- Community Associations, Legal Updates, Finances
- Indiana
The 2026 Indiana legislative session introduced several changes that will affect condominium, homeowner (HOA), and townhome community associations. While some of the updates clarify existing practices, others will require boards and property managers to adjust policies, procedures, and collection strategies before the laws take effect.
Below is an overview of key legislative changes (including House Bill 1152, House Bill 1115, and other statutory updates) and what Indiana community associations should be doing now to prepare.
Clarification on Owner Obligations (House Bill 1210)
One positive change for associations addresses a common enforcement issue: owners arguing that the association cannot enforce rules because quorum has not been established.
The new law clarifies that failure of an association to establish quorum does not relieve owners of their obligation to comply with the governing documents. This means that even if an association has difficulty reaching quorum or electing a board, owners must still:
- Pay assessments
- Follow the association’s rules and restrictions
- Comply with the governing documents
House Bill 1152: Budget Increases When Quorum Is Not Achieved
One of the most discussed bills from the 2026 session is House Bill 1152, which addresses how associations can increase budgets when they cannot obtain quorum from the membership.
Under existing Indiana law, associations that fail to obtain quorum may approve a budget up to 110% of the prior year’s budget, provided that authority exists in the governing documents. The final version of HB 1152 allows boards to approve a budget increase of up to 105% of the previous year’s budget when quorum cannot be obtained.
Important details include:
- The provision only applies to associations formed after July 1, 2026
- Associations must have language in their governing documents authorizing the budget increase approval process
- Associations formed before that date remain largely unaffected
- A developer-controlled association exception allows budgets to increase up to 110% within the first five years after the first unit or lot sale.
Because the allowable increase is now smaller, future Indiana community associations should consider:
- Incremental annual budget increases
- Long-term reserve planning
- Proactive financial planning to avoid large budget spikes
Gradual adjustments may help associations avoid budgetary restrictions when large increases become necessary.
House Bill 1115: Payoff and Resale Letter Fee Cap
House Bill 1115 introduced several provisions affecting association operations and owner fees.
Payoff and Resale Letter Fee Cap: Previously, Indiana law capped the fee for a resale or payoff letter at $250. Under the new law, associations and their agents may charge no more than $50 to the owner for a payoff or resale letter. The cap only applies to the owner being charged, not necessarily the association’s internal costs.
A payoff letter typically includes assessment balances, covenant violations, lien status, and/or the relevant financial information requested during a sale or refinance. By contrast, the new law clarifies that a simple account balance statement must now be provided to owners without charge.
Associations and management companies will need to evaluate how these administrative costs are handled going forward.
House Bill 1115: Optional Service Fees Must Be Disclosed
Another key component of HB 1115 addresses optional services provided by the association or management company. The law allows these fees but requires transparency. Examples of optional services include:
- Key fob replacements
- Clubhouse rentals
- Boat dock or golf cart fees
- Landscaping services requested by owners
- Administrative processing fees
Associations must now:
- Create a Schedule of Optional Services
- Have the board approve the schedule
- Distribute or publish the schedule to owners (Note: Providing notice to the ownership and posting the schedule on the association’s website is generally sufficient)
However, services that are already included in the association’s regular assessments cannot be reclassified as optional services simply to charge additional fees.
House Bill 1115: Association Authority to Issue Fines
One of the most significant improvements in the new legislation is the statewide authority for associations to issue fines. Previously, Indiana associations could only issue fines if their governing documents explicitly allowed it. The new law allows all Indiana community associations to impose fines, even if the governing documents do not expressly authorize them. Associations must follow the procedure outlined in the new law prior to the assessment of a fine.
In order to assess a fine, associations are required to adopt a Schedule of Fines that includes:
- Each type of violation
- The amount of the fine
- Whether the fine is recurring
- The maximum aggregate fine amount
Boards must also provide proper notice before assessing fines, including:
- The violation
- The fine amount
- The date it will be assessed
- Whether the fine may recur
These strict procedures must be followed and require transparency so owners understand the potential consequences of violations. Failure to follow the required process could jeopardize enforcement. We recommend that all associations utilize legal counsel to ensure this process is accurately followed. In addition, we recommend that all associations adopt an updated enforcement policy, outlining the procedure that will be followed in the new process.
HB1115: Voting Percentage Lowered to 2/3 Vote
In a positive change for many associations, HB1115 lowered the approval threshold that association governing documents may require for certain owner consents. This new law states that the governing documents may not require more than two-thirds (2/3) vote of the owners to approve matters covered by this provision. This means that associations may not impose extremely high approval thresholds (e.g. 75%) in certain membership votes.
HB1210: HOA Rental Restriction Voting
In a move that signals a major restriction on homeowner voting rights, HB1210 limits voting eligibility in associations. Beginning on July 1, 2026, only owners who occupy their property as a homestead (primary residence) may vote on associations matters involving restrictions or prohibitions on rental properties. This means that for any association vote involving rental restrictions, only homestead owners can vote. This effectively includes votes on banning rentals entirely, limiting rentals (caps, waiting lists, lease terms, etc.) and any provision restricting the ability to rent a home. Note that this does not apply to the developer while the developer still owns lots in the association.
