Indiana HOA Budget Approval
Section 1: Overview — How HOA budgets are approved in Indiana
In Indiana, two different laws decide how an HOA budget gets approved, and they do not work the same way. Condominium budgets fall under the Indiana Condominium Act (Ind. Code § 32-25). Planned-community budgets fall under the Indiana Homeowners Associations Act (Ind. Code § 32-25.5).1 For a condominium, the Condominium Act steps back and lets the recorded declaration and bylaws control, so the board adopts the budget under the governing documents.2 For a planned community, the Homeowners Associations Act takes a firmer hand: it tells the association to prepare an annual budget and to win approval from a majority of the members who show up at a meeting. Only when no quorum appears can the board adopt a capped budget on its own.3 Neither statute uses the negative-option, ratified-unless-rejected approach you find in the UCIOA states. The Homeowners Associations Act also adds disclosure duties: the association has to hand out the proposed budget (or written notice that a copy is available) and give written notice of any assessment change before the meeting.3 Neither law orders a reserve study or caps a member-approved assessment increase, though the Condominium Act does require a replacement reserve fund.4 So Indiana is a non-UCIOA, two-statute state: condominium budgets run on the declaration, and planned-community budgets carry a statutory member-approval step. The mechanics below lay out each process.
Section 2: The budget approval mechanism
2A. Quick-Reference Budget Mechanics Table
This table reflects the Indiana Condominium Act (Ind. Code § 32-25) for condominiums and the Indiana Homeowners Associations Act (Ind. Code § 32-25.5) for planned communities. The two statutes are independent; a provision in one does not apply to the other.
| Parameter | Condominiums (Ind. Code § 32-25) | Homeowners associations (Ind. Code § 32-25.5) |
|---|---|---|
| Governing statute section(s) | Ind. Code §§ 32-25-4-4, 32-25-8-1, 32-25-8-2, 32-25-8-82 | Ind. Code § 32-25.5-3-33 |
| Community types covered | Condominiums created by a recorded condominium declaration5 | Planned-community homeowners associations established after June 30, 2009 (or pre-July 1, 2009 associations that elect in) authorized to impose mandatory dues6 |
| Body that adopts the proposed budget | Board of directors under the bylaws and declaration2 | Association prepares the budget; members approve it at a meeting; board adopts a capped budget only if no quorum3 |
| Approval model | Board adoption, declaration-driven (not negative-option)2 | Affirmative member approval by a majority of members in attendance, with a capped board fallback if no quorum (not negative-option)3 |
| Budget summary distribution deadline | Not specified by statute; governed by recorded declaration | Proposed budget (or notice of availability) and notice of any assessment change must be provided before the budget meeting; no day-count specified3 |
| Ratification meeting notice window | Not specified by statute; governed by recorded declaration | Not specified by statute; the budget-approval meeting is called and conducted under the governing documents3 |
| Owner rejection threshold | Not specified by statute; governed by recorded declaration | No rejection threshold; the budget requires affirmative approval by a majority of members in attendance3 |
| Quorum required to ratify | Not specified by statute; governed by recorded declaration | Quorum is defined by the governing documents; if not met, the board may adopt a capped budget3 |
| Effect of owner rejection | Not specified by statute; governed by recorded declaration | If no quorum, the board may adopt a budget up to 100% (or 110% if the governing documents allow) of the last approved budget3 |
| Statutory cap on assessment increase absent owner vote | Not specified by statute; governed by recorded declaration | No cap on a member-approved budget; the board's no-quorum fallback is capped at 100% (or 110% if documents allow), with tiered caps added effective July 1, 20263,7 |
| Special assessment approval threshold | Not specified by statute; governed by recorded declaration | Not specified by statute; governed by recorded declaration |
| Reserve study mandate (and frequency) | Not specified by statute; governed by recorded declaration | Not specified by statute; governed by recorded declaration |
| Reserve funding mandate | Assessments must include the establishment and maintenance of a replacement reserve fund4 | Not specified by statute; governed by recorded declaration |
| Audit or financial review tied to budget cycle | Detailed records of receipts and expenditures must be kept and available for examination; no audit mandate8 | Financial records must be available for member inspection; no audit mandate3 |
| Provisions variable by declaration | Budget adoption process, quorum, notice, special assessments9 | Quorum threshold, meeting notice, special assessments, whether the 110% no-quorum fallback is allowed3 |
2B. The budget process under each statute
