawsuits or violations, and ages of major systems.
