Last reviewed: October 26, 2026 · By the Chicago Condo Loans Editorial Team
Quick answer A condo deconversion is a bulk sale of an entire condo building, usually to one buyer. In Chicago, a city ordinance requires at least 85 percent of the unit owners to approve the sale (Illinois law alone requires 75% for buildings of four or more units), and the vote then binds every owner. Owners who don’t vote for the sale and file a written objection within 20 days are guaranteed the greater of their unit’s appraised value or the balance of the loan they used to buy or refinance it, minus unpaid assessments, plus reasonable relocation costs. Your mortgage is paid off from the proceeds, and conventional lenders generally won’t finance units in a building that is voting on a sale.
This is part of our complete guide to Chicago condo loans.
What is a condo deconversion?
Section 15 of the Illinois Condominium Property Act lets condo owners sell the whole property, including every unit and the common elements, by a supermajority vote at a duly called meeting. The buyer is often a developer or investor who plans to run the building as rental apartments, which is why the sale is called a deconversion: the building stops being a condominium. Owners don’t sell their units one at a time; they each receive a share of one sale price.
A deconversion is different from removing a property from the Act under Section 16, which takes all unit owners and the consent of every lienholder, and from what happens after an uninsured casualty under Section 14. This guide covers the Section 15 bulk sale that Chicago owners most often face.
How many owners have to vote yes in Chicago?
Illinois sets a sliding threshold by building size. Chicago, as a home-rule city, set its own higher threshold in 2019. In both cases a declaration or bylaws that require a larger percentage control.
| Building | Illinois law (765 ILCS 605/15) | City of Chicago (Municipal Code 13-72-085) |
|---|---|---|
| 2 units | A majority of the unit owners | Not less than 85 percent of the unit owners |
| 3 units | Not less than 66⅔% | Not less than 85 percent of the unit owners |
| 4 or more units | Not less than 75% | Not less than 85 percent of the unit owners |
| Higher percentage in the declaration or bylaws | The higher percentage applies | The higher percentage applies |
| Effect of an approving vote | Binding on all unit owners | Binding on all unit owners |
Chicago’s City Council passed the 85% ordinance (O2019-5753, sponsored by Ald. Brendan Reilly) on September 18, 2019. Once the vote passes, every owner must sign the deeds and other documents needed to close, including owners who voted no.
What do owners who object to the sale get?
The law doesn’t let a minority block an approved sale, but it does give objecting owners a guaranteed minimum. The Chicago ordinance and the state Act use nearly the same protections; the main difference is who qualifies.
| Protection | Illinois law | Chicago ordinance |
|---|---|---|
| Who qualifies | An owner who voted against the sale and filed a written objection with the manager or board within 20 days after the meeting | An owner who did not vote for the sale and filed a written objection with the manager or board within 20 days after the meeting |
| Minimum payout | The greater of (i) the fair appraised value of the owner’s interest or (ii) the outstanding balance of a bona fide debt secured by the interest and incurred to acquire or refinance it, each less unpaid assessments or charges | Same as Illinois law |
| Relocation costs | Reasonable relocation costs, figured under the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 | Same as Illinois law |
| Disagreement on value | Owner and purchaser each name an appraisal expert; those two pick a third; at least 2 of the 3 set the value | Same as Illinois law |
The 20-day written objection is the step owners most often need to watch. An owner who misses it still receives a share of the sale price under the sale terms, but not the statutory minimum or the relocation payment. The objection goes to the manager or the board, so keep proof of when you delivered it.
What happens to my mortgage in a deconversion?
Your unit is sold, so your mortgage is paid off at closing from your share of the proceeds, along with any unpaid assessments or charges. Anything left over comes to you. What that means depends on where you stand:
- Your share is more than your loan balance. The loan is paid off and you receive the difference, as in any sale. Our guide to selling a condo in Chicago covers the transfer taxes and other seller costs that apply to ordinary sales.
- Your loan balance is more than your share. If you objected in writing on time, the law guarantees you at least the outstanding balance of a bona fide loan you used to buy or refinance the unit, less unpaid assessments. That floor is designed to keep an objecting owner from being forced to sell for less than the purchase or refinance loan on the unit. The guarantee covers debt incurred to buy or refinance the unit; ask your attorney how any other liens are treated.
- You voted for the sale. The statutory floor doesn’t apply; what you receive depends on the terms of the sale agreement.
Read your mortgage paperwork too. The standard Fannie Mae/Freddie Mac Condominium Rider (Form 3140) says the borrower won’t, without notice to the lender and the lender’s prior written consent, consent to the abandonment or termination of the condominium project (other than termination required by law after a casualty or condemnation). If your building is weighing a sale, contact your loan servicer early and ask what it needs before you vote or close.
Can I buy or refinance a unit in a building that is voting on a sale?
