Legal Updates & Hot Topics Impacting Indiana Community Associations” – KSN attorney Kelly Elmore discusses legal updates and hot topics impacting Indiana condo, homeowner (HOA), and townhome associations. Topics include solar panels, short term rentals, board member liability, insurance coverage, voting, and more. (57 mins.)

The KSN Podcast examines various aspects of association law, landlord/tenant issues, property tax appeals, and more.

In each episode, KSN attorneys share their experience and knowledge as they discuss legal updates, best practices, industry trends, and more.

KSN Podcast episodes are available here:

Subscribe to the KSN Podcast where podcasts are found including:

You can also listen to the episode on YouTube:

Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collectionslandlord/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.

For more info about our law firm and legal services, please visit


Episode Transcription

Bernie: You are listening to the KSN podcast, and on this episode, we’re discussing legal updates and hot topics impacting Indiana condo, homeowner, and townhome associations. Welcome to the KSN Podcast, where you’ll hear from KSN attorneys as they share their experience and insight on legal issues surrounding community associations, collections, property tax appeals, and landlord tenant law. This episode is an edited version of our February 22nd, 2023 webinar presented by KSN attorney Kelly Elmore. Kelly practices community association law and has an extensive background as a litigator and for this webinar, she discussed legal updates and hot topics impacting Indiana condos, homeowners, and townhome associations. Topics include solar panels, short-term rentals, board member liability, insurance coverage, voting, and more. KSN is an experienced legal resource ready to provide you with quality advice and exceptional service. We look forward to demonstrating how we’ve earned the trust of thousands of clients since 1983. If you’d like to reach Kelly or any of KSN’s experience attorneys, please call 855-537-0500. You can also visit, complete the contact form and send us a message.

Kelly: Well, thank you everyone so much for joining us this evening for the KSN Free Webinar series on Indiana Condo and HOA legal updates and hot topics. My name is Kelly Elmore. I am a principal here at KSN down in Indianapolis. I have been practicing law since 2005 and actually celebrated my 11-year anniversary with KSN yesterday. But I have focused my entire career exclusively on the practice of representation of community associations, condominium associations, homeowner associations, townhome associations, and the number of other types of community associations. In addition to my practice, I’m also very involved in our Central Indiana chapter of CAI or the Community Association Institute. For those of you who are unfamiliar with CAI, it is a national organization that is focused on bringing education in other venues to community associations and anyone really involved in community associations, so attorneys, management personnel, vendors pavers, roofers, things like that insurance agents, really anyone who’s involved in community associations and certainly board members.

So our focus is as an organization to really foster education nationally and within our local communities. We truly believe that education, such as doing things like we are tonight with this webinar series really enhances associations and certainly assists board members and managers as you run an association. In addition, please feel free to check out our website. We have a number of articles, podcasts and webinars available online. A ton of information on pretty much any topic such as the ones we’re going to talk about tonight. So tonight we’re going to be talking about legal updates and legislation impacting community associations here in Indiana and a couple of hot topics. I know we have a number of things going on but short term rentals still seems to be the number one issue, so I thought we talked a little bit about that this evening as well as some things we’re seeing with board member responsibilities and liabilities, certainly in the courtroom and some trending cases that we are seeing.

So first let’s talk about last year. So, 2022 if you participated in any of the webinars or any presentations we did last year everyone is aware that 2022 was the big year in Indiana for solar panel legislation. I am still getting a couple of questions about it and in the last couple weeks there, I had some questions about what exactly that bill does. So I thought I’d add it to the slide even though we’re now in 2023 but I thought it would be helpful just to go back and clarify what it does and what it doesn’t do. So back in March of 2022 the Indiana legislature passed house Bill 1196, which essentially provided that a homeowner’s association may require certain screening and pre-approval procedures before an owner of a unit or a lot may install a solar energy system. So, the law clarified that in a situation where an owner wants to proceed with installation of the solar panel the association is well within its rights to require screening and a process and procedure. Very similar to if an owner wants to submit an ARC request for a construction project. Very similar, you have to go through a process to submit a request for solar panel installation.

