Few issues divide a condo community like rentals. Some owners see renting as their right, or their retirement plan. Others worry that too many rentals will hurt financing, upkeep and the feel of the building. Short-term rentals through platforms like Airbnb and Vrbo add another layer: strangers with building access, and turnover every few days.
Illinois law gives associations real tools here. The key is knowing which tools are set by statute, which have to be written into your declaration, and how to enforce them. This guide covers all three, plus practical advice for designing a rental policy, handling tenant move-ins, and what leasing owners need to know.
Why rentals are such a debate
It helps to understand both sides before changing the rules.
Arguments owners make for allowing rentals:
Flexibility to keep a unit through a job move, a family change or a slow sales market.
Rental income as an investment or retirement plan.
A larger pool of potential buyers, including investors, which can support resale values.
Arguments owners make for restricting rentals:
Lenders may be more cautious about buildings with a high share of rented units, which can affect financing and resale.
Concerns that tenants are less invested in the building's upkeep and rules.
Security and wear-and-tear concerns with frequent turnover, especially short-term rentals.
A preference for a community of long-term residents.
A good rental policy usually balances these interests rather than choosing one side completely.
What every leasing owner must do under the Act
Section 18(n) of the Illinois Condominium Property Act sets baseline rules that apply in every Illinois condominium, whether or not your documents mention them:
The rules follow the tenant. The Act, the declaration, the bylaws and the rules that relate to use of the unit or common elements apply to anyone leasing a unit, and are treated as incorporated into every lease.
The board gets a copy of the lease. The owner must deliver a copy of the signed lease — or a written memorandum if the lease is oral — by the date the tenant moves in or within 10 days after signing, whichever comes first.
The association can act against the tenant. If an owner violates the leasing requirements in the Act or the association's documents, the association can sue the owner and tenant together to stop the tenant from moving in, or to evict the tenant under Article IX of the Code of Civil Procedure. For other breaches by a tenant, the board can proceed directly against the tenant.
These rules alone give boards a lot of leverage: a tenant who ignores the rules can be removed, not just fined.
Restricting or prohibiting leasing
The Act doesn't itself cap rentals. Restrictions — a rental cap, a minimum lease term, a ban on leasing in the first year of ownership, or a full prohibition — usually live in the declaration, and adding them means amending the declaration.
Under Section 27, the declaration can generally be amended by a vote of two-thirds of those voting, or by whatever majority the declaration itself specifies — but the declaration can never require more than three-quarters of all unit owners. Some declarations also require notice to or approval from mortgage lenders. The amendment takes effect when it's recorded.
Can an amendment bind owners who bought before it passed? Illinois courts have generally said yes. In a 2016 decision, Stobe v. 842-848 West Bradley Place Condominium Association, the Illinois Appellate Court upheld a leasing ban adopted by amendment against an owner who had bought before the change. Owners buy subject to the declaration and the process for amending it. Many associations still include a grandfather period or hardship exceptions to make the transition fair.
How the amendment process typically works
1. Survey owners. Before drafting, find out what owners actually want. A survey or town-hall meeting can reveal whether a full ban, a cap or a minimum lease term has support.
2. Work with the association's attorney to draft the amendment and confirm the required vote and any lender notice requirements in your declaration.
3. Explain the proposal. Send owners a plain-English summary with the reasons for the change, how it affects current renters, and any grandfather provisions.
4. Hold the vote as your declaration requires, and document the results carefully.
5. Record the amendment with the county recorder. It isn't effective until it's recorded.
6. Notify owners of the effective date and any new procedures.
Common types of leasing restrictions
Minimum lease terms (for example, no leases shorter than 12 months) — the simplest way to rule out short-term rentals.
Rental caps limiting the number or percentage of units that can be leased at once, often with a waiting list.
Ownership waiting periods requiring owners to live in a unit for a year or two before renting it.
Hardship exceptions for job relocation, military deployment, illness or estate situations.
Tenant registration requirements, move-in fees and rule acknowledgements.
Limits on subleasing or renting only part of a unit.
A caution on rental caps: they can affect mortgage eligibility, since lenders look at the share of owner-occupied units in a building. Talk to your attorney and manager about how a cap will interact with financing.
Designing a rental cap that works
If your building chooses a cap, the details matter. Questions the amendment or accompanying rules should answer:
What's the cap? A fixed number of units, or a percentage?
Who's grandfathered? Are current rentals allowed to continue, and for how long?
How does the waiting list work? First come, first served? Does an owner lose their place if they decline a slot?
What counts as a lease? Is a unit occupied by the owner's adult child or parent a "lease"? Many declarations exempt occupancy by immediate family members.
What about hardship? Who decides whether a hardship exception applies, for how long, and can it be renewed?
What happens when a lease ends? Does the rental slot pass to the next owner on the list, or can the same owner re-rent?
