Legislative Reform in Indiana

Hi:

I have recently been in meetings with our local state senator and members of various city and county agencies in Marion County regarding the need for legislative reform in the State of IN. These meetings have been very productive and the end result is that there is a recognized need for this reform in our State Code. The beginnings of change have ensued.

This is a long journey I have embarked on but I believe it is both worthwhile and can result in some very positive and much needed changes for HOAs in Indiana. Along with continuing to work with the leadership I have already been in contact with, there are plans to build a network of fellow leaders in our state and most importantly, a network of homeowners who see the need for this change and the protection of both HOAs in general and specifically their members, the homeowners.

I would be very interested in comments, concerns, support (that is a duh!) through this forum. All ideas are welcomed and I look forward to this adventure.

Thanks,

Cathy

Hi Joyce:

First there will have to be something written to provide for HOAs in single family dwelling and mixed developments...currently in the State of IN there is nothing. The only community that is referenced in the current Code is a condo dwelling under the Horizontal Properties Act.

Second, I have visited the FL site and read the Statutes enacted in 2004 which created an omnabudsman who does have direct oversite of HOAs and enforcement abilities. His site is set up very much like our atty general site here in IN. I would encourage you to go to MyFlorida.com and visit the Department of Business & Professional Regulation...Division of Florida Land Sales, Condominiums and Mobile Homes. That link will take you to the omnabudsman's site and you can see exactly what I have in mind. Anything would have to be structured to fit the needs of Hoosiers, but it is a start and we do not need to "reinvent the wheel" to get this done!

Most importantly, WRITE YOUR STATE LEGISLATORS AND HAVE YOUR FELLOW HOMEOWNERS DO THE SAME! www.accessindiana.gov will take you to each legislator's e-mail link and you can let them know you believe this issue is important and needs to be addressed. You are exactly right in regard to the number of developments in IN (especially in the Central Indiana area). The numbers are growing exponentially and there is no end in sight. The larger the numbers, the more potential for problems if HOAs are not structured and administered correctly.

An HOA can be a blessing if run right. Unfortunately, I and many others have had the unfortunate experience of an HOA not being run correctly and the abuses that ensue. I thank you for your interest and encourage you to contact your neighbors and friends and join this effort.

Cathy

Reform of legislation concerning common interest developments (CIDs) and property owners associations (POAs) is generic. The underlying issues appear to be similar from one state to another.

I am working with my representative and senator in Michigan on developing such legislation. Most of the references and findings have been assembled, and are available at http://swagman.typepad.com/poa_governance/. The challenge is to organize the findings into a coherent manner for drafting of legislation. An Outline of Legislation for Democratic Governance of CIDs/POAs of that effort, which is work in progress, is available at http://swagman.typepad.com/poa_governance/2006/06/outline_of_legi_1.html.

To avoid an overwhelming reform, my focus is on governance of the POAs. A new legal entity, private government, can provide the unique requirements. Private government basically recognizes that no existing legal entity can meet the unique requirements of a POA: mandatory membership with ownership of property, major financial obligations, definitions of responsibilities of board based on common interest and protection of members' rights, need for effective dispute resolution that is low cost to members, etc.

I am seeking a broader network of individual owners/members in POAs who have a common interest in legislation that would clearly create governance of the members, by the members and for the members.

Don Nordeen
Governance of Property Owners Associations
http://swagman.typepad.com/poa_governance/

This is in response to the post by JoeW Posted:07/20/2006 12:29 AM. He is right; I am very disappointed in the proposed amendments to Uniform Common Interest Ownership Act developed by the drafting committee so far. That committee seems to be focused entirely on property law. They have included provisions on developer's rights and lender's rights, but nothing on owners' rights. It is the owners who provide the money that funds the common interest development industry.

I don't prefer the proposed Texas Uniform Planned Community Act (TUPCA), but I believe it is a resource worth considering. It contains 25 provisions concerning members' rights. For example, it contains a provision concerning preserving rights under the federal and state constitutions, unequivocally stated. That is a milestone proposal from a real estate attorneys group. Unfortunately, many of the other provisions also include caveats that make the language unclear, or certainly would make outcomes unclear. Rights with conditions really aren't rights. Elimination of those conditions is what should be debated. TUPCA's 25 provisions concerning owners' rights cover a number of subject areas — new to any real estate attorney group that I am aware of. TUPCA reaches out by introducing these subject areas. Now is the time to compliment the real estate attorneys for introducing these new subject areas in TUPCA, and proceed with a the debate on the details as JoeW suggests.