In addition, this bill provided that a homeowner’s association may prohibit the installation, use a removal of a system under certain circumstances. So, without going into extreme detail of what the bill provided, it essentially provided a path for those associations where owners previously did not have the ability in their HOA to install solar panel systems. There were associations where they were either expressly prohibited or the board or the ARC had refused them. And so, the intent was to create a path where if somebody did wish to install such a system, they would have a path and the bill provides a number of requirements for an owner to provide information to the board, including the site plan of the system, the vendor and installer of the system, the plans and specifications. And then on top of that requires the owner to petition their fellow homeowners and obtain the required number of signatures which would be the same amount required to amend the association’s governing documents, which would be at least 65% of the association’s owner. So it is still a major uphill battle. I think for those associations where it can be very difficult to get fellow owners’ consent on issues but essentially that is the solar panel legislation in a nutshell and we will move on to 2023 and beyond.

So, I am very, very excited about 2023 and then what we’re also going to be doing in 2024. So, this past year I had the privilege in 2022 of being elected as the board president for the Central Indiana chapter for CAI. I’ve now moved on and the chair of the CAI legislative Action Committee or LAC Committee, if some of you might have heard of that the purpose of our committee is to look around in our communities, look at what’s going on in various HOAs and condominium associations and other community associations, and to figure out where there are problems, identify those propose legislation reach out to our legislators when we see bills that are being proposed that maybe are not great for associations, which I’ll talk a little bit about. But one of the things we are really focused on for this year is the modernization of the HOA and Condo Act. So have a number of amazing committee men and women on the committee this year who are contributing some incredible ideas for ways that we can update the Indiana HOA Act and the Indiana Condo Act to really address problems that we’re seeing in communities, things like the fines and the ability of associations to assess fines for covenant violations.

So for years, I think many property managers and certainly board members have struggled with the fact that you have owners who violate the covenants and unfortunately, if those owners do not comply after a first or second letter is sent it can be incredibly difficult and a very long process to proceed with filing litigation. Unfortunately because of a case that was decided back in 1987 and has not been challenged, many individuals took the position that, well, in Indiana, you just can’t assess fines. Well, that’s not actually the law In Indiana, the law is actually silent on the ability of an HOA to assess a fine, and in fact, many associations have provisions in their governing documents that actually authorize the board to assess a fine for a covenant violation. However, because of this case many associations have been hesitant to assess the fine and then seek to recover it in litigation. Well, one of the main goals of some legislation we are working on now is to clarify that not only can associations assess a fine we also want to maybe make it a little bit easier for boards to assess that fine, perhaps you don’t have to wait until you’ve issued the second grievance letter. The idea is really compliance with the governing documents and I know for many of you who are board members and property managers, you have many, many things to do with your time better than going after owners for leaving an RV in the front driveway or leaving a commercial truck parked in the driveway overnight or on the street. And I know a lot of board members and property managers would appreciate the opportunity to have an alternative method to enforce the covenants that does not involve going to litigation.

Some of the cases that we have seen on very, very simple covenant violation issues; debris in yards, RVs parked in driveways, Christmas lights still up in April, the board has been forced with no other recourse to file litigation and often the cost can be minimally $2,000 just to have your attorney prepare a complaint, file it, appear in court. And that is not including those cases where the owner actually hires an attorney and contests the violation or refuses to comply, and the case is dragged out. So truly what we’re looking to do with this legislation is really empower boards, empower managers to really target and place the financial burden of covenant violation on the people who are offending and not complying with the declaration. The goal also with this type of legislation is that homeowners will spend a lot less on legal fees. You can imagine if you could send a letter or two to an owner and let them know you’ll be fined if you do not comply with the governing documents, or we might implement a daily fine we have found in many jurisdictions throughout the country that is a very effective method of addressing covenant violations. In fact, I think Indiana is one of the only states that sort of seems a little bit behind in that they don’t allow association with this mechanism again, just because of the confusion over this case law. So, I’m really hoping to get that moved forward in the next year and we will continue to keep everyone updated on that.

In addition, as part of some of what our committee’s looking at as far as modernization of the HOA and Condo Act there’s also been a big focus on how assessment payments are applied in association. So, many of you who have had long-term collection actions know that throughout the process an owner might have a late fee, there might be a fee charged by the management company to turn over an account to collections certainly legal fees and I think there’s been a lack of clarity under the law that let’s suppose an owner is delinquent, and with all of those items, the owner owes $500. Well, many times owners will submit a partial payment, and there’s confusion as to, well, should that payment be applied to the assessment debt? Should it be applied first to attorney’s fees or to the management fee? We’ve all had those scenarios where the owner submits the payment and then specifically says this is for the assessment, but I’m disputing the other charges, so I’m not paying those. And it can create a major issue and unfortunately cause issues as far as keeping collection actions open resulting in more fees to the owner.

