Indiana Legislaltive Update

Started by GeorgerwilliamsW • 15 replies • 1294 views

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GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

We had an interesting meeting Tuesday with a state legislator to discuss legislation to be introduced in the next General Assembly session. We had two legislative assistants (who will be charged with actually supervising the bill writing) and the local assessor, and city councilor in attendance. Just the one state representative attended. It was a great meeting.

There continues to be a high level of concern about abusive homeowners association boards which is driving interest in legislation. I related the recent news reports of problems in other states and the thrust of many of the postings on HOATalk. I distributed on paper some of the postings here for the interest, edification and in some case bemusement of those in attendance.

Legislation curbing the powers of homeowners association boards will be introduced. That is a definite. And it is likely to pass, since the focus of the upcoming legislative session will be on broad government reform issues.

My sense is that any consideration of the Uniform Common Interest Property Act is dead for another session. Everyone around the table understood that it would be importing the horrors of other states into Indiana. There was also recognition that "one size does not fit all."

The high rate of foreclosures in Indiana permeated the discussion. There is no desire to do anything that would make the situation worse.

Surprisingly, there was strong sentiment in opposition to allowing homeowners association boards to levy fines. Much of the discussion centered around the need for mandatory arbitration/mediation or some sort of jurisdiction by the Attorney General's Office of Consumer Protection if fines were to be allowed. Nevertheless, there was agreement that if the Attorney General's office becomes involved, it would reasonable to require (1) registration of all homeowners associations and (2) a fee per unit to fund the regulatory oversight operations.

Led by the state representative in attendance, a good portion of the discussion centered on the need to better educate purchasers on the benefits, responsibilities, and obligations of membership in a covenant community. The question is, "How do we get the homeowners association to the closing table?" One idea that came out of the discussion is a mandatory meeting with a homeowners association representative not less than 10 days prior to closing. Another option discussed is a sign off of receipt and review of the covenants and rules by the purchaser and seller or real estate agent 10 days before closing. The sign off would state that the purchaser has read and understands the deed restrictions and has had all questions answered satisfactorily.

The next step is an initial draft.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

By the way, the state representative, a Republican, distributed the following story he had received in a e-mail. You can decide for yourself if it has any relationship to the discussions here (irrespective of political parties or inclinations).

The Fisherman

A woman in a hot air balloon realized she was lost. She lowered her altitude and spotted a man in a boat below. She shouted to him, 'Excuse me, can you help me? I promised a friend I would meet him an hour ago, but I don't know where I am.'

The man consulted his portable GPS and replied, 'You're in a hot air balloon, approximately 30 feet above a ground elevation of 2346 feet above sea level. You are at 31 degrees, 14.97 minutes north latitude and 100 degrees, 49.09 minutes west longitude.'

She rolled her eyes and said, 'You must be a Republican.'

'I am,' replied the man. 'How did you know?'

'Well,' answered the balloonist, 'everything you told me is technically correct , but I have no idea what to do with your information, and I'm still lost. Frankly, you've not been much help to me.'

The man smiled and responded, 'You must be a Democrat.'

'I am,' replied the balloonist . 'How did you know?'

'Well,' said the man, 'you don't know where you are or where you are going. You've risen to where you are, due to a large quantity of hot air. You made a promise that you have no idea how to keep, and you expect me to solve your problem. You're in exactly the same position you were in before we met, but, somehow, now it's my fault.

SheliaH (Indiana)
Posts: 6,964

Posted:

Thanks for the update. Who is the legislator (legislators?) you've been working with on this issue?

While I know abusive HOA boards are out there, I really would like to see some numbers on how many complaints have been filed, nature of the complaints, etc., before we start saying "Ok, HOA boards can't do this or that." There really are HOAs that have some very good policies already in place and I'd to see them disregarded.

My father used to say there are three sides to a story - yours, mine and the truth, and frankly, I wonder if some of these conflicts between HOAs and homeowners erupted because people have this "it's my house, dammit and I'll do whatever I want" attitude. Of course, it's your house, but you made the choice to live in a HOA and you should have been savvy enough to find out what the rules were beforehand and then decide if they were rules you were willing to live with.

