Indiana Legislative Meeting Report

I finally got a copy of the bill (you posted the link on this site a few months ago - thanks again!) I'd also like to discuss this bill with my state representative (somehow squeezing it in with writing our newsletter and going through our 2009 budget process, which begins next month). Here are some random thoughs I do have based on what you said.

First, why should arbitration only be binding to the HOA - suppose the homeowner IS proven wrong, but there's nothing in place to compel him/her to comply? Instead, I'd rather have something where both parties agree in advance to abide by the arbitrator's decision (if they don't, the arbitration proceedings should be introduced as evidence in a court proceeding). I do think arbitration is a great idea and should be used before going to court, especially if it's set up to be cost effective for both sides. I say split the fee 50-50 to start - whoever loses has to reimburse the other side.

Fines are a little trickier, because some people do go overboard and try to fine for all sorts of trivial items. I'll have to think a little more about this, but it may be a good idea to limit fines to situations where the HOA has to pay to correct the problem (the amount may not exceed the actual costs incurred.) There definately needs to be an appeals process - the fine kicks in after the process is completed.

I probably wouldn't add fines as an enforcable lien (it's probably easier to duke it out in small claims court), but special assessments should be. If a HOA board does its job and the homeowners pay their fees in full and on time, special assessments should be rare - however, if they become necessary and were approved by a majority of the homeowners (our HOA requires 75% approval), the homeowner should pay.

As for foreclosures - given the cost of legal fees, the time it takes to pursue a foreclosure and the prospect of the HOA not getting anything when it's all over, I don't think we need a requirement that foreclosure proceeding can only be done when the delinquent amount exceeds a certain percentage of the home's assessed value. I think most HOAs do try to work with the homeowner first, resorting to legal action only when that hasn't worked.

I agree that many homeowners don't have a clue what CCRs and bylaws are for, let alone read or comply with them, but whose fault is that? If you know your home is in a community governed by a HOA, what's wrong with getting a copy of the CCRs, bylaws (and the most recent financial statements) and review them BEFORE deciding to buy or rent a house in that community - if you don't understand them, talk to an attorney. Better yet, go to a board meeting and ask questions (our HOA has a short period at the beginning and end of the meeting where residents can ask questions, offer comments, criticisms an suggestions).

Bottom line - take some responsibility and educate yourself on what living in a HOA means - there's a lot of information out there if homeowners would only get off their ass and get it. If you find you can't live with the rules, don't want to pay a monthly or annual fee, that's ok - just don't buy or rent there, and then act like you can do whatever you want.

The same applies to voting - if you don't like what your board is doing, go to the meeting and ask questions. Talk to your neighbors and see what they think - if all of you show up, it's a little harder for a rouge board member to blow everyone off. It amazes me that people find time to do everything else, but can't be bothered to even attend an annual meeting or send in a proxy and them complain when the board makes a decision they don't like.

Our HOA requires 10% of the homeowners (those who are current with their fees) to be present at the annual meeting so an election can be held - this year, only two homeowners showed up and we were one vote short of having the required number (a whopping 15) to hold the election. The proxies were mailed in January for the February meeting and there was a lengthly article on it in the newsletter (I know because I wrote it!) Now, if we can't even get 15 people to cast a vote, how are we going to get 25%?

Shelia -- Ditto
Michelle -- Our docs also state that if a quorum is not present, we may reschedule the meeting to a date not more than 60 days later (Quorum for us is already 25%).

George, thanks for the good work at helping to provide workable laws for us in Indiana.

I guess I have a few concerns. I'm wondering whether the emerging points leave us in a bit of a circular loop. If homeowner associations are given stronger enforcement powers but 1) fines and assessments are not enforceable liens and 2)voting rights and use of common property cannot be restricted for nonpayment of fines or special assessments, then how do we enforce? What are HOA enforcement tools?

Also, I really like the idea of arbitration, but do not understand why it would be non-binding on the homeowner but binding on the HOA. Along with that, why should the costs be split 75%/25% in favor of the homeowner? Why punish the association?

I so much appreciate your focusing on the underlying elements, i.e. the balance between individual property owner rights and the needs of the community. That's an incredibly hard balance to achieve, but certainly one worth aiming for.