HB1115: Removal of Fees for Production of Documents
A last minute amendment to HB1115 revised the law to prohibit the authority of an association to charge fees for producing records requested by members. HB1115 effectively removed the provision of the HOA act that previously allowed fees for copying and compiling records. Under that provision, an association could charge a fee for the production of records after the first hour, at a rate not to exceed $35/hour, with a cap of not more than $200 for the production. Accordingly, associations may no longer charge homeowners for copying documents requested under the records inspection provisions.
HB1115: Notice of Board Meetings and Notices for Annual Meetings
HB115 addressed a number of administrative issues in associations, including the following:
- Minimum Notice for Board Meetings: Association boards must give at least four (4) days’ written notice before any board meeting. The notice must include the meeting agenda.
- Remote Attendance Counts as Being Present: Members are considered in attendance at an association meeting if they participate remotely or virtually, not just in person.
- New Requirement for Annual Meeting Notices: When sending notice of the annual meeting, the association must also include:
- A statement informing members of the right to demand a special meeting
- The number of members required to demand that special meeting.
The practical effect of these provisions seeks to increase meeting transparency and participation. It will be very important for Board members and/or management to ensure that the new provisions are adhered to when scheduling and sending notices for meetings.
HB1152: In-Home Childcare
Associations may not prohibit or restrict a resident from operating a Class I childcare home or providing certain childcare services if:
- The person lives in the home, and
- The person owns, rents, or leases the residence where the childcare is provided.
Accordingly, residents may operate small, licensed in-home childcare services from their homes without association prohibition. Board members and management will need to consult with legal counsel to determine what may be permitted as far as enforcement of violation policies in conjunction with the operation of any in-home child care service.
HB1152: Amateur Radios
This new law prohibits a homeowners association from adopting or enforcing a regulation, rule, or other policy that prohibits a person from maintaining an amateur (ham) radio antenna.
HB1150: Fuel Discrimination, American Flag Rights & License Plate Readers
Some additional provisions were included in a lesser-known bill, HB1150 which addressed a number of issues, including the following:
- Display of US Flag/Indiana State Flag: This new provision provides that an association’s governing documents may not include a covenant, policy, or similar measure that prohibits the display of an American flag. *Note that unlike the other legislation passed this session, this provision applies to “property owners associations” which includes HOAs, condo, coops, residential subdivisions, or similar property owners associations. Note that an association may continue to enforce reasonable restrictions with respect to the placement of the flag.
- Fuel Discrimination in Outdoor Equipment: This new law provides that a homeowners association’s governing documents may not include a covenant, policy, or similar measure that: (1) prohibits or restricts the use of; (2) distinguishes between types of; or (3) results in differing standards for different types of; motor vehicles or outdoor equipment based on the fuel source that powers the motor vehicle or outdoor equipment.
- License Plate Readers: This new provision of the law prohibits a homeowners association from installing, maintaining, or operating an automated license plate reader (ALPR), and prohibits a homeowners association from permitting the installation, maintenance, or operation of an ALPR on the property of the association unless the ALPR is installed by a law enforcement agency and only the law enforcement agency has access to the ALPR data.
HB1155: Traffic Enforcement on Private Roads Pilot Project
Finally, in a law that has limited applicability to many associations, this new law creates a pilot program allowing certain large associations to implement and enforce traffic controls on privately owned roads within their subdivisions. The program applies only to subdivisions that meet all three criteria:
- Governed by a homeowners association
- Contain at least 1,500 lots
- Include at least 15 miles of private roads owned and maintained by the association
This effectively limits the program to very large communities with extensive private road networks.
The Role of the Association’s Attorney: Preparing for the July 1, 2026 Changes
Given the number of legislative updates affecting Indiana community associations, now is an ideal time for boards to work closely with their association attorney to update policies, procedures, and governing documents.
An experienced community association attorney can assist boards and property managers with:
- Preparing a formal Schedule of Fines
- Preparing an updated Enforcement Policy for the assessment and collection of fines
- Identifying all owner-paid service fees and reviewing a Schedule of Optional Services as approved by the board
- Updating delinquent assessment recovery policies including notice procedures
- Advising on budget procedures and financial planning
- Handling assessment collections, liens, and foreclosure strategies
- Reviewing governing documents for compliance with the new laws outlined above
Working with legal counsel also helps ensure associations follow the required statutory procedures when enforcing violations, issuing fines, and responding to owner disputes.
Legal Resource
To maintain financial stability and comply with the new legislation, Indiana community association boards should treat assessment collection as a fiduciary duty, maintain clear policies regarding owner fees, and implement written enforcement procedures.
Boards should also work closely with their association’s attorney and management team to ensure proper compliance and consistent application of the governing documents. Taking prompt action on delinquencies and enforcing policies consistently helps protect the association’s financial health and prevents larger problems from developing.
Do not hesitate to contact our law firm if your Indiana association has questions about assessment recovery, collection policies, or other legal concerns.
Please call 855-537-0500 or visit www.ksnlaw.com.
Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We represent thousands of clients and community associations throughout the US with offices in several states including Florida, Illinois, Indiana, and Wisconsin.
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