Reprinted

April 15, 2009





ENGROSSED

HOUSE BILL No. 1071

_____


DIGEST OF HB 1071 (Updated April 14, 2009 3:07 pm - DI 69)



Citations Affected: IC 32-25.5; IC 32-28.

Synopsis: Homeowners associations. Applies the following provisions to a homeowners association (association) established after June 30, 2009, and allows an association established before July 1, 2009, to elect to be governed by the provisions: (1) Requires an association to maintain a current roster of all members of the association (members). (2) Requires an association to prepare an annual budget that must be approved by the members. (3) Requires the board of directors of an association (board) to hold a special meeting of the members if at least 10% of the members submit a written demand to the board to hold the meeting. (4) Prohibits a board from entering into certain contracts without the approval of the affected members. (5) Prohibits a homeowners association from borrowing certain amounts of money on behalf of the homeowners association unless borrowing the money is approved by the affirmative vote of a majority of members of the homeowners association. (6) Provides that the governing documents of
(Continued next page)


Effective: July 1, 2009.





Cheatham , Hinkle , Grubb
(SENATE SPONSORS _ BOOTS, DELPH, LEWIS, SIMPSON)




    January 7, 2009, read first time and referred to Committee on Judiciary.
    February 17, 2009, amended, reported _ Do Pass.
    February 20, 2009, read second time, amended, ordered engrossed. Engrossed.
    February 23, 2009, read third time, passed. Yeas 54, nays 41.

SENATE ACTION

    February 24, 2009, read first time and referred to Committee on Judiciary.
    April 9, 2009, amended, reported favorably _ Do Pass.
    April 14, 2009, read second time, amended, ordered engrossed.





Digest Continued

an association must include grievance resolution procedures. (7) Prohibits an association from suspending the voting rights of a member for nonpayment of annual assessments unless the assessments are delinquent for more than six months. Provides that an association may enforce an association lien by filing a complaint in the circuit or superior court of the county where the real estate that is the subject of the lien is located if the complaint is not filed: (1) earlier than one year; and (2) later than five years; after the date the statement and notice of intention to hold a lien were recorded. Provides that an association lien is void if: (1) the owner of the real estate subject to the lien or any person or corporation having an interest in the real estate, including a mortgagee or a lienholder, provides written notice to the owner or holder of the lien to file an action to foreclose the lien; and (2) the owner or holder of the lien fails to file an action to foreclose the lien in the county where the real estate is located within one year after the date the owner or holder of the lien received notice of the lien.


Reprinted

April 15, 2009

First Regular Session 116th General Assembly (2009)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts between statutes enacted by the 2008 Regular Session of the General Assembly.


ENGROSSED

HOUSE BILL No. 1071



    A BILL FOR AN ACT to amend the Indiana Code concerning property.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 32-25.5; (09)EH1071.2.1. -->     SECTION 1. IC 32-25.5 IS ADDED TO THE INDIANA CODE AS A NEW ARTICLE TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]:
    ARTICLE 25.5. HOMEOWNERS ASSOCIATIONS
    Chapter 1. Applicability
    Sec. 1. This article applies to the following:
        (1) A homeowners association established after June 30, 2009.
        (2) A homeowners association established before July 1, 2009:
            (A) if a majority of the members of the homeowners association elect to be governed by this article; or
            (B) if the number of members required by the homeowners association's governing documents elect to be governed by this article if a different number of members other than the number established in clause (A) is required by the governing documents.
    Chapter 2. Definitions
    Sec. 1. The definitions in this chapter apply throughout this