So, we’d really like to create some clarity on the application of assessment payments going forward and how that is done. That also I think from an attorney perspective over the years we have certainly seen, given the number of associations, we represent, a number of Fair Debt Collection Practices Act and the FDCPA is a federal law that prohibits debt collectors from engaging in harassing or unfair collection tactics when collecting a debt and oftentimes we have seen angry owners who were upset about the association attempting to collect a fee or enforcement of an action. They will assert that the debt was not justified and assert an FDCPA claim against the association or attorney. So, I think overall just some further clarity in the legislation would be really helpful on how associations are to collect and apply assessment payments. And then lastly, one other big issue I know we’re going to be tackling is also clarification on usage of electronic notices, communications and also all forms of electronic tools that we’re using in community associations. So, this really originated after 2020. As many associations pivoted to the use of Zoom and other types of virtual venues, we received a number of questions from associations throughout Indiana as to whether or not boards could continue conducting meetings electronically or through virtual means.

Early on when the pandemic hit, we had the governor’s order in place that was very easy to answer that question. Essentially, it was not recommended to leave, and so, it was certainly understood that board meetings need to continue, and they should be done via virtual means. However, since things have opened up and as we saw that in late 2020 and 2021 and going till how many boards really enjoyed the convenience of using the Zoom forums and the teams forums. And so many have asked, can we sort of make this a permanent thing? And so, what we’re trying to do is make sure that it’s clear under the law that boards can utilize various methodologies as far as conducting the meetings and then similarly with electronic notices, communications and voting. So, over the years, many associations have express provisions and their bylaws allowing for certain types of electronic notices to be sent out to the owners in lieu of mailing. I think the price of mail the last time I checked a stamp, it’s almost getting close to a dollar, and so many associations would love to eliminate the overhead cost for associations and simply send out electronic notices of meetings.

Certainly, there is an understanding though, as with many jurisdictions around the country, and again, I think Indiana might be just a little bit behind other states as far as getting to a point where we actually adopt this into our law. But there will be a provision expressly stating that owners can continue. You know, if you don’t use email, if you don’t have a computer, things like that, owners will always still have the option of receiving notices and communications the old-fashioned way. Same thing with voting. As we look to modernize voting procedures, allowing for third party voting platforms and other types of third-party voting and sending email votes, things like that we’ll always make sure to address any types of owners who still need to use paper votes and things like that, or attend meetings. All right. So very excited for 2023 and if you’re a board member or property manager and you have ideas or you have any issues that you have seen, hey, it would be really great if we could clarify this in the law. Please, please reach out. I’m sort of asking all of our managers and board members, if you have ideas, please let us know. We’re trying to just think of the ones that we hear about routinely on a regular basis, but we know these issues affect associations on a day-to-day basis. So, we’d love to hear from you on other thoughts of things we can update and modernize.

All right, so moving into our first hot topic, rental restrictions and short term rentals. So, as I said earlier this is a topic that we have been talking about for a while, but it continues to be probably one of the most addressed issues that we are handling on a weekly basis, specifically spending amendments that we are being asked to prepare for associations, several different kinds. So, the first are rental restrictions and bans. So, these types of amendments are the types of amendments where you’re simply capping the number of rental properties within a community. So that could be a percentage number of homes or lots or units. The result is that you’re essentially– you have a community where you’re going to have owner occupied homes or units and then those homes are lots with renters. So, the percentage number really varies by association. We have some that have higher percentages than others. It sort of changed, back in 2007 and 2008, when I really saw the first huge trend with rental restrictions and a lot of associations wanting to implement those, the comments on the amount of restriction within a community, what percentage associations should adopt was really driven in large part by the banking community. In other words, people were very, very concerned about being able to get funding and loans, whether it’s owners selling to potential buyers or whether it was communities, certainly in the city, urban areas where they had capital projects and they needed to take out a loan.

