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by: Stephen R. Buschmann

Once again the Indiana General Assembly has shown an interest in legislation regulating homeowners associations. Since our firm maintains an active presence at the General Assembly, we are often called upon to assist on this legislation.  Several proposed bills could significantly impact neighborhoods and neighborhood associations. They include various bills that would (1) allow the Attorney General to pursue HOA boards for fraudulent conduct or misappropriation of funds; (2) allow local works boards to install mounds, barriers, fencing, and other structures to protect retention ponds from children and vehicles and then assess the cost against the home owners; and (3) change the timing and various aspects of imposing and collecting association assessments.

The following is a list of the pending bills:

House Bill 1058

Authorizes the Attorney General to bring an action against the board of directors of a homeowners association or individual members of a homeowners association, if the attorney general determines that the board or a director has committed a fraudulent or criminal act or has knowing and intentional misappropriated association funds. Originally, the Bill would have permitted the involuntary dissolution of an association if violations were severe, but after our firm provided guidance and input to the legislature, this provision was removed.

Senate Bill 104

This bill specifies that Barrett Law funding may be used to finance a mound, guardrail, barrier, or other structure necessary or useful to: (1) limit access by children to a retention pond; or (2) reduce the likelihood that a vehicle will enter a retention pond. The Bill provides that if such an improvement is constructed under the Barrett Law within a platted subdivision, the works board may assess all or part of the lots in that subdivision for the improvement.

Senate Bill 155

The original bill dealt with the foreclosure of tax liens by the Department of Revenue. The bill was amended to add a provision that specifies that a complaint to foreclose a homeowners association lien may not be filed earlier than 90 days after recording (current law is 1 year) , unless a person files a notice to foreclose the lien, or another person files an action to foreclose the property that is the subject of the lien.

House Bill 1514

This bill provides that a person who repairs, cleans up, or maintains a neighboring abandoned structure is entitled to a lien on the property, not to exceed the lesser of: (1) the fair market value of the work performed; or (2) $10,000. The bill establishes a procedure for creating, filing, and enforcing the lien and provides that the lien has priority over the lien of a lender and over later recorded liens.

House Bill 1541

This bill defines “transfer fee covenant” as a declaration or covenant that: (1) purports to affect an interest in real property in Indiana; and (2) requires the payment of a transfer fee to a specified person upon a subsequent transfer of the interest in real property. Provides that a transfer fee covenant recorded in Indiana after June 30, 2011: (1) does not run with the title of the real property interest purported to be affected; and (2) is not binding or enforceable against any subsequent owner, purchaser, or mortgagee of the real property interest. Provides that any lien purporting to secure the payment of a transfer fee under a transfer fee covenant recorded in Indiana after June 30, 2011, is void and unenforceable.

Senate Bill 466

This bill would allow tax sale certificate purchaser to enter onto abandoned property for which the purchaser owns a tax sale certificate to abate a nuisance or comply with unsafe building laws or certain ordinances. It requires a person who purchases property at a foreclosure sale to record the deed within 60 days. With respect to mortgaged real property that the mortgagor surrenders in writing to the court or to a mortgagee, provides that 30 days after the date on which the mortgagor surrenders real property the mortgagee is responsible for ensuring that the property does not violate local ordinances or nuisance, unsafe building, and vacant and abandoned structures statutes. Specifies that the mortgagee is personally liable for ensuring that the property complies with local ordinances or nuisance, unsafe building, and vacant and abandoned structures statutes, and provides that the mortgagee may be liable for additional civil penalties as determined by the appropriate local legislative body. Requires a mortgagee to whom property has been surrendered to record the mortgagee’s interest in the property not later than 60 days after receipt. The bill provides that a mortgagee has the authority to enter onto real property in order to carry out its responsibilities.

Bear in mind, these bills are currently pending before the Indiana General Assembly and may be amended, combined, or not passed.  At present, they are not the law of the State of Indiana.   If you have questions regarding the how state laws and legislation will impact your neighborhood, please contact Steve Buschmann at (317) 686-4773.

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