For condominiums, the Condominium Act puts the bylaws in charge of running every property, and a copy of those bylaws has to be attached to the recorded declaration.10 The Act spells out what the bylaws must cover: the powers and duties of the board, the election of a treasurer who keeps the financial records and books of account, and the way each owner's share of the common expenses gets collected.9 What the Act does not do is name who adopts the annual budget or call for any member vote on it. So budget adoption is declaration-driven, and it usually lands with the board under the bylaws. The Act does set one firm rule on the money side: every sum the association of co-owners assesses has to follow generally accepted accounting principles applied consistently, and it has to include the establishment and maintenance of a replacement reserve fund.4 Adopting the budget is one thing; levying the assessment is another. Unpaid assessments become a lien on the unit at the moment they are assessed under Ind. Code § 32-25-6-3.11
For planned communities, the Homeowners Associations Act is far more specific. It requires the association to prepare an annual budget that lays out estimated revenues and expenses, plus any estimated surplus or deficit.3 Before the budget meeting, the association has to give each member a copy of the proposed budget (or written notice that a copy is available at no charge) and written notice of how much the regular annual assessment would rise or fall if the budget passes.3 The budget, the statute says, "must be approved at a meeting of the homeowners association members by a majority of the members of the homeowners association in attendance at a meeting called and conducted in accordance with the requirements of the homeowners association's governing documents."3 If the members who show up do not make a quorum as the governing documents define it, the board may adopt a budget that does not exceed 100% of the last approved budget, or up to 110% if the governing documents expressly allow it.3 This is affirmative member approval with a capped board fallback, not a negative-option ratification. The Act reaches associations established after June 30, 2009, and earlier associations that elect in, under Ind. Code § 32-25.5-1-1.6 As with condominiums, approving the budget is separate from levying the regular assessment, which the law enforces as a lien under Ind. Code § 32-28-14.12
2C. Variation and the corporate-law overlay
Each statute makes some budget items mandatory and hands the rest to the declaration. Under the Condominium Act, four things are mandatory: the replacement reserve fund, the use of generally accepted accounting principles, the keeping of detailed records, and open board meetings with minutes available on request. The budget-adoption process, the quorum, the notice timing, and special assessments are set by the declaration and bylaws.4,13 Under the Homeowners Associations Act, preparing the budget, getting member approval, distributing the proposed budget, and making financial records available are mandatory, while the quorum threshold, the meeting notice, the special-assessment procedures, and whether the 110% no-quorum fallback applies are set by the governing documents.3 Many Indiana associations also organize under the Indiana Nonprofit Corporation Act of 1991 (Ind. Code § 23-17), which supplies the corporate formalities — including the rule that a corporation have a board to exercise its corporate powers.14 That Act governs corporate formality; it sets no budget-approval threshold. Where the statutes and the declaration both fall silent, Indiana courts treat the declaration as a contract and give its restrictions a strong presumption of validity.15
Section 3: Budget-adjacent obligations
A. Reserves in the budget
The two statutes part ways on reserves. The Condominium Act requires assessments to include the establishment and maintenance of a replacement reserve fund, held in a separate interest-bearing account or invested the way political-subdivision funds may be invested, and spent only on capital expenditures and the replacement and repair of common areas.4 The Homeowners Associations Act carries no reserve-funding mandate at all; for a planned community, the declaration sets reserve practice. Neither statute orders a reserve study or fixes how often one has to happen.
B. Special assessments
Neither statute sets an approval threshold for special assessments; the recorded declaration controls. The Condominium Act treats special assessments as common expenses collectible under the bylaws and declaration, and the Homeowners Associations Act leaves the special-assessment procedure to the governing documents.5 The Court of Appeals confirmed in Talley that where Article 25.5 does not apply, the governing documents control both annual and special assessments.16
C. Assessment increase limits
Neither statute caps a member-approved assessment increase, so the declaration sets the size of regular increases. The one statutory ceiling sits in the Homeowners Associations Act's no-quorum board-adoption fallback, which holds a board-adopted budget to 100% of the last approved budget, or 110% where the governing documents allow.3
D. Financial review, audit, and disclosure tied to the budget cycle
The Homeowners Associations Act requires the association to distribute the proposed budget (or notice of its availability) and to give notice of assessment changes before the budget meeting, and it requires the association to make financial records — contracts, invoices, bills, receipts, and bank records — available for member inspection on written request.3 The Condominium Act requires the manager or board to keep detailed, itemized records of receipts and expenditures, to make them available to co-owners for examination, and to make board-meeting minutes available to co-owners on request.8,13 Neither statute orders an independent audit or a financial review tied to the budget cycle.
