New Indiana Legislation to be Introduced

Started by GeorgerwilliamsW • 9 replies • 1573 views

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GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

I would appreciate any comments or opinions on the following subsection of legislation that will be reintroduced in the Indiana General Assembly.

. . .
(d) A homeowners association budget must be approved:
(1) at a meeting of the homeowners association members; and
(2) by the affirmative vote of at least forty percent (40%) of the members of the homeowners association.
Sec. 4. (a) A board may not enter into any contract that would result in a new assessment or the increase in an existing assessment payable by the members of the homeowners association in the amount of more than five hundred dollars ($500) per year for each member of the homeowners association unless:
(1) the board holds at least two (2) homeowners association meetings concerning the contract; and
(2) the contract is approved by the affirmative vote of at least two-thirds (2/3) of the members of the homeowners association.

The complete bill HB 1080 introduced in the last legislative session can be found here.
http://www.in.gov/legislative/bills/2008/IN/IN1080.1.html

JohnK3 (Pennsylvania)
Posts: 967

Posted:

George,

I'd vote NO re: membership approving ordinary budgets. In our HOA, and I imagine most others, that is left to the Board. In fact, our ByLaws indicate the Board "should" formulate an annual budget but is not "required" to do so. Opening up budget considerations, much less needing a 40% vote at a meeting, to HOs could tie up the process forever.

BradP (Kansas)
Posts: 2,640

Posted:

George:

I would also vote no on it based on the budget requirement. Most HOA's have trouble getting 20% of the membership to a meeting, but having to have 40% of the members approve a budget is going to be difficult to impossible...what are the ramifications if that doesn't happen?

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Ok, how would react if the proposed legislation were changed so that owners could vote by mail and/or by proxy as is now the case rather than attend a meeting?

DJ1 (Ontario)
Posts: 798

Posted:

Maybe the 40% req is a GOOD thing as it might get people out. The alternative is the budget doesn't get passed, nothing gets maintained, homeowners notice and take some initiative to get involved. I think as long as things are moving along in a HOA and appearance is being kept up many HO's don't get involved.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

OK, maybe there should be a section that specifies if a budget is not approved by the requisite number of owners, the most recently approved expenditure budget shall continue in force until a new budget is approved.

BruceF1 (Connecticut)
Posts: 2,535

Posted:

I would also vote no. Our association (and per our state law) the budget process is a veto process.

The board determines and adopts the annual budget. At the annual meeting (quorum 20%) a vote is taken on the budget to either accept or reject the it. The documents and state law are worded such that the budget adopted by the board becomes the budget for the year unless rejected by a majority of the homeowners present (in person or by proxy) at the meeting.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

George,

Still NO.

As Brad notes, 40% YES votes is a tough hurdle for a meeting, and as I'll note, 40% of PARTICIPATION can be tough.

Example: Earlier this year, we sent out an e-mail ballot to Membership re: changing a ByLaw concerning annual audits. The result? NOBODY bothered to respond. So we (the Board) went house to house, handed them the ballot and an SASE. It took another month for us to receive the minimum necessary to pass it.

Also as Brad notes, ramifications. What do you do when you don't get that 40%, much less, what if Membership starts weighing in with suggestions on how to change the proposed budget?

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By GeorgerwilliamsW on 07/30/2008 9:32 AM
OK, maybe there should be a section that specifies if a budget is not approved by the requisite number of owners, the most recently approved expenditure budget shall continue in force until a new budget is approved.

Our documents cover that too. They say that if the budget is rejected by the homeowners then the existing budget remains in force until a new budget is adopted by the board, voted on, and not rejected.

KirkW1 (Texas)
Posts: 1,665

Posted:

I would vote no for fear that our HOA would have to cease operations. Proxy or none, 40% of the vote could be tough to get. And what happens if you can't get 40% to approve? (Regardless of proxy or mail in votes.) Does the HOA cease to operate?

If that requirement was put to any level government it would cease to operate unless you gave them authority to arrest those not voting. Even in this year's heavy primary turnouts, 40% was not reached.

Here is how I see it: at our turnover meeting I brought 13 proxies with me. And the president/developer had 14 proxies that people sent in. Now understand that they had a drawing for a year's assessments from the proxy votes. And even at that, only 14 people took upon themselves to send in a proxy. I halved their chances with what I collected.

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