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GeorgerwilliamsW
(Indiana)

Posts:568

07/21/2008 10:07 AM
Homeowners associations in Indiana currently operate under laws designed for condos in a "horizontal property" statute. Due to the increasing number of associations being formed and the increase in litigation and complaints to the Attorney General about rouge association boards, there is some interest in drafting new legislation specifically for homeowners associations. In the past three legislative sessions there have been two bills introduced that addressed specific issues, but were not comprehensive approaches. Neither saw the light of day in committee. I am aware of the work that has been (is being)done by the NCCUSL, but it is not very far along. Currently, Indiana prohibits homeowner associations from assessing fines. The best they can do to enforce covenants or rules is to seek an injunction or sue to force compliance, a costly and time consuming effort. As a result, it is only possible to address the most egregious violations. Indiana courts view covenants under existing contract law with a couple of reservations. The court has held that "Indiana law permits restrictive covenants but finds them disfavored and justified only to the extent they are unambiguous and enforcement is not adverse to public policy." When courts are called upon to interpret restrictive covenants, they are to be strictly construed, and all doubts should be resolved in favor of the free use of property and against restrictions. http://www.in.gov/judiciary/opinions/pdf/11170605ewn.pdf I am meeting with my state senator on August 19th to discuss potential legislation. Can anyone suggest an existing state statute anywhere in the U.S. that could serve as a model for drafting a bill in Indiana? I am looking for the very, very best. Also, what are the best mechanisms for handling disputes between the association and a homeowner? Should we propose defined mediation/arbitration, appeal to an oversight commission within the office of the Attorney General along the lines of a consumer protection agency, or an outright regulatory commission? I am looking for some really good advice. Appreciate anything you are able to share.

SheliaH
(Indiana)

Posts:68

07/21/2008 10:38 AM
Thanks for the information (I didn't know there were plans for legislation, so I'll be keeping a very close eye on this) If you're in the central Indiana area, you may wish to attend the annual meeting of the Community Associaiton Institute(CAI) - Central Indiana chapter, and see if they have anything to say about this subject. Our property manager told me it's scheduled for 8/23 at Connor Prairie in Hamilton County. I don't remember the website link, but if you go to the main CAI website, it may have some information. My two cents on dispute resolution - I wouldn't mind some sort of low cost mediation program that could iron out these things without heading for court (which is currently the only option I'm aware of in Indiana). Perhaps something along the line of what the Better Business Bureau already has with its members.

GeorgerwilliamsW
(Indiana)

Posts:568

07/21/2008 10:49 AM
Thanks SheilaH. Unfortunately, the problem is CAI itself. It is mainly populated with attorneys and property managers who have a vested self-interest in drafting a law to create more business for themselves. They are more interested in process than outcomes. I am not a fan of CAI. What we need is legislation that does a better job balancing individual property rights and common interests. We also have to recognize that outside the nine county Central Indiana region, Hoosiers have very strong attitudes about property rights. Any legislation is going to have to pass muster with representatives from a broad spectrum of opinions.

JeanneK3
(Maryland)

Posts:120

07/21/2008 11:09 AM
If you go to http://mlis.state.md.us/2008rs/subjects/homeowa.htm you'll get a list of legislation that was introduced in the 2008 Maryland Legislative session. Click on the number and you get the text of the bill. Those bills that did not pass will be introduced again in 2009. Foreclosure legislation took up most of the time in 2008.

GeorgerwilliamsW
(Indiana)

Posts:568

07/21/2008 11:56 AM
Hey, thanks for the lead. It is a good one. Do you endorse the draft legislation?? One of the reasons that the homeowners association bills did not make it through the Indiana General Assembly because property tax reform took up most of the time in 2008. The coming legislative session may be no different.

GlenL
(Ohio)

Posts:1304

07/21/2008 2:58 PM
This is the bill Ohio is considering: http://www.legislature.state.oh.us/bills.cfm?ID=127_HB_220 It would give HOA's a lot of the things now provided under ORC 5311 for condo's, except it explicitly allows closed BOD meeting which I do not agree with.

JeanneK3
(Maryland)

Posts:120

07/21/2008 5:42 PM
Yes, I endorse the Maryland legislation and I agree with you that CAI is more the problem than the answer. CAI seems to always oppose homeowner-friendly legislation in Maryland. I assume its to make sure all problems go to CAI attorneys to resolve. Not a good system for the average homeowner.

HaroldS
(Arizona)

Posts:904

07/21/2008 10:24 PM
Here are Arizona's statutes: http://www.azleg.state.az.us/ArizonaRevisedStatutes.asp?Title=33 stroll down to chapter 16. However, Title 10 - Corporations and Associations can also affect HOAs. CAI has a strong and well funded lobby in Arizona so that getting HOA owner focused legislation out of committee, much less passed, is a struggle. Georger - can you steer me to Indiana's current law forbidding HOA fines. Thanks.

