The Importance of Understanding Indiana HOA Laws
While federal laws apply to all homeowners associations nationwide, state laws can vary. Some states have more comprehensive statutes that regulate how an HOA can operate, whereas others have more relaxed laws that apply to HOAs. Additionally, there are some states that don’t have legislation that specifically applies to homeowners associations.
As with many states, homeowners associations in Indiana are subject to certain state laws. Unfortunately, there are some associations that neglect to familiarize themselves with these statutes. Boards that do this put their association at risk of potential liability. When an association fails to follow the law, it can incur penalties.
For example, if an association imposes a restriction it is legally not allowed to impose, a homeowner may file a private lawsuit against the HOA. As a result, the association’s finances will be affected. The HOA will have to pay for legal fees as well as any damages the court awards to the homeowner. While the association does have insurance to rely on, it may not be enough to cover the full cost of expenses. Additionally, the association’s reputation would go down because of this incident.
For Homeowners Associations:
The Indiana Homeowners Association Act regulates the creation, powers, operation, and management of homeowners associations in Indiana created after June 30, 2009. It applies specifically to homeowners associations that collect mandatory dues from members. Additionally, the Indiana HOA Act can also apply to associations that were created prior to July 1, 2009, provided a majority of the members expressly elect to follow it.
The Indiana Homeowners Association Act, found under Indiana Code 32-25.5, consists of five chapters.
The Indiana Condominium Act regulates the creation, powers, operation, and management of condominiums in Indiana. This Act is found under Indiana Code 32-25. Moreover, it consists of 10 chapters.
- Chapter 1. Condominiums
- Chapter 2. Definitions
- Chapter 3. Classification of Property
- Chapter 4. Ownership Interest in Condominiums
- Chapter 5. Conveyance Procedures
- Chapter 6. Liens and Encumbrances
- Chapter 7. Declaration
- Chapter 8. Administration of Condominiums
- Chapter 8.5. Grievance Resolution
- Chapter 9. Actions and Proceedings
For Nonprofit Corporations:
The Indiana Nonprofit Corporation Act of 1991 regulates nonprofit corporations in the state. Most of the homeowners associations in Indiana register as nonprofit corporations and are, therefore, subject to this Act with regard to corporate structure and procedure. This Act is found under Indiana Code 23-17. Additionally, the Act consists of 31 chapters.
- Chapter 1. Application
- Chapter 2. Definitions
- Chapter 3. Organization
- Chapter 4. Purposes and Powers
- Chapter 5. Repealed
- Chapter 6. Repealed
- Chapter 7. Members; Admission; Types of Memberships; Rights and Duties
- Chapter 8. Resignation and Termination of Members
- Chapter 9. Delegates
- Chapter 10. Meetings and Action Without Meetings
- Chapter 11. Voting
- Chapter 12. Directors
- Chapter 13. Standards of Conduct for Directors
- Chapter 14. Officers
- Chapter 15. Meetings and Action of Board of Directors
- Chapter 16. Indemnification
- Chapter 17. Amendment of Articles of Incorporation
- Chapter 18. Amendment of Bylaws
- Chapter 19. Merger
- Chapter 20. Sale of Assets
- Chapter 21. Distributions
- Chapter 22. General Dissolution
- Chapter 23. Repealed
- Chapter 24. Judicial Dissolution
- Chapter 25. Private Foundations
- Chapter 26. Repealed
- Chapter 27. Records and Reports
- Chapter 28. Notice
- Chapter 29. Repealed
- Chapter 30. Miscellaneous Provisions
- Chapter 31. Repealed
Indiana Fair Housing Act:
The Indiana Fair Housing Act is the state equivalent of the federal Fair Housing Act. This Act prohibits housing discrimination based on the following:
- National origin
- Familial status
Housing discrimination victims can file a report with the U.S. Department of Housing and Urban Development or the Indiana Civil Rights Commission within a year from when the behavior took place. Alternatively, victims can also sue the offender in the federal district court within two years from when the behavior took place.
Specific Indiana HOA Laws and Regulations:
When running homeowners associations, there are a few issues that come up more than others. Here are some of the more specific HOA laws Indiana associations should know:
Display of Political Signs
Pursuant to Indiana Code 32-21-13, homeowners associations are not allowed to enact or enforce a rule that prohibits residents from displaying political signs on their property during the following periods:
- Starting 30 days prior to the date of the election
- Following 5 days after the date of the election
But, homeowners associations can impose certain restrictions related to the sign. This includes the size of the signs, the number of signs allowed, and the location where owners can place the signs.
For those who are unaware, in many states, homeowners associations do have the authority to place liens on a property if a member fails to pay their fees. In Indiana, you will find the laws that apply to homeowners association liens under Indiana Code 32-28-14. This chapter regulates the lien itself as well as notice requirements, the recording of the lien, liability for unpaid assessment, the timing for enforcing the lien, and voiding the lien due to failure to foreclose.
Many states have legislation that protects the solar rights of homeowners. Associations have long placed restrictions on the installation of solar panels because of their effect on curb appeal. In Indiana, though, homeowners associations have certain regulations to consider.
According to Indiana Code 36-7-2-8, homeowners associations do not have the ability to enforce unreasonable restrictions when it comes to solar energy. If a restriction impacts the cost or efficiency of the solar energy system, then it is considered unreasonable.
The Key to Better HOA Management!
Understanding Indiana HOA laws is paramount to running a successful association. If you want to avoid liability as much as possible, it is within your best interest (and the community’s best interest) to familiarize yourself with these laws. Of course, not all HOA board members have the time or necessary expertise for this kind of work. This is where an HOA attorney or management company can help.