And so, everyone sort of looked to the banking professionals to provide feedback on what is the percentage number where the banks are comfortable with the rental rate in a community. That is because in many lending type situations if an association’s attempting to get a loan for a project and the bank comes in, reviews your documents, they review the financials, and they see a high number of rentals that can essentially be a ding when they’re considering whether to loan or the rate. So that’s really where a lot of times the percentages early on came on. I don’t see that quite as much now. Now I think that percentage number really just depends on the community and it’s just something typically we talk it through with each individual association. With the rental restrictions and bans, I think each of these types of amendments have their own advantages and disadvantages but generally if you do a rental restriction or entire ban, you generally have to maintain as a board or management a list. So, I just had a meeting with a community this week where they have a high level of rentals within the property. They’re looking to now implement a rental restriction and maybe take the community down to, let’s say 30%. Well, it’s going to take some time as people sell and leave to slowly get down to that number but I advise them, someone’s going to have to go around and survey everyone in the community, figure out which homes are actually rented, create a list and then going forward in the future there is a responsibility then to continue to track that number and make sure you’re staying on top of it.

So that is one tricky thing with the rental restrictions based on percentages, but I think many associations are able to do it successfully. There is another type of rental restriction that we have done where it’s not based on a percentage, but it says each owner has the ability to rent at least one time during their ownership. So essentially the idea is that for those communities where they don’t truly want to be a rental community but there is an acknowledgement that maybe during one’s ownership of your home or your unit you might at some point find yourself in a position where you need to leave either temporarily, maybe for work, something like that. So those types of amendments say something like, every owner has the ability one time during their ownership to rent, and then everyone is treated the same. That also accounts for hardships and things like that. Just a couple of ideas on the rental restriction or bans.

The next type of amendment that we’re seeing clients ask for quite a bit are the short-term vacation rental bans or restrictions. So certainly, this has been absolutely huge in Indiana especially in the last two years. We had the wave initially with Airbnb and VRBO. Now, I think there’s a number of other platforms that individuals are using, and it’s become quite commonplace, I think, for many associations to now have these short-term vacation rentals in their communities. So we are being asked to do quite a few of these amendments where the community essentially allows rentals within the community, but it is targeting the length of the lease term. So, for example, the language in the amendment would say a lease can be no shorter than 30 days or six months, you know, whatever the community or the board has decided on and the idea is that you’re going to continue to allow rentals, but you really want to restrict the really short-term or vacation rentals. Some associations are fine with short-term rentals as long as they are longer than a certain period of time. For some communities the issue is just they don’t want people constantly in and out. So, they’re fine with rentals through these third party platforms as long as they’re at least 60 days or 90 days. So again, these are very tailored to individual communities based on your particular preferences but just a lot of what we’re seeing with respect to these rental bans.

And then finally owner occupancy amendments. Some associations as a way to curb the newest trend from the last two years is just the huge increase in the investor ownership. So, before the last couple of years, I think most communities were quite familiar with having owners who were investor owners or people, you know, I know we have a lot of snowbirds in Indiana where a lot of lucky individuals take off for Florida six months out of the year. And so, certainly a lot of associations had these investor owners who just weren’t there full-time. Well, the owner occupancy amendment which is really a clause within the amendment operates as a waiting period. So, this type of requirement requires that an owner own and occupy the property for x number of years before the property can be rented. So the idea is if you as an association adopt an owner occupancy clause within an amendment, or an amendment itself within your community, that essentially deters all investor owners because if an investor owner comes in and looks at your governing documents and sees, well, we’re not going to be able to rent this for one year or two years, or five years because there’s this owner occupancy requirement, they kind of usually do the cost benefit analysis, figure out the loss rent for the waiting period and move on to the next property.

So those have been very effective with these investment type properties. So, why are we seeing this trend? We are certainly seeing the trend with the amendments because of the popularity of Airbnb, HomeAway, VRBO, as I mentioned, just a huge increase in real estate investors. I personally can’t tell you how many letters I think I have sent to professional real estate investor companies. I think there’s some associations that have upwards of 20 or 30 homes within the community owned by a single investor group, and that’s now becoming a more common occurrence. So, I think a lot of associations who previously were kind of aware of real estate investors coming in it wasn’t really seen as a big issue. But when you have an investment group coming in and buying 10 homes, 20 homes, 30 homes that can really change the Makeup Oven Association from a family friendly community where owners have known each other for years and people stay in their homes for years to more of a transient rental type of situation, depending how the investment group is running the rental. And for some communities that’s fine. Many owners buy into associations knowing that it is very openly free for rentals. Some people prefer to not live in that type of community and that’s the beauty of the ability to change your governing documents, to tailor it to the association’s needs.

