Drafting new Indiana HOA legislation

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.

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.

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.

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.

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.

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.

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

I've been told that there is already a law in place in INDIANA that prohibits HOA's from imposing fines. You refer to it in this post.

Where can I find that law?

Dick Martin

[email protected]

Dick ... even though this post is 2 years old here is a link you can review for your state statutes: http://www.associationtimes.com/stateInformation.htm

What is the actual statute that forbids an HOA from imposing fines?

Maybe this will help you: http://www.answerbag.com/q_view/1207507