GrahamO
(Ontario)

Posts:44

07/22/2008 3:38 AM
Here in Ontario we have had "The Condominium Act" in place for 10 years. This is a link to the site of CCI (The Canadian Condominium Association) http://www.ccitoronto.org/Condoact/default.asp It's voluminous, but you can cherry-pick sections or sub-sections that may interest you.

Graham Oliver Official HOATalk.com Sponsor Author of "Reserve Fund Essentials" Oliver Interactive, Inc Reserve Fund Software & tools Learn More about our FREE Reserve Planning Tools *See legal notice below (end of page) or go to www.hoatalk.com/legal

GeorgerwilliamsW
(Indiana)

Posts:568

07/22/2008 3:50 AM
Regarding fines, the prohibition is from case law, not statute. I will do some sleuthing to find it. The prohibition on fines has been in place for so long it is accepted. There is hardly any recent citation of the original case. Indiana statutes are essentially silent when it comes to homeowners associations (and that is part of the problem). They operate under general corporate statues and condo laws. It is not even clear if the Secretary of State (corporate law) or the Attorney General (consumer protection/not-for-profit regulation) has primary responsibility. And so far, because HOAs have limited powers, disputes have been decided on the basis of contract law. It all has to do with the notion that HOAs cannot operate as private governments. Absent specific legislation, the courts in Indiana have held that the ability to levy fines and enforce contracts is a judicial function. Thanks for the reference to Arizona statutes. Would you endorse it as a good model for Hoosierland? I understand that Arizona has some sort of state agency or commission for mediation or appeal of HOA issues. Am I correct? Any new legislation is going to take years to get through the General Assembly. What I hope to get this year or next is a comprehensive bill that can form the basis for long-term discussion.

GeorgerwilliamsW
(Indiana)

Posts:568

07/22/2008 4:46 AM
Great! Thanks. There are some good ideas from Ontario that will be useful. I think the toughest part of the task I have taken on will be to find the appropriate balance between individual property rights and the best interests of the community as a whole. Any new legislation is will need to reflect the variety of HOA environments from vacation home associations with commonly owned lakes and dams to those with zero lot lines or attached units that are not condos. There is even a hybrid type of planned unit development (principally equity retirement communities) that is a blend of condos and HOAs.

HaroldS
(Arizona)

Posts:904

07/22/2008 10:54 AM
Yes. It is the Arizona Office of Administrative Hearings. Costs $550 to file for a hearing (generally by a homeowner, but in theory an HOA can also file.) The filing fee will be ordered returned by the HOA IF the Aminiinstrative Hearing Officer finds the HOA has violated state statute or their own documents. However, the HOAs are coming with their CIA attorneys, funded with association dues, to overwhelm with discovery requirements, delay tactics, etc. etc. Which completely defeats the process. And if they should be defeated, they can and will take it on to Superior Court just for more billable hours.

JosephW
(Michigan)

Posts:735

07/23/2008 1:38 PM
Start with the Uniform Common Interest Ownership Act (UCIOA). Variations of this "Uniform" act have been adopted by a number of states, and more are considering it. The original act can be found at: http://www.law.upenn.edu/bll/archives/ulc/fnact99/1990s/ucioa94.htm There is a committee of the Uniform Law Commission working on revisions to it and you can track their proposals and reasoning at: http://www.nccusl.org/Update/CommitteeSearchResults.aspx?committee=244 Yes, it was drafted by attorneys and is being revised by attorneys, but it also has passed the political reality test of getting by the big four of state politics - the builders, bankers, realtors and attorneys. Start with something that may have a chance and add in what you think is also needed. Joe

Joseph West Official HOATalk.com Sponsor Community Associations Network, LLC www.CommunityAssociations.net *See legal notice below (end of page) or go to www.hoatalk.com/legal

GeorgerwilliamsW
(Indiana)

Posts:568

07/24/2008 3:55 AM
Thanks much for the link. I was aware of the efforts to design a uniform law. Unfortunately, a version of this was introduced last year and the year before in the Indiana General Assembly (SB 1080)and went nowhere. My initial reading of the model suggests that it is balanced in favor of the "big four" and against individual property rights. That would be a big step backward for Hoosierland at this point. It would be as if the Indiana General Assembly would be importing all of the problems other states have experienced in attempting to address HOA issues. In fact, I see more states moving away from the uniform act, with legislation designed to deal with specific problems and abuses. It may be that one statute does not fit all situations. What works best for a condo and co-op does not seem to work well at all for a planned unit development and HOAs. And then there is the sticky related problem of time-shares. Additional thoughts are genuinely appreciated.

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