Another important resource for the debate on rights is the Declaration of Rights in your state's constitution. They don't have conditions. Neither should rights in TUPCA. But don't throw out the content proposed in TUPCA, just eliminate the conditions. Rights should be stated unequivocally.

The California Homeowners Bill of Rights, drafted by Retired California Judge Charles Egan Goff and others in 2001, is a much better resource document. The rights are unequivocally stated.

My goal is to integrate the best of the ideas into a model law that will meet the interest of the stakeholders.

Don Nordeen
Governance of Property Owners Associations
http://swagman.typepad.com/poa_governance/

The UCIOA and TUPCA I referred are drafts of model legislation that the attorneys put out as recommendations for consideration by states like yours, that are looking to update specific, (or non-existing) laws. In other words, you will find the language from which to start your journey. As for enlisting the aid of others or finding supporters, you will need to take into consideration the state bar association (real estate section), the Indiana Realtors, the Mortgage Banking association and the state home builders association, which have a vested interest in any legislation concerning real estate and have the political clout to help or stop any such legislation. In addition, the state chapter of the Community Associations Institute will weigh in, but without the force of the above heavyweights.

As for reaching out to the citizenry, as you probably know, it is very hard to find ones to serve on a board, much less take on this added workload. Usually it requires an issue to coalesce around. I think that Indiana, much like my state, Michigan, is not the hotbed of controversy like Florida, Arizona, or California, so it will be hard to stir them up. One way might be to start a blog, outlining your ideas, and inviting input from other Indiana community association residents. That will give you some idea of interest, some feedback on ideas and some potential volunteers.

You're probably going to ultimately end up where DonN has been going for a while, with a developer model or law and and owner model or law. The owner model kicking in after transition. That may remove the big four from blocking it. My web site hosts community association related blogs for free, so if you're interested, drop me a note at [email protected] I'll be happy to set it up for you.

Joe

Cathy,
Thank you for spearheading this effort. We have a nightmare here in our Morgan County neighborhood. 25% of our community of 400 has hired an attorney to "throw the bums out" because of the 5 member BOD resulting in a 3-man dictatorship that has been rolling along for 20 years. The only functional and female board member was tossed off 6 months ago because they could toss her off for cause..."being disruptive" Our BOD believes only they can remove board member and only they can replace them because of the loose writing of bylaws and regulations. Little case law exists and as you indicated most regulations address condo-living. HOA problems have to fall back on Indiana corporation and not-for-profit corporation regulations which really don't address the type of problems HOA's have.

I applaud your efforts and hope we all can benefit sooner rather than later.

I just attended a seminar on 7/22/06 in Indpls that was sponsored by the CAI. It was a well presented and balanced question and answer session that gave a lot of good information. Most of the attendees were BOD members but most of the BODs members presented themselves in a manner where you could tell they cared about their association and were conscience of the need to respect and follow the By-Laws and Covenants.

The most interesting portion of the seminar to me though was the lengthy discussion regarding the need for legislative changes in Indiana. The bottom line is that ALL parties in a HOA need this change. It is not just homeowners. It does a HOA and its Board no good to have CC&Rs without teeth and the only recourse is to file a lawsuit that may take years to litigate and force the association to spend thousands out of its coffers that can be put to much better use. It does homeowners no good to have no recourse but to file lawsuit if their rights as members of a HOA are violated and it takes them years to litigate to enforce those legal rights.

The bottom line is our Courts do not need to have every little infraction of a HOA being litigated and taking Court time so a HOA can enforce its CC&Rs. Homeowners do not need to have to spend thousands of dollars to protect their legal rights as members in a HOA (notice I am not saying rights as homeowners - that is a different animal - when you live in a HOA you are a MEMBER of an association and thereby are bound by certain restrictions you must abide by and you are afforded certain rights that must be respected). Our current Statutes DO NOT PROVIDE protection on either side of the HOA equation to ensure all parties are protected except thru litigation. There needs to be a change. We all need to educate ourselves and speak out to our lawmakers, NOW.

Thank you Harold...I really appreciate this info and look forward to being able to pull up the revised statutes coming into effect in September.

How long did it take your state to put laws like this on the books?