Section 4: Recent legislative and judicial activity
A. Recent bills
Indiana's 2026 session reshaped how planned-community boards may set a budget when a quorum does not appear. The headline measure amends the Homeowners Associations Act directly.
HEA 1152 · 2026 Regular Session
House Enrolled Act 1152 rewrites how a homeowners association sets its budget when a quorum does not show up. It keeps the core rule — members still approve the budget — and adds tiered caps for the no-quorum fallback. Within the first five years after a developer sells the first lot or unit, a board may adopt a budget up to 110% of the last approved one, if the governing documents expressly allow it. After that fifth year, the ceiling drops to the lesser of 105% of the last approved budget or that budget raised by the prior twelve months' average increase in the Consumer Price Index for housing in the Midwest region. The act also bars an association from charging a member any fee for a service the association provides, apart from the dues or fines named in the governing documents. It moved with little resistance — the House passed it 87–1 and the Senate 41–4.7
| Property managers | Confirm whether each association's governing documents actually authorize the no-quorum caps, and strip prohibited charges out of any fee-for-service billing before July 1, 2026. |
| HOA board members | You still cannot skip member approval for a quorum-backed budget, but you gain a defined no-quorum default tied to the developer-sale clock and a CPI measure. |
| Community association attorneys | Amend governing documents to expressly permit the 110% or 105%/CPI no-quorum adoption, because the caps apply only if the documents allow them. |
| Homeowners | A board can raise the budget without a quorum only inside the statutory caps, and most service fees beyond dues and fines are now off the table. |
B. Recent appellate rulings
Two recent Court of Appeals decisions show how Indiana judges handle budget-and-assessment disputes — one on when the statutory member vote even applies, and one on whether governance lapses excuse nonpayment.
Talley v. Cheswick Homeowners' Association, Inc.
The Court of Appeals sided with an association against an owner who withheld an assessment increase and a $35 special assessment, arguing both needed a homeowner vote. The catch: the association was created in 2005 and had never elected into Article 25.5, so the court held that the member-approval requirement in Ind. Code § 32-25.5-3-3(d) did not reach it. The governing documents controlled, and those documents let a two-thirds board vote set the budget and the assessments. The small-claims court had already awarded the association $673.38 in damages plus $700 in attorney's fees, and the appeals court let that stand. The ruling is a memorandum decision, non-binding under Indiana Appellate Rule 65(D).16
| Property managers | Verify each association's creation date and any election into Article 25.5 before you assume the statutory member-approval rule applies. |
| HOA board members | For associations outside Article 25.5, the governing documents control budget and assessment approval — including board-only adoption if the documents allow it. |
| Community association attorneys | Establish in the record whether Article 25.5 applies before you litigate a budget-approval defense, because applicability is dispositive. |
| Homeowners | You cannot withhold assessments on the theory that a statutory member vote was skipped when the statute does not apply to your association. |
Sandoval v. Willow Lake Estates Home Owners Association, Inc.
The Court of Appeals affirmed summary judgment and foreclosure for an association whose owner had stopped paying assessments, arguing the association had failed to hold annual meetings, run elections, or propose annual budgets. The court was unmoved. It held that the association's failure to follow its own rules — and the Nonprofit Corporation Act — did not wipe out the assessments, building on Feather Trace Homeowners Ass'n v. Luster, 132 N.E.3d 500 (Ind. Ct. App. 2019). An owner who sees procedural lapses, the court said, has to challenge them through other legal remedies, not by refusing to pay.17,18
| Property managers | You can keep collecting assessments even amid governance lapses, but those lapses still expose the association to separate claims. |
| HOA board members | Governance missteps do not void assessment authority, but cure budgeting and meeting failures to avoid injunctive or removal actions. |
| Community association attorneys | The decision gives you authority that procedural noncompliance does not defeat enforcement, while pointing owners to alternative remedies. |
| Homeowners | Withholding assessments is not a valid response to an association's failure to budget or meet; other legal channels apply. |
C. Active legislative debates
A companion 2026 measure, House Bill 1115 (Homeowners association governance), also became law. It trims HEA 1152's fee provisions — cutting the cap on a statement of unpaid assessments to $50 and barring governing documents from demanding more than a two-thirds owner vote to amend.19 No negative-option budget-ratification proposal is moving in Indiana.
