The Indiana General Assembly recently made several changes to the governance of homeowners associations, and rights of homeowner and community associations. House Enrolled Act No. 1286 (Public Law 148-2015) went into effect on July 1, 2015. This new law has many important provisions; however, I am only going to focus on two of the most important provisions.
First, the new law now requires that a purchaser of a home covered by restrictive covenants incorporating a homeowner’s association must receive a disclosure informing the purchaser and also copies of relevant documents. These must be provided to the purchaser not later than ten (10) days before the sale closing date. Frequently, homebuyers have reported that they had no idea that the home they were purchasing was subject to comprehensive use and restrictive covenants, including the obligation to pay mandatory assessments to a homeowner’s association. The new disclosure must include a copy of all recorded “governing documents” (which is defined in the statute), a statement regarding the amount of assessments, and information regarding a board member, homeowner’s association agent or any other person that has a contract with the homeowner’s association for management services.
The second important provision in the new law requires that community associations, including subdivision homeowner associations and condominium associations, incorporate within the governing documents a grievance resolution procedure in the event of a dispute between a homeowner, the Association or the officers of the Board of Directors for the association. Existing law already requires such a procedure in many circumstances. The existing law applies to non-profit member based corporations requiring an opportunity to be heard at a hearing before the Board of Directors, before a member’s privileges are suspended or the member penalized. Most often, community associations are established as non-profit corporation membership organizations. However, this new law extends to owners within a community homeowner’s association the opportunity to have their grievance or dispute resolved under minimum standards set forth in the law. The new law applies to most all disputes, not just when there is action taken against an owner to suspend privileges. If the homeowner and association cannot resolve the dispute in good faith and with reasonable efforts, then the law provides for a more formal series of written exchanges between the two parties. If this second tier of communication does not resolve the dispute, then mediation or arbitration is available to be instituted by the parties.
The grievance and dispute resolution requirement does not relate to all potentially adversarial matters. For example, a dispute over the payment of assessments is an “exempt claim” under the statute.
The operation and governance of homeowners or community associations is made more complicated by this and other recent laws which provide limitations on what can be imposed on unsuspecting homeowners.
If you have questions regarding Homeowner’s Association Policies, or other similar issues, please contact your HWE relationship attorney or visit us at http://www.hwelaw.com.