I wouldn't have a problem with an arbitration program run by the AG's office or an annual fee paid by HOAs to participate (it may be nice to have some sort of sliding fee scale based on the size of the community so it stays affordable).

I would like to see a requirement that real estate agents gather basic information on the HOA and disclose it to homeowners - at a minimum, hand over copies of the governing documents, current itemized budget, and the last 6-12 months of meeting minutes. I think many of these problems originate because the real estate agents don't know or understand what an HOA is, and of course, they don't tell the new homeowner. Getting this information to potential homeowners before they committ may prevent some of these purchases with "eyes wide shut" so to speak.

In light of these foreclosures, we still need something that will enable HOAs to collect delinquent fees if the bank takes the house back instead of the HOA left with several thousands of dollars it'll never see. Even if it's a certain percentage, say 70% of what's owed, I'd rather see that than nothing.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

KirkW1 (Texas)
Posts: 1,665

Posted:

Something to think about on fines - while there is certainly a potential for abuse, they are much cheaper (and quicker) then litigation (or mediation even). They also can take care of the small things that you would never want to litigate. For instance: many neighborhoods have strict rules about leaving your trash cans out. Most everyone understands why. But what to do about the guy who leaves them out repeatedly? Certainly not litigation. But a fine of say $25 to $50 will get the attention while not likely to break the bank.

JeanneK3 (Maryland)
Posts: 562

Posted:

Was the woman in the hot air balloon Sara Palin?

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By JeanneK3 on 10/03/2008 6:38 AM
Was the woman in the hot air balloon Sara Palin?

Could be. Could also be Nancy Pelosi. But let's agree not to go there. You could change the Republican fisherman to a consultant/lawyer, and the balloonist as a state legislator and the story would read the same.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By KirkW1 on 10/03/2008 5:41 AM
Something to think about on fines - while there is certainly a potential for abuse, they are much cheaper (and quicker) then litigation (or mediation even). They also can take care of the small things that you would never want to litigate. For instance: many neighborhoods have strict rules about leaving your trash cans out. Most everyone understands why. But what to do about the guy who leaves them out repeatedly? Certainly not litigation. But a fine of say $25 to $50 will get the attention while not likely to break the bank.

While I am opposed to fines, I can be persuaded otherwise. They are not the end of the world as I know it.

Indeed, there was a lively discussion at the meeting about the desirability for fines. Sentiment of those present, however, was opposed. It comes down to finding an appropriate balance between individual property rights and community needs.

In Hoosierland fines are prohibited, not by statute, but by case law. They courts have held that absent a specific enabling statute, fines are contrary to public policy.

Yet, fines are only prohibited by the courts in homeowners associations (and maybe some other associations). The local country club which has a $50,000 entrance fee and a three year waiting list has the power to fine and to throw a member out for umbecoming activities on and off the property. Unions can also fine members. Land ownership and home ownership is of a different character under law.

The problem with fines is the absence of checks and balances. There is no separation of powers in a homeowners association. The board make the rules, interprets the rules, enforces the rules, adjudicates alleged infractions, and carries out the punishment. Fines without relief mechanism is contrary to public policy in Hoosierland.

By the way, there will be a provision in the introduced bill that only allows liens to be filed for unpaid annual assessments not for special assessments.

And I will propose (after I see the draft) that a section be included that deals with the problem of what to do if nobody wants to stand for election.

SheliaH (Indiana)
Posts: 6,964

Posted:

I still don't agree with the provision regarding special assessments - what happens if the homeowners (the majority anyway) did everything right regarding manageing association funds, but the community got hit with a disaster that insurance and reserves combined won't cover?

I wouldn't mind a provision that states special assessments can only be levied after certain things have been done (e.g. a minimum percentage is required to pass it), but if the governing documents provide instructions on how the special assessment is to be levied and those instructions were followed, the homeowners should have to pay it.

