Indiana HOA Assessment Limits

Key Findings

• Member-approval model, not a cap. For HOAs governed by the Act, IC 32-25.5-3-3(d) requires a majority of the members in attendance at a meeting to approve the budget.¹ The 110 percent provision is a fallback the board may use only where a quorum is not present and only if the governing documents authorize it.¹
• The $500 contract rule is the one fixed numeric trigger — it requires two meetings, seven days' notice, and a two-thirds affirmative vote of affected members.²
• Condominiums operate under a separate regime — assessments are allocated by percentage of undivided interest and an automatic lien attaches for unpaid sums, but no percentage cap exists.^7,8
• A 2026 enactment (HEA 1152) refined the no-quorum adoption ceilings but left the affirmative-member-approval default intact.⁹
• Recent appellate decisions confirm that the statutory member-approval rule applies only to associations formed after June 30, 2009 (or that opted in), and that recorded assessment liens can carry attorney fees.^11,12

Details

Overview: How assessment authority and limits work in Indiana

Indiana imposes no flat percentage cap on homeowners association (HOA) assessments. Instead, a majority of members in attendance at a meeting must approve the HOA's annual budget — with a board safe harbor allowing adoption of a budget at or under 110 percent of the last approved budget, but only if the governing documents permit it.¹ The Indiana Homeowners Associations Act, codified at IC 32-25.5, supplies this member-approval-of-budget model and applies to HOAs established after June 30, 2009 that impose mandatory dues, plus earlier associations that elect to be governed.³ Condominiums fall under a separate framework — the Indiana Condominium Act at IC 32-25 — which contains no percentage cap and allocates assessments through the declaration.⁸ Special assessments are controlled by the declaration, with a statutory rule layered on for HOAs that requires a two-thirds member vote and two meetings before a board enters a contract raising assessments by more than $500 per year per member.² On the national spectrum, Indiana sits apart from statutory-cap states like California, from UCIOA ratification states, and from declaration-only states, occupying a distinct affirmative member-approval position. The sections below detail the statutory framework, the procedures in practice, and recent legislative and judicial activity.

The assessment framework

2A. Authority to levy and allocate assessments

For HOAs subject to the Act, the budget and assessment framework runs through IC 32-25.5-3-3, which requires the association to prepare an annual budget reflecting estimated revenues, expenses, and any surplus or deficit.¹ The Act applies in full to HOAs established after June 30, 2009 that are authorized to impose mandatory dues, and to pre-July-1-2009 associations only where a majority of members (or the number set in the governing documents) elect to be governed — though certain subsections apply to all HOAs regardless of formation date.³ The board prepares the budget, but for covered HOAs the members generally approve it. The allocation formula itself — how each lot's share is computed — comes from the recorded declaration, not from statute.

For condominiums, assessment authority arises under IC 32-25 and the declaration. The association charges common expenses to unit owners according to each owner's percentage of undivided interest in the common areas and facilities under IC 32-25-8-6.⁷ Unpaid assessments constitute a lien on the unit effective at the time of assessment under IC 32-25-6-3, with priority over most other liens except certain tax liens and prior first mortgages.⁸ The condominium board prepares and administers the budget under the bylaws, and the declaration controls the allocation of common expenses among units.

2B. Limits on regular assessment increases

The principal limit for HOAs is procedural, not numerical. Under IC 32-25.5-3-3, a majority of the members in attendance at a meeting must approve the budget, conducted under the governing documents.¹ Before that meeting, the association must give each member a copy of the proposed budget (or notice that it is available at no charge) and a written notice of the amount of any increase or decrease in the regular annual assessment that would result.¹ The board may adopt a budget without that member vote — where a quorum is not present — in an amount up to 100 percent of the last approved budget, and up to 110 percent of the last approved budget if the governing documents allow the board to do so.¹ The 110 percent figure is a board-adoption safe harbor, not a cap. Above 110 percent, member approval is required rather than prohibited; nothing in the statute bars an increase larger than 110 percent so long as the members approve the budget.

A separate statutory limit governs contracts. Under IC 32-25.5-3-4, a board may not enter into any contract that would create a new assessment or increase an existing assessment by more than $500 per year for each affected member unless the board holds at least two HOA meetings concerning the contract and the contract receives an affirmative vote of at least two-thirds of the affected members.² Notice of the first meeting must reach each member at least seven calendar days before it occurs.² This rule does not apply to a contract that resolves an enforcement action against the HOA for violating state or local law.