In addition, national trends continue to be popular. So, I was out in New Orleans last month for the CAI annual law conference. So, every year, many of us nerdy attorneys who do HOA and condo law get together and talk about all of the issues that are facing associations all over the country. And this topic, I think probably is still receiving the biggest buzz nationally because in other states, they are still seeing a ton of real estate investors coming in. And again, same things like what we’re seeing here. It used to be a couple of homes per community. Now, it’s 20, 30, 40 or more. This is not just something affecting Indiana, it’s all over the country. A lot of talk about how to address this, what we’re going to do as far as adopting mechanisms. So, impact on community associations and some concerns going forward and just quickly before I go into that, one of the comments or questions I routinely am asked by board members is why didn’t our governing documents have these provisions originally? And the very simple answer is, it’s not necessarily– you would think maybe it’s kind of a common sense provision to include a restriction on rentals for the protection of the community but the developers who are developing the properties, generally once they’re moving on, once all of the homes or the lots or units have been sold they’re really leaving the management of the association to the ownership to decide and it’s generally seen as adverse to a developer’s interest to include a rental restriction because they’re limiting the pool of potential people who might buy in their division.

They want to sell to people who want to buy this home, and it’s going to be their home for the next 20 years, and they’re going to raise their kids, but they also want to sell to the person who might use it as a short term rental. So, the developer is going to write these documents for their own benefit in a way that allows them to sell the most homes or lots. So, that is why generally we try to, especially when we’re working with associations that are newly turned over, that’s one of those topics we usually address right away with the board. Is this something you want to implement? Now would be a great time to include this, as we know it becomes a bigger and bigger problem if it’s left unaddressed over the years.

So, concerns for community associations with rentals. So, we’ve talked about the fact that associations are jumping on these, trying to limit them or ban or restrict our short-term rentals and other types of rentals. Certainly, safety is always a concern. What we hear from board members is there’s a concern when you have people who are unknown in the community walking around, it’s a little bit different than your neighbor who you’ve seen every other day for five years. So it just generally creates a safety concern with people coming and going. Maintenance of the property in violation. So, for as long as I’ve been practicing, there has always been just sort of a fundamental thought, whether it’s true or not, that tenants do not tend to maintain property in the same way that an owner does. If a window breaks or a piece of wood is peeling off the front door and affects the aesthetic of the front door, the tenant might not care about it, but an owner probably would and certainly the association that is trying to maintain a uniform appearance and maintain the aesthetics of the property does care about things like that.

And so, again, whether it’s warranted or not, we know there are thousands of amazing renters in various states but within community associations that’s kind of the reasoning behind the concern about so many rentals. Common violations, we have seen increased violations with properties that are being used as rentals, certainly by some of these investment groups. Just general concerns, again, about safety and maintenance of common areas and amenities. Insurance concerns, there have been issues when owners are taking out insurance, there is different insurance for homeownership versus renters and we have seen issues arise where it just creates some issues with claims and liability when you have renters on the property and an issue occurs. Protection of property values. As I said earlier, previously there was a lot of focus on what the banking industry was saying about the levels of rentals and generally there was a direct correlation between the high number of rentals and property values and the value of individual homes and resale values and things like that. So again, I think many associations are trying to target and jump on this issue to not just maintain the property and ensure safety, but also to protect generally property values.

And then lastly, we just mentioned the local state and city regulations. Obviously this has been a big issue in a number of different communities in the Indianapolis area as far as attempts by different groups or municipalities to implement bans and other restrictions under zoning laws, things like that. Many of which did not apply to homeowner associations or condominium associations. So we’re just generally aware of what’s been going on with many of the municipalities. So what can you do as far as your community looking to implement one of these types of restrictions or short-term rental bans? Certainly, we will look to your governing documents to see what you have in place already. Many associations, you know, have board members or owners who are just not aware of what terms are actually already defined in the governing documents. We had an association that issued a covenant violation recently to a woman and there was actually a very lengthy debate about whether or not the association had ever properly amended their governing documents to include a specific type of leasing restriction.

So there was a lot of focus on the history of the process that they had gone through and what was drafted and recorded. So just be aware that if you are looking to implement some kind of rental restriction or short-term rental we’ll be walking you through the process of amending your governing documents and that’s a whole presentation in and of itself. Short-Term rental policies. So often along with creation of amendments, we will work with associations on actually creating a policy. So, many times with associations when you’re adopting an amendment and making a major change to your governing documents, not all of the details are necessarily included within the amendment itself. For example, if you implemented a rental restriction by percentage within your community we wouldn’t necessarily include all of the language about the wait list and how the board or management was going to maintain the list and when it would be updated and how people could apply to be on the waitlist.