As for the fine issue, I wouldn't toss them altogether. the law could include provisions like:

the HOA must have a separate rules enforcement committee that would review violations and no board member can serve

fines are limited to actual expenses incurred by the association to resolve the problem

no fine can be collected until after the homeowner has exhausted the appeals process (up to legally binding arbitration)

sometimes you do everything right and still the community is hit with a disaster that insurance and reserves combined won't cover. If that happens, whif everyone paid regular assessments like

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Good points. It is a balance issue. But don't blame me. The special assessment is the driving force behind the bill's introduction in the first place.

I'm not tossing out the fine issue. It is a sentiment that we don't want more intrusion by the state, and the only way fines will work successfully is if there is some sort of consumer protection mechanism built in. I don't think self regulation or enforcement will fly.

If the bill gets a hearing in committee there will be lots of people making amendments I am sure. It is much easier in the Hoosierland legislative process to put things in, than it is to take things out.

SheliaH (Indiana)
Posts: 6,964

Posted:

First, I apologize for the weird look in my previous message (hit the send button before I finished editing!)

I wonder if delinquencies and foreclosures are an underlying cause of the uproar over special assessments. When people aren't paying fees, nothing goes into reserves. So, when a big repair bill comes up, there's no money to pay it and the special assessment becomes necessary. In light of the tornados and floods that have hit the state (especially in central Indiana), I can see where this becomes a problem.

It's even worse when your governing documents don't even address the issue, the board doesn't follow the rules or the board failed to plan and get information they could use to make a good decision - and then keep the homeowners in the loop. That's one reason why I also believe in transparency - homeowners need to know why things are happening and an opportunity to say what they think - and special assessments should NEVER be passed without a vote from the homeowners.

I don't want to pay high assessments or any special assessments either, but I also know you get what you pay for and if you don't take the time to find out why things are happening so you can at least start thinking about other options, you end up paying more in the long run. That's why prudent homeowners who live in a HOA must get involved - whether you're a board member or not. Much like politics, the school system or anything else one cares about.

Someone on this board said HOA living isn't just about paying your fees and going on about your business, and serving on a HOA board isn't just about meeting once a month and spending money. We can and should put consumer protections in place (it's long overdue anyway), but at the end of the day, homeowners themselves are going to have to rethink the way they do things.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Sheila, One of the very great problems Hoosiers face is a state government sorely in need of reform, especially when it comes to dealing with the problems of foreclosures and mortgage lending practices and abandoned property. In today's newspaper the lead editorial stated,
"Depending on which piece of the property puzzle is involved, and which player, it could be any one of at least seven offices at state level: the Secretary of State, Attorney General, Department of Financial Institutions, Department of Insurance, Real Estate Commission, Professional Licensing Agency or Housing and Community Development Authority.

"While each can defend its specialty, the multiplicity of oversight bodies makes for a cumbersome and confusing "system" that tends to weaken the many reforms enacted into law in recent years, according to legislators of both parties."
This is why government reform is high on the legislative agenda this year, and some changes to laws regulating homeowners associations are sure to get a hearing.

And on the front page of the very same newspaper today was the a report that Hoosier "spending choices underscore two core community values: thrift and an affinity for small government."

SheliaH (Indiana)
Posts: 6,964

Posted:

I saw that article on spending choices and it was quite interesting - I've lived in Indy for 22 years and ever since I've been here, I've noticed the first thing that comes up when the discussion turns to making various changes and/or starting new programs is "how much is it gonna cost?" Folks aren't so crazy about change either, opposing it simply because it's change, not because they don't like certain aspects of the change. Yes, I know there's talk and talk and more talk abut government reform, but at the end of the day, some people don't want to be bothered, especially if it means THEY will have to roll up their sleeves, get off their butts and do something.

There is a difference between being thrify and being cheap and sometimes, I think the people in this town are just plain cheap. To me, thrifty means saving for the future, living within your means, comparison shopping, knowing the difference between needs and wants, and in the case of housing, keeping up the house, inside and out, so you aren't faced with enormous bills in the future.