For condominiums, increase limits come from the declaration. The Indiana Condominium Act supplies no percentage cap on regular assessments, so the controlling restrictions are whatever the declaration and bylaws impose. A board that adopts a budget without the member approval required by IC 32-25.5-3-3 exposes the budget to challenge, and the Indiana Attorney General holds authority to act against a board for a budgeting violation.⁴

2C. Special assessments, emergency assessments, and the declaration

Special assessments in Indiana are creatures of the declaration. The Act does not separately authorize or cap HOA special assessments; rather, the authority and any ceiling derive from the recorded governing documents, with the statutory $500-per-member contract rule under IC 32-25.5-3-4 layered on whenever a special assessment flows from a board contract that crosses that threshold.² Emergency handling is likewise governed by the declaration. For condominiums, the declaration and bylaws authorize and limit special assessments — again with no statutory percentage cap.

The Indiana Attorney General holds an enforcement role over budgeting violations. Under IC 32-25.5-4-1, the Attorney General may bring an action against an HOA board or an individual board member where association funds have been knowingly or intentionally misappropriated or diverted, where a board member has used the position to commit fraud or a criminal act, where a proxy was exercised in violation of statute, or where a violation of IC 32-25.5-3-3 has occurred.⁴ Operationally, this means an HOA board generally needs member approval to adopt a budget, may use the 110 percent safe harbor only if the governing documents allow it, and must hold two meetings and secure a two-thirds member vote for a contract that raises assessments by more than $500 per year per member.

Assessment limits and procedures in practice

A. Regular assessment increase procedure

HOAs: The board prepares the annual budget and must distribute the proposed budget (or notice of availability) plus written notice of any assessment increase before a member meeting, where a majority of members in attendance must approve the budget; absent a quorum, the board may adopt up to 100 percent, or up to 110 percent if the governing documents allow (IC 32-25.5-3-3).¹ Condominiums: Declaration-defined; the board adopts the budget under the bylaws and allocates common expenses by percentage of undivided interest (IC 32-25-8-6), with no statutory member-approval mandate.⁷

B. Special assessment procedure

Both: Authority and ceilings are declaration-defined, with no statutory percentage cap in either Act. HOAs: When a special assessment arises from a board contract creating or increasing an assessment by more than $500 per year per member, the board must hold at least two meetings and obtain a two-thirds affirmative vote of affected members, with at least seven days' notice of the first meeting (IC 32-25.5-3-4).²

C. Caps, ceilings, and override mechanisms

Both: No flat percentage cap exists in Indiana law. HOAs: The 110 percent figure in IC 32-25.5-3-3 is a board-adoption safe harbor available only if the governing documents allow it; above it, member approval is required, not prohibited, and the default rule is affirmative member approval of the budget.¹ Both: Emergency handling and any override mechanisms are governed by the declaration.

D. Notice, documentation, and disclosure tied to assessments

HOAs: Before the budget meeting, the association must provide the proposed budget (or notice of availability at no charge) and written notice of the amount of any increase or decrease in the regular annual assessment (IC 32-25.5-3-3).¹ An HOA may not suspend a member's voting rights for nonpayment of assessments unless the governing documents provide for suspension and the assessments are delinquent for more than six months (IC 32-25.5-3-7).⁵ Both: Assessment status is commonly disclosed on transfer through the governing documents and recorded instruments.

Recent legislative and judicial activity

A. Recent bills

B. Recent appellate rulings

C. Active legislative debates

No pending Indiana proposal as of this update would replace the affirmative member-approval default, eliminate the 110 percent safe harbor, or change the $500-per-member contract-assessment rule. The most recent change, HEA 1152 (2026), refined the no-quorum adoption ceilings rather than the core model.

National positioning and related coverage

Indiana occupies a distinct middle position on the national assessment spectrum. California leads the statutory-cap states: Cal. Civ. Code § 5605(b) prohibits a board from imposing a regular assessment more than 20 percent greater than the preceding fiscal year's assessment, or special assessments exceeding in the aggregate 5 percent of the association's budgeted gross expenses, without member approval.⁶ UCIOA ratification states — including Alaska, Colorado, Connecticut, Delaware, Vermont, and Washington — control increases through an owner veto on an adopted budget, where a board-adopted budget is deemed ratified unless a set percentage of owners reject it. Owner-rejection states like Illinois let owners petition to reject an increase that crosses a statutory threshold. Indiana's distinctive member-approval model instead requires the members to affirmatively approve an HOA budget unless the board uses the 110 percent safe harbor permitted by the governing documents. For a multi-state operator entering Indiana, that means budget adoption cannot be treated as a board-only act or a passive owner-veto process — affirmative member approval is the default. Indiana also gives its Attorney General an enforcement role over budgeting violations, a backstop most states lack.

Federal frameworks also bear on Indiana assessment practice, in particular the Fair Debt Collection Practices Act, along with the Servicemembers Civil Relief Act and the bankruptcy treatment of assessments.

