Illinois Condominium Reserve Adequacy Calculator

How this calculator works

This calculator evaluates Illinois condominium reserve fund adequacy under 765 ILCS 605/9(c) and 605/9(d). Given the total replacement cost of common elements from the reserve study, the average remaining useful life of those components, the current reserve balance, the actual annual contribution, and the total number of units, it returns:

1. The fully-funded reserve target — the reserve balance the association should have today based on a straight-line depreciation of the replacement cost.
2. The funding ratio (current balance ÷ fully-funded target).
3. The reserve deficit (target minus current balance).
4. The recommended annual contribution to close the deficit over the remaining useful life and fund future replacements.
5. Whether disclosure of the deficit is required in the annual budget under 765 ILCS 605/9(c).
6. The projected years until reserve depletion at the current contribution and estimated annual draw rate.
7. A verdict classifying the reserve position and specifying next steps.

The relevant Illinois statutes

765 ILCS 605/9(c) is the core obligation. The board of an Illinois condominium association must maintain a reserve fund adequate to meet the projected costs of repairing and replacing the common elements. When the reserve fund balance is less than the amount determined by the reserve study, the board must disclose the deficit in the annual budget distributed to all unit owners.

765 ILCS 605/9(d) requires associations with seven or more units to conduct a reserve study at reasonable intervals. The reserve study determines the projected replacement costs of major common elements (roofs, elevators, HVAC, parking surfaces, lobbies, and other shared components) and the annual contribution required to fund those replacements. Illinois practice treats 3–5 years as a reasonable study interval.

765 ILCS 605/18.4(e) imposes a board duty to maintain the property and common elements. The reserve fund is the mechanism for fulfilling that duty over the long term; a severely underfunded reserve is evidence of a governance failure.

How the fully-funded target is computed

The calculator uses a simplified straight-line depreciation model:

consumed life = 30 years (assumed total life) − remaining useful life
depreciation fraction = consumed life ÷ 30
fully-funded target = replacement cost total × depreciation fraction

Example: 48-unit condominium. Total replacement cost: $1,200,000. Remaining useful life: 12 years. Assumed total life: 30 years.

• Consumed life: 30 − 12 = 18 years.
• Depreciation fraction: 18 ÷ 30 = 60%.
• Fully-funded target: $1,200,000 × 60% = $720,000.

A formal reserve study from a licensed engineer or credentialed reserve specialist (CAI RS, ARP) will produce a more accurate, component-by-component target. The calculator's result is a planning approximation; the reserve study is the authoritative figure for disclosure purposes.

Key rules and gotchas

Disclosure is mandatory when underfunded. If the reserve balance is below the target — even slightly — the board must disclose the deficit dollar amount in the annual budget. Failure to disclose creates personal liability exposure for board members and complications at unit resale.

Seven or more units triggers the reserve study requirement. Associations with fewer than seven units are not required to conduct a reserve study but are still required to maintain adequate reserves. Very small associations (2–6 units) often maintain informal reserve schedules approved by the board rather than a formal study.

The 30-year assumed life is a simplification. Different components have different useful lives: asphalt paving (20 years), roofing (25–30 years), elevators (25–35 years), HVAC (15–20 years). A formal reserve study assigns individual useful lives to each component. The calculator uses 30 years as a single-number approximation; for associations with many near-end-of-life components, the actual fully-funded target may be significantly higher than this calculator shows.

The depletion projection assumes a constant draw rate. The annual draw is estimated as replacement cost total ÷ 30 years. Actual draws are lumpy — a roof replacement in year 3 may consume the entire reserve balance; no major expenditure for years 4–8 allows rebuilding. The depletion figure is a trend indicator, not a precise forecast.

Worked example: adequately funded

Condominium, 48 units. Replacement cost: $1,200,000. Remaining life: 12 years. Current balance: $780,000. Annual contribution: $55,000.

• Consumed life: 18 years. Depreciation fraction: 60%.
• Fully-funded target: $720,000.
• Current balance ($780,000) > target ($720,000).
• Funding ratio: 108%.
• Reserve deficit: $0.
• Verdict: ADEQUATELY FUNDED. No disclosure required.

Worked example: underfunded — disclosure required

Same association, but current balance is only $280,000.

• Fully-funded target: $720,000.
• Reserve deficit: $720,000 − $280,000 = $440,000.
• Funding ratio: 39%.
• Disclosure required under 765 ILCS 605/9(c).
• Annual draw estimate: $1,200,000 ÷ 30 = $40,000.
• Net annual change at current contribution: $55,000 − $40,000 = +$15,000.
• Projected depletion: fund is growing — no depletion (reserve is building slowly, not declining).
• Recommended annual contribution: $440,000 ÷ 12 years + $40,000 = $76,667.

The board should disclose the $440,000 deficit in the annual budget and consider a contribution increase from $55,000 to at least $76,667 per year to close the gap over 12 years.

What this calculator does NOT model

• Component-by-component useful life variations. A formal reserve study assigns individual useful lives to each component; this calculator uses a single weighted remaining-useful-life input.
• Inflation. Replacement costs increase with construction inflation. The calculator uses today's costs; a reserve study projects inflation-adjusted costs over the study period.
• Interest earnings. Reserve fund balances often earn interest in FDIC-insured accounts; the calculator does not model earnings on the reserve balance.
• Developer turnover reserve obligations. At turnover from the developer to the unit owners, the developer must fund the reserve account to the required level under 765 ILCS 605/9(c); this transitional obligation is not modeled.
• CICAA reserve requirements. CICAA (765 ILCS 160) has parallel but not identical reserve provisions. This calculator implements the Condominium Property Act (765 ILCS 605) reserve framework.

Sources

Last reviewed: 2026-05-19 against:

• 765 ILCS 605/9(c) (reserve fund maintenance obligation; deficit disclosure in annual budget).
• 765 ILCS 605/9(d) (reserve study requirement for associations with 7 or more units).
• 765 ILCS 605/18.4(e) (board duty to maintain common elements — reserve fund is the implementation mechanism).
• National Reserve Study Standards, Association of Reserve Professionals (used by Illinois reserve study professionals for § 9(d) compliance studies).