So with those types of amendments, we create policies and very similar short-term rental policies along with an amendment. If we’re doing some type of restriction to restrict short-term rentals, we want to be very clear about what is and isn’t included. Many associations, there is a distinction between a short-term rental if the owner lives at the property versus a short-term rental if the owner doesn’t live at the property. So there are some rentals out there where the owner lives and continues to live in the home and then allows a separate lease through one of these third party platforms. So, a lot of different types of arrangements. Owner occupancy requirements, so again, we talked about those owner occupancy clauses. So we might have some separate requirements or details explaining what does and doesn’t qualify. I recently had a situation where there was some confusion about an owner occupancy requirement for an owner who just simply lived in Florida half of the year. And so, there was a thought that they were violating that and we had to explain, no, actually, the owner occupancy requirement doesn’t actually require you to physically live in the property. It just essentially means you can’t be renting it out to someone else. It has to be owner occupied either physically or it’s vacant.

Fines and enforcement procedure. So I didn’t previously discuss this, but kind of going back to what we talked about earlier with our desire to overhaul the HOA Act and the condo act, with respect to the clarification on an association’s ability to assess fines for any type of violation, the violation of an association’s rental restriction or short term rental restriction is a violation of the covenants. So, we pursue those violations in the same way that we pursue any other type of violation. So often when we’re looking at an association’s rental restriction or working on an amendment to update their language with whatever they’re looking to do as far as leasing, we might also be looking at the association’s enforcement procedure. So I think many of you who are in this industry or who have been involved with violations in the past or where we are required to send an initial letter, a grievance letter, and then a second letter. The owner has an opportunity to ask for a meeting with the board and then when we send that second letter, the owner has an opportunity to ask for arbitration and if they do not, then we move to the very costly litigation.

Similar or it’s the same enforcement procedure as far as rental restrictions. I’ll tell you, one of the biggest trending issues that we are seeing with the associations right now with the investor groups is the transfer internally of property. You might have a company called Progress Residential Five transfer the deed for a property to Progress Residential HOA Commercial LLC. And so, one of those that’s been quite a big issue that we have had to address with these investment companies, with their internal transferring, you know, we’ve kind of taken a hard line with many of the investment companies about if you’re transferring the property just like an owner transferring ownership to someone else you might no longer enjoy the benefit of a grandfather provision that previously allowed prior owners to continue to rent. And so, that’s kind of where we’re seeing the big issue is they’re saying, well, we were owners before this amendment was adopted, and we’re still entitled to be able to continue renting. So, we’re sort of navigating that. There’ve been some unique situations with some of them, but many of them, we’ve told them unfortunately once you transferred it that grandfather provision no longer applies.

So I’m going to stop quickly and answer a couple of questions. “If You are not on the title, are you an owner? Asking for occupancy by a close relative or an owner?” So, that is a great question. We generally get a lot of questions about what qualifies as owner occupied and is a son or a daughter or a cousin, is that considered a renter? So first and foremost, when we talk about rental restrictions or rental amendments, things like that, we’re generally talking about situations where there is consideration being exchanged for the rental of the property. So first and foremost, if you have a cousin living in a property and you’re just allowing them to stay for a few months, they’re going to school, IUPUI, and they want to just come and stay for a few months, that’s not considered a rental. There’s no consideration, there’s no exchange of funds. Generally speaking, the ownership designation also for purposes of a rental restriction extends to the direct relatives. So, spouse, daughter, son, et cetera. It starts getting a little bit trickier when you go outside of immediate family, however, that is where it’s very important when we are drafting your governing documents to clarify what does and does not qualify as an owner for purposes of the amendment or family member. Unfortunately, we have seen a lot of situations where people have tried to abuse the language, someone claiming that someone’s a family member, the board has direct evidence that they’re not actually related. So unfortunately there have been some poor situations handled by owners in that situation but I think for the most part people understand owner occupancy, it’s the title owner, spouse, immediate family member and then kind of generally going beyond, it depends on the association.