article.
    Sec. 2. "Board" refers to the board of directors of a homeowners association.
    Sec. 3. "Governing documents" includes:
        (1) the articles of incorporation and bylaws of a homeowners association and all adopted amendments to the articles of incorporation and bylaws; and
        (2) any applicable declaration of plat.
    Sec. 4. "Homeowners association" means a corporation or another entity that:
        (1) is organized and operated exclusively for the benefit of two (2) or more persons who each own a dwelling in fee simple;
        (2) acts, in accordance with the articles, bylaws, or other documents governing the corporation or entity, to:
            (A) acquire, transfer, manage, repair, maintain, or engage in construction on or in the land and improvements on the land related to the use of the dwellings owned by the members of the corporation or entity;
            (B) purchase insurance to cover a casualty or an activity on or in the land and improvements on the land;
            (C) engage in an activity incidental to an activity described in clause (A) or (B); or
            (D) engage in more than one (1) of the activities described in clauses (A) through (C); and
        (3) may be governed by a board that serves the purpose of setting policy and controlling or otherwise overseeing the activities or functional responsibilities of the corporation or entity.
    Sec. 5. "Subdivision" means the division of a parcel of land into lots, parcels, tracts, units, or interests in the manner defined and prescribed by a subdivision control ordinance adopted by a legislative body under IC 36-7-4.
    Chapter 3. Homeowners Associations
    Sec. 1. (a) A homeowners association shall maintain:
        (1) a current roster of all members of the association; and
        (2) the mailing address and legal description for each member of the association.
    (b) The homeowners association shall also maintain any electronic mail addresses or facsimile (fax) numbers of those members who have consented to receive notice by electronic mail or facsimile (fax). Electronic mail addresses and facsimile (fax) numbers provided by a member to receive notice by electronic mail

or facsimile (fax) shall be removed from the association's records when the member revokes consent to receive notice by electronic mail or facsimile (fax). However, the association is not liable for an erroneous disclosure of an electronic mail address or a facsimile (fax) number for receiving notices.
    (c) The mailing addresses and legal descriptions maintained by a homeowners association under subsection (a):
        (1) shall be made available to a member of the homeowners association upon request;
        (2) may be used by a member of the homeowners association only for a purpose related to the operation of the homeowners association; and
        (3) may not be used by a member of the homeowners association for personal reasons.
    (d) Except as provided in subsection (c), a homeowners association may not sell, exchange, or otherwise transfer information maintained by the homeowners association under this section to any person.
    Sec. 2. (a) In addition to any other meeting held by a board, a board shall hold a special meeting of the members of a homeowners association if at least ten percent (10%) of the members of the homeowners association submit to the board at least one (1) written demand for the special meeting that:
        (1) describes the purpose for which the meeting is to be held; and
        (2) is signed by the members requesting the special meeting.
    (b) If a board does not send out a notice of the time and the place for a special meeting not more than thirty (30) days after the date the board receives a valid written demand for the special meeting under subsection (a), a member of the homeowners association who signed the written demand may:
        (1) set the time and place for the special meeting; and
        (2) send out the notice for the special meeting to the other members.
    Sec. 3. (a) A homeowners association shall prepare an annual budget.
    (b) The annual budget must reflect:
        (1) the estimated revenues and expenses for the budget year; and
        (2) the estimated surplus or deficit as of the end of the current budget year.
    (c) The homeowners association shall provide each member of

the homeowners association with:
        (1) a:
            (A) copy of the proposed annual budget; or
            (B) written notice that a copy of the proposed annual budget is available upon request at no charge to the member; and
        (2) a written notice of the amount of any increase or decrease in a regular annual assessment paid by the members that would occur if the proposed annual budget is approved;
before the homeowners association meeting held under subsection (d).
    (d) A homeowners association budget must be approved at a meeting of the homeowners association members by a majority of the members of the homeowners association in attendance at a meeting called and conducted in accordance with the requirements of the homeowners association's governing documents.
    (e) For purposes of this section, a member of a homeowners association is considered to be in attendance at a meeting if the member attends:
        (1) in person;
        (2) by proxy; or
        (3) by any other means allowed under:
            (A) state law; or
            (B) the governing documents of the homeowners association.
    Sec. 4. (a) This section does not apply to a contract entered into by a board that would resolve, settle, or otherwise satisfy an act of enforcement against a homeowners association for violating a state or local law.
    (b) A board may not enter into any contract that would result in a new assessment or the increase in an existing assessment payable by the affected members of the homeowners association in the amount of more than five hundred dollars ($500) per year for each member of the homeowners association unless:
        (1) the board holds at least two (2) homeowners association meetings concerning the contract; and
        (2) the contract is approved by the affirmative vote of at least two-thirds (2/3) of the affected members of the homeowners association.
    (c) A board shall give notice of the first homeowners association meeting held under subsection (b):
        (1) to each member of the homeowners association; and


