Legal Question in Real Estate Law in Illinois

Depends on what the developer spent the funds. If it was not to benefit the association, property owners can certainly sue them.

"prior to forming" is the uncertainty here. Usually a developer will incorporate the association but "control" it until required by law to be "turned over" to unit ownership (sale of 75% of the unit ownership or 3 years whichever is first to occur) so it may appear the developer is using assessments for itself but it wears two hats. If this was the scenario then upon turnover there should be a reconciliation or true-up with the owner-controlled board since the new board inherits the finances set up by the developer; this is when the developer's "honesty" is truly tested. If there was no corporation, that only means that the association was an "unicorporated" association governed exclusively by the Illinois Condominium Property Act (and was not a corporation also subject to the Illinois Not For Profit Corporation Act), but the essentials are the same.