“Is It legal to require zero renters and require at least one owner living in the home, unless approved by the board for a year or less under a hardship clause?” So legal to require zero renters and require at least one owner living in the home unless, okay, so I guess if the base question is, can our community prohibit all renters in the community? The answer is yes. If your association meets the requirements for amendment under the declaration and it’s properly approved by the association and recorded, yes, you can have a situation where the community does not allow any rentals and then with respect to a hardship clause. So the hardship clause is usually included as a provision in many rental restriction amendments and it allows the board the ability to have some discretion to allow an owner to rent due to a hardship. So sudden loss of a job, military service and deployment, a lengthy hospital stay, something like that. So I would say just generally speaking, the board has a lot of discretion under the hardship clause.

“How Does the board go about determining if the HOA has appropriate insurance coverage?” We seem to have good liability coverage, so I’m actually going to be talking about that. So I’ve kind of bumped to my last topic here, which is just board member responsibilities. So these are actually old topics, but I wanted to bring some of these up just because of– to bring up recent trends we’re seeing in 2022, in 2023 and it’s always just a good reminder for board members and managers, the fiduciary duty that board members owe to the association. We have seen quite a bit of litigation whether it’s just an owner filing suit against a board or an owner filing a counterclaim against a board member for breach of fiduciary duty which could trigger a multitude of different things. So, owners sometimes say the board is not or is in breach of its fiduciary duty for failing to maintain the common elements or common areas as outlined in the budget, or the board didn’t make certain repairs or the amount that the board is planning annually for the association. So, things like that.

We also see a lot of breach of fiduciary duty claims, which I think are misnamed breach of fiduciary duty claims. A lot of times I think people take issue with things that the board does, but people just say, well, it’s a breach of fiduciary duty. But I bring this up to say, it’s always a great time annually to review your insurance coverage with your agent. So to answer your question, how does the board go about determining if the HOA has appropriate insurance coverage? We seem to have good coverage. There are agents and we have a number of members in CAI I’m aware of who specialize in community association insurance. So I have seen quite a few associations here in Indiana who are underinsured, who don’t have the right coverage. I just handled a lawsuit a few weeks ago where, it came out at a settlement conference that the insurance company was defending under a policy, but they were concerned cause they didn’t think the board had directors and officers liability coverage, which, if there’s one thing you take away from this presentation, it’s that you should always, always, always as a board, make sure you have proper coverage as far as your directors and officers liability coverage. That protects the board members from general business judgements and things like that. I wish all associations would annually check their insurance coverage. And as a side note, I just talked to one agent just this morning about actually adding some additional language in our proposed legislation to really clarify the types of coverage homeowner associations need. So, another thing in Indiana, we’d really like to update and just make sure it’s clear for everyone.

Alright, “Our board trade passed a rental restriction amendment last year. We mailed the amendment to all owners and over 80% approved, which you could only get about 20% of owners to respond. It was nowhere near required 75%. We considered having a vote, but only about 30% even attended. Is there another way to get this passed?” So, your community is struggling, like many communities, getting people to attend meetings. That has been probably one of the biggest issues that we have seen in the last year. Why is that a problem? Well, for those associations who have tried to pass a budget that is supposed to be approved by the unit ownership or home ownership and you can’t even get enough owners there, that creates an issue. That is also another issue that is on our list to tackle in the legislation to decrease the levels of quorum. So a really quick note on quorum, and then the percentage required to pass something in your community. Quorum is the base number of owners who need to appear either in person or by proxy at a meeting just for the meeting to go forward. So let’s suppose you are trying to get an amendment passed and your declaration requires 75% of owners to approve it. Your quorum might be 30%. So, if you get to the meeting where everyone’s voting and you only have 10% of the owners there, the law says you can’t even convene this meeting to see what kind of votes you’ll have.

Obviously if you only have 10% of people there, you’re not going to even reach the 75%. There are a number of ways that we work with associations to try to get amendments passed, knowing that it’s difficult to get people at meetings. So some associations have and it sounds like you tried the mail-in amendment issue you can also vote by proxies. But again, as I said earlier, one of the things we’re working on is just to try to make the electronic voting actually recognize under Indiana law so that maybe in the future when you guys are sending out these votes, someone can just click a button in your community and you actually have enough votes for people to vote on and approve things within the matter of a few hours versus I know many associations it’s taking months to get votes approved. But we can certainly try to help working with you on an amendment and sometimes it takes good old-fashioned door knocking just to get these types of issues addressed.