        (2) at least seven (7) calendar days before the date the meeting occurs.
    Sec. 5. (a) This section does not apply to money borrowed by a homeowners association that is needed to:
        (1) resolve, settle, or otherwise satisfy an act of enforcement against the homeowners association for violating a state or local law; or
        (2) address an emergency that affects the public health, safety, or welfare.
    (b) A homeowners association may not borrow money during any calendar year on behalf of the homeowners association in an amount that exceeds the greater of:
        (1) five thousand dollars ($5,000) during any calendar year; or
        (2) if the homeowners association operated under an annual budget in the previous calendar year, an amount equal to at least ten percent (10%) of the previous annual budget of the homeowners association;
unless borrowing the money is approved by the affirmative vote of a majority of the members of the homeowners association voting under this section.
    (c) A person who owns a lot, parcel, tract, unit, or interest in land in a subdivision may cast one (1) vote under this section for each lot, parcel, tract, unit, or interest in land in the subdivision that is owned by the person unless the governing documents provide for a different voting procedure.
    (d) A vote held under this section must be conducted by paper ballot.
    (e) A homeowners association shall distribute paper ballots to persons eligible to vote under this section at least thirty (30) days before the date the votes are to be opened and counted.
    (f) Votes cast under this section shall be opened and counted at a public meeting held by the homeowners association.
    Sec. 6. The governing documents must include grievance resolution procedures that apply to all members of the homeowners association and the board.
    Sec. 7. A homeowners association may not suspend the voting rights of a member for nonpayment of any assessments unless:
        (1) the governing documents provide for suspension; and
        (2) the assessments are delinquent for more than six (6) months.

SOURCE: IC 32-28-14-8; (09)EH1071.2.2. -->     SECTION 2. IC 32-28-14-8, AS ADDED BY P.L.135-2007,

SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 8. (a) A homeowners association may enforce a homeowners association lien by filing a complaint in the circuit or superior court of the county where the real estate that is the subject of the lien is located. The complaint:
         (1) may not be filed earlier than one (1) year; and
        (2)
must be filed not later than one (1) year five (5) years;
after the date the statement and notice of intention to hold a lien was recorded under section 6 of this chapter.
    (b) If a lien is not enforced within the time set forth in subsection (a), the lien is void.
    (c) If a lien is foreclosed under this chapter, the court rendering judgment shall order a sale to be made of the real estate subject to the lien. The officers making the sale shall sell the real estate without any relief from valuation or appraisement laws.

SOURCE: IC 32-28-14-9; (09)EH1071.2.3. -->     SECTION 3. IC 32-28-14-9, AS ADDED BY P.L.135-2007, SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2009]: Sec. 9. (a) A homeowners association lien under this chapter is void if both of the following occur:
        (1) The owner of the real estate subject to the homeowners association lien or any person or corporation having an interest in the real estate, including a mortgagee or a lienholder, provides written notice to the owner or holder of the lien to file an action to foreclose the lien.
        (2) The owner or holder of the lien fails to file an action to foreclose the lien in the county where the real estate is located within thirty (30) days one (1) year after the date the owner or holder of the lien received the notice described in subdivision (1).
However, this section does not prevent the claim from being collected as other claims are collected by law.
    (b) A person who gives notice under subsection (a)(1) by registered or certified mail to the owner or holder of the homeowners association lien at the address given in the recorded statement may file an affidavit of service of the notice to file an action to foreclose the lien with the recorder of the county in which the real estate is located. The affidavit must state the following:
        (1) The facts of the notice.
        (2) That more than thirty (30) days have one (1) year has passed since the notice was received by the owner or holder of the lien.
        (3) That an action for foreclosure of the lien is not pending.
        (4) That an unsatisfied judgment has not been rendered on the lien.
    (c) The recorder shall record the affidavit of service in the miscellaneous record book of the recorder's office. When the recorder records the affidavit under this subsection, the real estate described in the homeowners association lien is released from the lien.
    (d) An affidavit recorded under subsection (c) must cross reference the lien.