The Indiana HOA Act: Which Provisions are Mandatory?
Indiana homeowners associations are governed by the Indiana Homeowners Associations Act, which can be found at Indiana Code 32-25.5 (the “HOA Act”). The HOA Act is applicable to all non-condominium associations. The HOA Act is often the source of confusion, as only certain portions apply to ALL Indiana homeowners associations.
Applicability depends on the Association’s creation date. Specifically, certain provisions of the HOA Act apply only to associations formed after June 30, 2009 (or those associations whose members voted to become subject to the HOA Act in its entirety). All homeowners associations established after June 30, 2009 are bound by the entirety of the HOA Act. Conversely, homeowners associations established before June 30, 2009 are only bound by the entire statute if the members vote to be so bound.
For associations created after June 30, 2009, the answer is simple. Those associations should simply apply and abide by all portions of the HOA Act, regardless of what their community’s covenants or by-laws provide. However, the boards of associations formed prior to that date must be aware of which provisions apply to their community, and which provisions are inapplicable.
There are six provisions of the HOA Act that are mandatory to all associations, regardless of formation date. These provisions are discussed below.
Rights to Inspect Association Documents: The HOA Act provides that owners have a right to inspect certain association records. This includes financial records (i.e. checks, bank statements, financial statements, budgets, receipts, and invoices), executed contracts, and meeting minutes. The association does not, however, need to provide records which are more than two years old. The HOA Act also provides that the association can charge a reasonable fee for copies and no more than $35 per hour for the time it takes to search for the requested records if the search time exceeds one hour (the first hour must be free).
Amendments to Governing Documents: The HOA Act sets forth that the governing documents of an association MUST permit amendment of the governing documents (i.e. the association covenants and bylaws) at any time. Moreover, the requirement to amend the governing documents can be no higher than 75% of the membership (though it can be lower, if the documents so provide).
Proxies: Association proxies must adhere to specific requirements. For example, all proxy forms must contain the date of the meeting for which it is to be used, the name of the selected proxyholder, and an affirmation under penalties of perjury that the person signing the proxy has the right to do so. Additionally, the HOA Act sets forth that proxies can be valid for no more than 180 days. Any proxy that does not meet the requirements set forth in the statute are void and cannot be accepted.
Failure to Achieve Quorum: The HOA Act provides that if the association cannot achieve quorum at a properly called meeting, the existing board members will continue on in position until a quorum can be reached to hold the election. Also, decisions made by the board members that continue on in position past their term (including enforcement actions) will be valid, and a homeowner does not have the right to withhold assessments or forgo any obligation under the governing documents due to the association’s failure to reach quorum.
Attorney General: The HOA Act gives the Indiana Attorney General jurisdiction to hear complaints regarding homeowners associations in limited cases, including fraud, misappropriation of funds, and criminal activity.
Grievance Resolution: The statute establishes a dispute resolution procedure which must be followed prior to initiating legal action. With limited exceptions, the association and individual members of the association must take these steps in attempt to resolve disputes in good faith before a lawsuit can be initiated against the other. This procedure applies to grievances alleged by the association against an owner, as well as those brought by owners against either the association or other owners.
This is not an exhaustive review of the HOA Act. You can find the HOA Act in its entirety on our firm’s website by going to the “Resources” tab and then scrolling down to the “Statutes” section. Board members should consult the HOA Act in its entirety and review questions with their association’s legal counsel.