Usually not with a conventional loan. Fannie Mae’s Selling Guide B4-2.1-03 (08/05/2026) says a project must not be the subject of an action that would cause it to cease to exist, including termination, deconversion or dissolution, and that this includes any project that has voted or is in the process of voting on one. A building in that position is non-warrantable for Fannie Mae loans; see warrantable vs. non-warrantable condos.
That affects buyers who want a mortgage and owners who want to refinance. Before you sign a contract in a Chicago building:
- Ask the seller and the board whether the association has received any bulk-sale offer, hired a broker to market the building, or scheduled a vote.
- Read recent board meeting minutes and the Section 22.1 disclosures and lender questionnaire; pending suits and unusual reserve or capital plans can be early signs.
- Have your attorney review the declaration for any higher sale-vote percentage.
We have not confirmed FHA’s or VA’s written rules for projects that are voting on a sale, so ask your lender how they treat it.
Do I pay taxes on a deconversion payout?
Federally, a deconversion is a sale of your home. Under 26 U.S.C. 121, if you owned and used the unit as your principal residence for periods adding up to at least two years during the five years before the sale, you can exclude up to $250,000 of gain, or up to $500,000 on a joint return when either spouse meets the ownership test, both meet the use test and neither used the exclusion on another sale in the past two years. Gain above that, or on a rental or second-home unit, may be taxable. Relocation payments and state taxes are questions for a tax professional.
Is Illinois changing its deconversion law?
Bills to tighten the process have been introduced in recent sessions. For example, Senate Bill 2125, introduced on February 7, 2025 (104th General Assembly), would require the sale vote to happen at one meeting called for that purpose with 72 hours’ notice to owners, and would require the board to notify state and local legislators at least 90 days before signing a sale contract. As introduced, it did not change the vote thresholds or the objector protections. This guide reflects the Act as published by IDFPR and the Chicago ordinance; it does not assume any bill has passed.
What should Chicago owners do if a sale is proposed?
- Get the offer terms in writing and ask your attorney how the price will be split among the units.
- Check the threshold: 85 percent of the unit owners in Chicago, or more if your declaration requires it.
- Hire your own real estate attorney before the vote.
- Order a payoff statement from your loan servicer and compare it with your expected share of the price.
- If you oppose the sale, vote against it and deliver a written objection to the manager or board within 20 days after the meeting; keep proof of delivery.
- Gather documents for relocation costs and, if you objected, for the appraisal process.
- Talk to a tax professional about the home-sale exclusion before closing.
Frequently asked questions
How many owners must approve a condo deconversion in Chicago?
Chicago’s ordinance (Municipal Code 13-72-085, passed September 18, 2019) requires a vote of not less than 85 percent of the unit owners at a duly called meeting, unless the declaration or bylaws require more. Illinois law alone would require 75% for buildings of four or more units.
What happens to my mortgage if my condo building is sold in a deconversion?
Your loan is paid off from your share of the sale proceeds at closing, along with any unpaid assessments. If you vote against the sale and file a written objection within 20 days, the law guarantees you at least the outstanding balance of a bona fide loan you took out to buy or refinance the unit, less unpaid assessments, even if your share of the price would be lower.
Can I stop a condo deconversion if I vote no?
Not by yourself. Once the required percentage approves the sale, the decision binds all owners and each owner must sign the documents needed to close. Voting no and filing a timely written objection protects your payout and relocation costs; it does not block the sale.
Can I get a mortgage on a condo in a building that is voting on a deconversion?
Usually not a conventional loan. Fannie Mae’s Selling Guide (B4-2.1-03) makes a project ineligible if it is the subject of a termination, deconversion or dissolution, including a project that has voted or is in the process of voting on one. Ask the seller and the board about any sale offers or votes before you sign a contract.
Do I pay tax on money from a condo deconversion?
A deconversion is a sale of your unit. If you owned and lived in it as your principal residence for at least two of the five years before the sale, federal law lets you exclude up to $250,000 of gain, or $500,000 for most married couples filing jointly. Ask a tax professional about your situation.
Sources
- Illinois Condominium Property Act, as effective January 1, 2025 (IDFPR), Sections 14, 15 and 16
- 765 ILCS 605/15, Sale of property (FindLaw copy)
- Chicago Municipal Code Chapter 13-72, including 13-72-085, Sale of condominium property (IDFPR copy)
- Chicago City Council Ordinance O2019-5753 (passed September 18, 2019)
- Fannie Mae Selling Guide B4-2.1-03, Ineligible Projects (08/05/2026)
- Fannie Mae/Freddie Mac Form 3140, Multistate Condominium Rider (07/2021)
- 26 U.S.C. 121, Exclusion of gain from sale of principal residence
- Illinois Senate Bill 2125 (104th General Assembly), as introduced
Educational content only. We are not a lender or broker, and this is not lending, legal or financial advice. Rules change; confirm details with your lender and attorney.