“Can The fine enforcement procedures be written as policy or memorandum using wording from the bylaws rather than an amendment to the documents?” So if your governing documents, if your declaration already says that you can assess a fine, then yes, you can write the policy; when it will be assessed, how much, maybe your association’s going to have a fine schedule and you’re going to decide, okay, we’re going to do $50 for first violations, a hundred dollars for second violations, things like that. You can put those types of things actually in your rules. You don’t even need to put them in your bylaws, but the authority of the board to assess the fine needs to be in your declaration and in anticipation of hopefully where we see the legislature going hopefully in the next year, we are encouraging associations. If you don’t have that language already in your governing documents, now is a great time to start working on that. We can help draft amendments and the correct wording so that if and when this gets approved by the legislature, you’re often running and you can immediately implement that as a board. Otherwise, after the law is passed, you’d have to go through the amendment process at that point. But just check your governing documents, make sure fines are allowed under your governing documents already, and then we can do the policy separately as either a rule or just a standalone policy.

“Would The fine policy be a bylaw or a covenant?” So it doesn’t necessarily have to be either. In fact, I would suggest that you do it as a standalone policy or a rule. Reason being, the bylaws are a bit more formal set of documents and generally the idea with the bylaws, those really kind of go to the, we would say more of the administration of the association. We’re going to have an annual meeting each year. Sometimes it’s really specific about when your annual meeting will be. The number of board members will be X the board officers will be president, vice president, secretary, treasurer. Those are the things that we see most in the bylaws versus a policy that the board adopts to essentially outline the process that you’re going to follow when you’re assessing the fine. So again, fundamentally, you absolutely have to have the language that says the board has the authority to assess a fine or a violation of the governing documents. That has to be in the declaration, not the bylaws, not the covenants, not a policy. But then separately we can do a standalone policy that provides more information on the fine process.

So I know we are short on time and I don’t know if we’ll have a chance to get– I’ll just quickly finish out my topics and if we have a chance, I’ll get to the rest of the questions. So finally, board member responsibilities and just again, some hot topics. We’ve been getting a lot of challenges lately in court on governing documents, certain provisions that we have certainly tried to use for enforcement provisions. As we always say to our clients, if you haven’t had your governing documents reviewed in a while, it might be a good time to do so. Our goal is always to make sure they’re very easy to read, they’re very clear, there’s no inconsistencies. You can’t believe that entire lawsuits can hinge on just simple wording in governing documents and the way things are written, especially when we’re talking about covenant violations and restrictions. So, just kind of a note for boards to be paying attention to that. If I didn’t get a chance to answer your question, please reach out, happy to answer any questions directly but we appreciate your attending and thank you so much.

Bernie: That was KSN attorney Kelly Elmore. Kelly practices condominium, townhome and homeowner Association law and has extensive background as a litigator. KSN is an experienced legal resource ready to provide you with quality advice and exceptional service. We look forward to demonstrating how we’ve earned the trust of thousands of clients since 1983. If you’d like to reach Kelly or any of KSN’s experienced attorneys, please call 855-5370-500. You can also visit and complete the contact form to send us a message. Thanks for listening.

Outro: The music for this show is provided by Please note the material contained on the KSN podcast is for informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained on the KSN podcast. You should not act on the information discussed on the KSN Podcast without first obtaining legal advice from an attorney duly licensed to practice law in your state. While KSN has made every effort to include up-to-date information on the KSN podcast, the law can change quickly. Accordingly, please understand that information discussed on the podcast may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed on the podcast at any time without notice and disclaims any liability for your use of information or statements of law discussed on the podcast or the performance of the podcast generally. The KSN podcast may be considered advertising in some jurisdictions under applicable laws and ethical rules for regulations.


Please note the material contained on the KSN Podcast is for informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained on the KSN Podcast. You should not act on the information discussed on the KSN Podcast without first obtaining legal advice from an attorney duly licensed to practice law in your State. While KSN has made every effort to include up-to-date information on The KSN podcast, the law can change quickly. Accordingly, please understand that information discussed on the podcast may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed on the podcast at any time, without notice, and disclaims any liability for your use of information or statements of law discussed on the podcast, or the performance of the podcast generally. The KSN Podcast may be considered advertising in some jurisdictions under applicable law/s and/or ethical rules/regulations. © 2023 Kovitz Shifrin Nesbit, A Professional Corporation.