Clear answers prevent disputes and keep the waiting list fair.
Short-term rentals
For short-term rentals, the strongest tool is a minimum lease term in the declaration. If your declaration already prohibits leases under a certain length, a nightly Airbnb booking is almost certainly a violation.
Local law matters too. Chicago, for example, regulates short-term rentals through its shared housing ordinance, which includes a process for buildings to be placed on a list of buildings where short-term rentals are prohibited. Other municipalities have their own rules. Check your city's current requirements; they change often.
Why buildings worry about short-term rentals
Security. Guests receive keys or codes and may share them.
Wear and tear. Frequent move-ins and move-outs increase use of elevators, hallways and amenities.
Rule compliance. Short-term guests are less likely to know or follow building rules.
Insurance. Some association policies and HO-6 policies treat commercial short-term rental activity differently. Ask your broker how short-term rentals affect coverage.
Rules vs. declaration amendments
Rules adopted by the board are good for operational details — move-in scheduling, elevator reservations, tenant registration forms. But a rule can't conflict with the declaration, and major limits on owners' property rights, like rental caps or bans, belong in a recorded amendment. When in doubt, amend the declaration. (See How to Adopt or Change Condo Rules in Illinois for the rule-adoption process.)
A smooth tenant move-in process
Clear procedures reduce friction for everyone. A good leasing package typically includes:
A lease submission form and a checklist of documents the owner must provide.
A tenant registration form with names of all occupants, contact information, vehicles and pets.
A copy of the rules and regulations, with a signed acknowledgement from the tenant.
Move-in scheduling instructions, including elevator reservations and any deposit or fee allowed by your documents.
Emergency contact information and building procedures.
Instructions for keys, fobs and access — and a process for collecting them at move-out.
For leasing owners: your responsibilities
If you rent out your unit, you remain responsible to the association. That typically means:
Delivering a copy of the lease on time.
Making sure your tenant receives and follows the rules.
Paying assessments, regardless of whether your tenant pays you rent.
Being responsible for fines and damage caused by your tenant, as your documents provide.
Keeping your contact information current so the association can reach you.
Carrying appropriate insurance; ask your agent whether you need a landlord policy.
Enforcing leasing rules fairly
1. Keep a lease file for every rented unit, and track the 10-day delivery deadline.
2. Apply restrictions consistently. Selective enforcement is a common defense in leasing disputes.
3. Give notice and a hearing before fines, as the Act requires for any fine.
4. Escalate when needed. For persistent violations, Section 18(n) allows action against both owner and tenant, including eviction.
5. Watch for listings. Periodically check rental platforms for your building's address.
6. Document everything — complaints, listings, notices, hearings and outcomes.
Fair housing still applies
Leasing rules must comply with federal, state and local fair housing laws. Restrictions based on protected characteristics — or on a tenant's source of income where local law protects it — are off-limits, and boards must make reasonable accommodations for people with disabilities.
Screening tenants is generally the owner's job, not the association's. Boards should be careful about any process that involves approving or rejecting individual tenants, and should consult counsel before adopting one.
Frequently asked questions
Can our board ban rentals by passing a rule?
Generally, no. Major leasing restrictions belong in the declaration and require an amendment approved by owners and recorded.
Does a leasing ban apply to owners who bought before it passed?
Illinois courts have generally upheld amendments against existing owners, as in Stobe. Many associations include grandfather provisions for fairness.
Can the association evict my tenant?
Under Section 18(n), the association can seek to evict a tenant when an owner violates leasing requirements, and can proceed directly against a tenant for other breaches.
Is having a relative live in my unit a rental?
It depends on your declaration. Many exempt occupancy by immediate family members; others treat any non-owner occupancy as a lease.
Can we charge a move-in fee?
Check your declaration and bylaws. Many associations charge reasonable move-in fees authorized by their documents to offset elevator and common-area wear.
The bottom line
Illinois lets associations decide, through their declaration, how much leasing to allow. Once the rules are in place, the Act gives boards strong enforcement tools. The work is in adopting restrictions properly, designing them with clear details, applying them evenly and keeping good records.
Related reading:
How to Adopt or Change Condo Rules in Illinois (and What Rules You Can't Make)
Fining Owners in an Illinois Condo: Notice, Hearings and Fair Enforcement
Condo Liens, Foreclosure and Eviction in Illinois: How Associations Collect Unpaid Assessments
Selling a Condo in Illinois: The Association Disclosure Package, Deadlines and Fees
Pimmit Run Management tracks leases, tenant registrations and rental caps for Illinois condo associations, and helps boards work through leasing amendments with counsel. Contact us to learn more.
This article is general information, not legal advice. Leasing restrictions raise fair housing and financing issues; consult your association's attorney before adopting or enforcing them.
This article is general information, not legal advice. Consult your association's attorney about your specific situation.