Instead, it seems to me, most suggestions about reform and change in this state die on the vine because it may cost more money. There's nothing wrong with asking about cost, but some people don't understand that in some cases, it's better to spend a little more now to prevent spending tons of money in the future - where they may have little choice.

For example, people yell about gas prices, but then there's the comment on the last page of the editorial section in today's paper where someone is quoted as saying mass transit is a waste of taxpayer money and won't be economically effective unless gas goes up to $6 or $8 a gallon. WTH?? Apparently this person would rather spend $50 or more a week on gas, perhaps with downtown parking fees kicked in, cope with daily traffic jams, more wear and tear on the car and more air pollution instead of getting on a bus that can carry more people at once going in the same direction.

As for small government, I agree that government can't and shouldn't do everything, and it needs to be more efficient in a number of areas, but it may be government has to step in because people are too damn cheap to spend any money and seem perfectly content with letting everything fall around their ears. Witness the howling when the waters bills went up to pay for long overdue sewer repair - all some people could see was the increased prices, instead of the filth that was running into Fall Creek or overflowing in neighborhoods after a good rain.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

We are kinda' gettin' off topic here, and even off discussion board here.

The problem is, Life just ain't fair.

When my community was built we had to pay 100 percent of the cost of a one-mile new sanitary sewer main. And part of the deal was that we had to build a restroom facility in a local park as payment for running the sewer line across parkland owned by the county.

We had no tax money to help us out. We paid for it 100 percent, pure and simple. Since then two other newly developed communities have hooked up to "our" sewer main without having to foot one penny of the bill.

And to top it off, now through higher city/county sewer charges, we are helping to pay for sewer line extensions in Frog Hollow and other areas to avoid the problems you describe.

So your complaints about cheap and thrifty may fall on deaf ears.

And we have to pay for the construction and continued maintenance of a storm water management system without any taxpayer monies, while others in the county who built/bought homes in flood prone areas benefit from my taxes being used to correct their problem.

This is not a complaint. This is just the way things are. Life is not fair.

MaryA1 (Arizona)
Posts: 7,043

Posted:

George,

One reason why I would never buy into a community that has its own water and/or sewer. However, I guess sometimes it just can't be helped -- just like buy into an HOA!

And, of course, you're right -- life isn't fair -- and there's nothing we can do about that so there's no use in complaining.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By MaryA1 on 10/06/2008 7:47 AM
George,

One reason why I would never buy into a community that has its own water and/or sewer. However, I guess sometimes it just can't be helped -- just like buy into an HOA!

And, of course, you're right -- life isn't fair -- and there's nothing we can do about that so there's no use in complaining.

Just to clarify, the sanitary sewer belongs to the county, not to the association. We had to build and pay for a public sanitary sewer main for our community as part of the development process.

JS1 (Nevada)
Posts: 30

Posted:

From a Nevada perspective - be careful. The Uniform Act is not bad - even giving that one size does not fit all.

What happened in NV is that one of our State Senators has taken up the task of bi-annually fixing NRS 116. (Our legislature meets once every two years). This fiddling has created more problems for EVERYONE.
- The real estate division is not up to the investigation requirements, which means that the "cases" which are to come to the commission are not brought forth in a timely fashion.
- Arbitrators and Mediators (NRS 38)do a reasonably good job - only issue is when HOAs choose binding arbitration and the decision is wrong according to the law - legislating from the bench - there is no way to take the decision to court for a review.
-If you create a Commission, similar to the one here - leave the decision making to them at the lowest level possible. Legislators here put their decisions into the law based on the fact that their relative got called to a hearing because their pizza delivery guy was speeding. A TV guy made changes because he wanted to play street basketball.

After the last session - which ended in a late night conference committee, without public oversite - some "stuff" got added to the bill, which really was not acceptable... So a handful of legislators told the rest of the assembly and senate that it was now a great bill, and it passed, then got vetoed when everyone found out about the little added extras....

Proceed with caution and do no harm

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