Recommendations

1. Classify every Indiana association first. Before treating IC 32-25.5-3-3's member-approval rule as controlling, confirm (a) formation date relative to June 30, 2009 and (b) any recorded opt-in election. Post-June-30-2009 mandatory-dues HOAs are fully covered; pre-July-1-2009 HOAs are covered only on opt-in, as Talley makes clear. For condominiums, work from IC 32-25 and the declaration, not from Article 25.5.
2. Audit governing documents for the 110 percent (and now 105 percent/CPI) language before the 2026–2027 budget cycle. The no-quorum adoption ceilings in HEA 1152 are usable only if the documents expressly allow them. Boards that want to rely on board adoption when a quorum fails should amend documents now; boards relying on the pre-amendment 110 percent grandfather under new IC 32-25.5-3-3.1 should avoid amending or renewing those provisions after June 30, 2026, which would forfeit the grandfather.
3. Treat the $500-per-member contract rule as the one bright-line numeric trigger. Build the two-meeting, seven-day-notice, two-thirds-affected-member-vote process into procurement workflows for any contract that would raise assessments above that figure. Below that threshold, the contract proceeds on normal board authority.
4. Do not import out-of-state cap math. Staff trained on California's 20 percent / 5 percent rule or on Illinois/UCIOA owner-veto mechanics should be retrained for Indiana's affirmative-approval default. The operative benchmark for budget validity in Indiana is a majority vote of members in attendance, not a percentage ceiling.
5. Preserve fee and collection documentation. Following Treyburn Lakes, record liens that capture attorney fees and costs authorized by the declaration, and be prepared to support fee reasonableness at a hearing. Reassess collection policies if a court signals a different fee standard.

Caveats

• Talley v. Cheswick is a memorandum decision and, under Indiana Appellate Rule 65(D), is not binding precedent; it may be cited only for persuasive value. Its applicability holding is consistent with the statute's text but should be presented as persuasive, not controlling.
• The exact section-level pages on iga.in.gov render through a JavaScript application, so the footnote URLs point to the official 2025 Indiana Code Title 32 portal and the official enrolled-bill PDF; individual section text was cross-verified against the statutory language and the IGA-hosted enrolled act. Editors should confirm each deep link resolves in a live browser before publication.
• HEA 1152's new sections take effect July 1, 2026. Until then, the pre-amendment IC 32-25.5-3-3 framework (100 percent default / 110 percent safe harbor on no quorum) governs. The grandfather and the five-year developer-window mechanics are new and untested in the courts.
• This page addresses assessment authority and limits only. Lien enforcement procedure (IC 32-28-14 for HOAs; IC 32-25-6 for condominiums), records inspection, fining authority, and elections are addressed separately.

1. Ind. Code § 32-25.5-3-3 (Annual budget; budget meeting; budget approval), 2025 Indiana Code, Title 32, Article 25.5, Chapter 3 (Indiana General Assembly) ↩
2. Ind. Code § 32-25.5-3-4 (Approval of certain contracts; meeting; vote), 2025 Indiana Code, Title 32, Article 25.5, Chapter 3 (Indiana General Assembly) ↩
3. Ind. Code § 32-25.5-1-1 (Applicability), 2025 Indiana Code, Title 32, Article 25.5, Chapter 1 (Indiana General Assembly) ↩
4. Ind. Code § 32-25.5-4-1 (Attorney general's action against association or board member; misappropriation or fraud; proxy violations; budgeting violations), 2025 Indiana Code, Title 32, Article 25.5, Chapter 4 (Indiana General Assembly) ↩
5. Ind. Code § 32-25.5-3-7 (Member voting rights), 2025 Indiana Code, Title 32, Article 25.5, Chapter 3 (Indiana General Assembly) ↩
6. Cal. Civ. Code § 5605 (California Legislative Information) ↩
7. Ind. Code § 32-25-8-6 (Common profits and expenses), 2025 Indiana Code, Title 32, Article 25, Chapter 8 (Indiana General Assembly) ↩
8. Ind. Code § 32-25-6-3 (Unpaid assessments; lien), 2025 Indiana Code, Title 32, Article 25, Chapter 6 (Indiana General Assembly) ↩
9. House Bill 1152 (2026), "Homeowners association matters," signed March 3, 2026, Public Law 53 (Indiana General Assembly) ↩
10. House Enrolled Act 1152 (2026), enrolled text adding IC 32-25.5-3-3.1, 3.2, and 3.3, effective July 1, 2026 (Indiana General Assembly) ↩
11. Talley v. Cheswick Homeowners' Association, Inc., No. 24A-SC-581 (Ind. Ct. App. Feb. 27, 2025) (Indiana Courts) ↩
12. Treyburn Lakes Homeowners Association, Inc. v. Scott, No. 25A-CC-646 (Ind. Ct. App. Oct. 31, 2025) (Indiana Courts) ↩