Section 5: National positioning and related coverage
Indiana sits outside the UCIOA family and runs two separate statutes, so budget approval depends on what kind of community you are in. Condominium budgets run on the declaration: the board adopts the budget under the bylaws, and the Condominium Act layers on a replacement-reserve-fund requirement. Planned-community budgets carry a statutory member-approval step under the Homeowners Associations Act, with a capped board fallback when no quorum turns up. That sets Indiana apart from the negative-option ratification model of the UCIOA states, from California's percentage-increase-cap model, and from the mandatory-reserve-study states — because Indiana orders no reserve study and caps no member-approved increase. For a multi-state operator moving into Indiana, the practical takeaway is simple: the recorded declaration controls budget adoption for condominiums, while planned-community boards have to follow the statutory member-approval and disclosure duties, including the no-quorum caps that take effect July 1, 2026.
HOA Weekly's Indiana Budget Approval coverage updates quarterly as the General Assembly and the Indiana courts act; dates and bill statuses should be checked against the primary sources cited here. The federal frameworks — the FHA, ADA, FDCPA, SCRA, and FCC OTARD rule — apply to Indiana associations no matter what the state budget framework says.
- Ind. Code Title 32 (Property), Articles 25 (Condominiums) and 25.5 (Homeowners Associations), Indiana General Assembly ↩
- Ind. Code § 32-25-8-2 (Bylaws; contents), via FindLaw (verify against iga.in.gov Title 32, Article 25, Chapter 8) ↩
- Ind. Code § 32-25.5-3-3 (Annual budget; budget meeting; budget approval), 2025 Indiana Code (verify against iga.in.gov Title 32, Article 25.5, Chapter 3) ↩
- Ind. Code § 32-25-4-4(c) (replacement reserve fund), via FindLaw (verify against iga.in.gov Title 32, Article 25, Chapter 4) ↩
- Ind. Code §§ 32-25-2-5, 32-25-2-7 (definitions of "common expenses" and "condominium"), via FindLaw ↩
- Ind. Code § 32-25.5-1-1 (Applicability), 2025 Indiana Code ↩
- House Enrolled Act No. 1152 (2026), P.L. 53-2026, amending Ind. Code § 32-25.5-3-3 and adding §§ 32-25.5-3-3.1, -3.2, -3.3, effective July 1, 2026 (enrolled text; bill record at iga.in.gov/legislative/2026/bills/house/1152/details) ↩
- Ind. Code § 32-25-8-8 (Records), Indiana Code ↩
- Ind. Code § 32-25-8-2 (Bylaws; contents, including treasurer and collection of common expenses) (verify against iga.in.gov Title 32, Article 25, Chapter 8) ↩
- Ind. Code § 32-25-8-1 (Bylaws; administration of property), Indiana Code ↩
- Ind. Code § 32-25-6-3 (Unpaid assessments; lien), 2024 Indiana Code ↩
- Ind. Code § 32-25.5-3-8 (regular annual assessment enforceable as lien under IC 32-28-14), Indiana Code ↩
- Ind. Code § 32-25-8-2.5 (Board of directors meetings; co-owners entitled to attend; availability of minutes), via FindLaw ↩
- Ind. Code § 23-17-12-1 (Necessity of board of directors; exercise of corporate powers), Indiana Nonprofit Corporation Act of 1991 ↩
- Talley v. Cheswick Homeowners' Ass'n, Inc., No. 24A-SC-581 (Ind. Ct. App. Feb. 27, 2025) (citing Villas West II of Willowridge Homeowners Ass'n v. McGlothin, 885 N.E.2d 1274 (Ind. 2008)) ↩
- Talley v. Cheswick Homeowners' Ass'n, Inc., No. 24A-SC-581 (Ind. Ct. App. Feb. 27, 2025), courts.in.gov ↩
- Sandoval v. Willow Lake Estates Home Owners Ass'n, Inc., No. 24A-MF-309 (Ind. Ct. App. Mar. 12, 2025), courts.in.gov ↩
- Sandoval v. Willow Lake Estates Home Owners Ass'n, Inc. (analysis; citing Feather Trace Homeowners Ass'n v. Luster, 132 N.E.3d 500 (Ind. Ct. App. 2019)) ↩
- Indiana House Bill 1115 (2026), Homeowners association governance ($50 statement cap; two-thirds amendment-consent ceiling) (bill record; verify against iga.in.gov) ↩