George,

Great news! Hope you can get a bill going in the next session. I'd like to offer a bit of advice, if I may. Since I've been quite involved in the legislative process for a number of years, including writing legislation, there are a few things I've learned which I hope will be of help to you.

1) Orient yourself to the legislative process. I have a book that was prepared by a former State Senator that outlines everything that transpires during the legislative process. Knowing what is involved in getting a bill through the legislature is half the battle!
2) Get to know the staff personnel. These are the people who draft the bills and the amendments. They do all the groundwork and they can tell you what is going on with your bill. Even if you're familiarized yourself with the legislative process, believe me something will happen with the bill that will absolutely confuse you. If you're unable to contact the sponsor, the staff personnel will be able to help with your questions.
3) Instead of just letting the sponsor know what you would like to see put into a bill; write up the bill yourself and present it to him. Add a cover letter explaining the reason for the bill. Draft it the same as the legislative council would. If your legislature has a website, take a look at some of the bills that have gone through the process. By the same token, if an amendment to the bill is order, draft up the amendment in the same manner as legilative council would. My philosophy is that the easier you make it for them the better and it usually results in them having a lot more respect for you too.
4) Don't put too many issues into one bill. For ex: if you want to address voting requirements, foreclosure and disclosure issues; think about two or three bills instead of one. The more issues on one bill the harder it is to get through. It's not uncommon for another issue to be tacked onto a bill as it progresses, which is all the more reason not to start out with too many issues on the bill.
5) Take time to get to know the lobbyists for the special interest groups associated with HOAs. This is invaluable! You want all, or at least a majority of the special interest groups to be on your side. Even if you can't get them to agree to your position you will want to be on friendly terms with them. Never portray the image of someone who is unwilling to compromise. Sometimes you have to give up one thing in order to get another!

Hope some of this is helpful to you. Keep us posted on what transpires. Good luck!

Of course, legalese has a sleep inducing quantity all its own, but as everyone knows, the devil is in the details. You're investing hundreds of thousands of dollars in the place where you'll lay your head - don't you think it'll help if you have SOME some idea of what the expectations are if you're living in a neighborhood run by a HOA?

Certainly, HOAs can do a better job at explaining those expectations in plain English - I've pushed our board to create a rules handbook that would do just that. However, I refuse to give people a pass because they don't read because - well there were more than three syllables in the words and no pictures, so they just didn't read it. Not to be vulgar, but reading is like sex - if you want to do it, you will find the time and make the effort. And if you don't, don't come and yell at me as to why you must abide by a rule that was presented to you when you brought your home!

George, you don't want HOAs to levy fines, and I, too don't want them to become unreasonable, or used to discriminate against someone (or a certain group) and they should never be levied without some sort of appeals process. But if you'r going to have rules, you must have consequences for breaking them. For some people, the only way to make them straighten up and fly right is to hit them in the pocketbook - what options would you suggest?

Yes, small voting turnouts happens far to often, and the the smaller the turnout, the more likely you'll give more power to "factions", whose members are extremely motivated to come out and vote based on whatever issue is most upsetting to them (depend on what side you're on, this may explain the current state of affairs in today's national and local government).

And yet, I truly believe that if the people lead, the leaders will follow. You don't like the faction running the show - don't just complain to your spouse - get off your duff, go to the meeting and vote (maybe the other folk who don't like the faction will do likewise and things will change).

Board training IS a real issue - one of the reasons I like this message board so much is that I've learned a lot from all of you regarding rules enforcement, delinquency collection, insurance, etc, that I bring to our board. Your comments help bring new prespectives to our issues and often suggest options we hadn't though about.

I don't know what legislation can do if anything about training, but it may start when the developer turns over the community to the homeowners - if people sign up to serve as the first board, why can't the developer bring in some folks to talk to them about the fundamentals of HOA management, or develop a policy and procedures manual?

Even so, individual rights are great, but they come with individual responsibilities - homeowners have got to understand that board members in HOAs are managing hundreds of thousands of dollars that come from fees they pay - I can talk to you all I want about the budget, but the only way we have a productive dialogue is if you come to meetings and listen to the problems we're dealing with and read the information we provide. That's when you can point out discrepencies and make suggestions and ask for clarification. Board members aren't psychics or prophets - people need to tell us what they think, otherwise we can't respond to their concerns.