Illinois community association management firms: licenses, fidelity insurance and segregated accounts

What 225 ILCS 427 requires of Illinois management firms: designated managers, fidelity or crime insurance, separate accounts and exemptions.

Illinois licenses community association managers and, separately, the firms that provide management services, under the Community Association Manager Licensing and Disciplinary Act (225 ILCS 427). The Act is administered by the Illinois Department of Financial and Professional Regulation (IDFPR). For a condominium or townhome board, its most useful parts are the rules on insurance and on keeping association money separate.

Who needs a license

It is unlawful "for any person to provide community association management services, provide services as a community association manager, or hold the person out as a community association manager or community association management firm to any community association in this State" without a current license, unless exempt (225 ILCS 427/15).

The exemptions in Section 20 include an association's own directors or officers working without pay, anyone providing manager services to an association of 10 units or less, a licensed attorney acting incidentally to the practice of law, court-appointed receivers and trustees, and an unlicensed owner who does not perform a licensed activity, along with support staff such as bookkeepers and receptionists.

The firm license and its designated manager

A corporation, partnership, LLC or other entity may not provide or offer management services unless it has applied for a firm license and shown IDFPR that it "has designated a licensed community association manager to supervise and manage the firm" (225 ILCS 427/50). Having a designated manager is a continuing requirement, and one manager cannot be the designated manager for more than one firm. The designated manager supervises all licensed and unlicensed employees acting on behalf of the firm's associations.

This directory lists Illinois-based firms whose firm license IDFPR shows as Active. Firm licensing in its current form is recent, so many firms show an original issue date in 2023 or later even when the business is much older; read "licensed since" as the date of the firm license, not the firm's age.

Fidelity or crime insurance

Section 55 says the designated manager or firm "shall not have access to and disburse community association funds" unless fidelity or crime insurance is in place against loss or theft of association funds, "in the maximum amount of coverage available to protect funds in the custody or control" of the manager or firm. The policy must cover the designated manager, the firm, all managers, all partners, officers and employees of the firm, and the association's own officers, directors and employees. The insurer must give at least 10 days' written notice before cancelling or not renewing.

Unless the management agreement says otherwise, the association may buy the policy and name the manager and firm as additional insureds. If the firm buys it instead, it must give the association a current certificate within 10 days of a request.

Separate accounts for every association

A firm managing more than one association "shall maintain separate, segregated accounts for each community association". The funds may not be commingled with the manager's, the firm's or any other association's money, and the accounts must be custodial and in the association's name. This is the single most important question to ask a candidate firm: in whose name will our operating and reserve accounts be, and who can sign?

Liability and errors-and-omissions insurance

The same section requires the designated manager or firm to carry general liability and errors-and-omissions insurance, as IDFPR determines, to cover losses or claims against the manager or firm. Ask for certificates for all three coverages.

Discipline

IDFPR can discipline both managers and firms. Its public licensing file records disciplinary actions, and we show any entries for a firm's license exactly as IDFPR lists them, with case number, action and dates. Most Illinois management firms have none. IDFPR's License Look-Up is the official record.

Records the board should keep

A management firm handles the association's books, but the board remains responsible for them. Keep copies, outside the firm's systems, of the management agreement, the current fidelity or crime insurance certificate, the general liability and errors-and-omissions certificates, the bank account agreements showing the accounts are in the association's name, and each year's budget, audit or review and reserve study. If the relationship ends badly, these are the documents that let a new firm take over quickly and let the board show what was agreed.

Common mistakes

• Letting the firm hold reserves in its own name. The Act requires custodial accounts in the association's name. Check the bank statements, not just the firm's reports.
• Assuming the firm's insurance covers the board. The Act requires the association's officers, directors and employees to be covered by the fidelity or crime policy. Ask to see the named insureds.
• Hiring an unlicensed bookkeeper for a larger building. The 10-unit exemption is narrow. A bookkeeping service that also collects assessments, prepares budgets or runs meetings for a bigger association is providing management services.
• Not checking the individual manager. The firm's license depends on its designated manager, but the person who actually handles your building may be someone else. Both should hold Illinois licenses.

Questions for an Illinois management firm

1. Your firm license number, and the name and license number of your designated manager.
2. Who will manage our account day to day, and is that person licensed?
3. Fidelity or crime coverage: who buys it, for how much, and does it name our board?
4. Will our accounts be in the association's name, segregated from every other client?
5. General liability and E&O certificates.
6. Fees for extras: special meetings, collections, resale disclosures, project management.
7. How the agreement ends, and how quickly records and funds come back to us.

The Act and IDFPR's rules are the authority; this guide paraphrases them. Associations with legal questions should consult their attorney.

Updated 2026-10-16.

General information only, current as of the date above. The information on HOA Manager Check is not a recommendation or a guarantee of anyone's work. A license record shows registration status on the date shown, not workmanship, insurance coverage at the time of your job, or suitability for your project. Confirm license, insurance and permits directly before you hire. Rules and programs change; check the official sources linked in this guide.