Why the grandfather clause is a trap

Look closely at IC 32-25.5-3-3.1. An association with pre-existing 110 percent authority keeps it — until its documents are “amended or renewed after June 30, 2026.”

That creates a genuine and non-obvious conflict for boards that were already contemplating amendments. Indiana lowered the amendment consent ceiling to two-thirds in the same session, which makes amendment newly achievable for a lot of associations. An association that uses that new freedom to amend its declaration may forfeit its grandfathered 110 percent budget authority in the process, and drop to the 105-percent-or-CPI tier.

We are not saying an amendment is a bad idea. We are saying that any Indiana board planning one this year should establish, before it starts, whether it currently holds grandfathered budget authority and what losing it would cost. That is a five-minute question with a potentially expensive answer, and nothing in the coverage of either bill puts the two provisions side by side.

The CPI mechanic, and its direction of travel

The third tier is not simply “105 percent.” It is the lesser of 105 percent and the CPI-Housing figure for the Midwest region over the preceding twelve months.

In a low-inflation year, CPI is the binding constraint and the board gets less than 5 percent. In a high-inflation year, the 105 percent cap binds and the board still gets 5 percent. The structure only ever cuts one way: it can reduce the ceiling below 105 percent but never raise it above.

Practical consequences for a treasurer:

• Identify the index and pin the period. It is a specific series — housing, Midwest region, trailing twelve months — not headline national CPI. Document which figure you used and as of what date, in the minutes.
• Insurance does not follow CPI. This is the structural problem with the tier. Association master-policy premiums in Indiana have been moving on severe convective storm losses, not on general housing inflation. A board capped at a CPI-linked increase can face a premium rise several times that figure.
• The ceiling compounds downward. Each year's cap is measured against the prior year's budget. Two or three constrained years in a row leave a structural gap that a single later increase cannot close without a quorum.

The way out is the quorum, and it just got easier

Every one of these ceilings applies only when the association fails to raise a quorum. A budget approved with a quorum present is not subject to them at all.

That is the connection to the other half of the 2026 package, and it is the most useful thing in this article. HEA 1115 provided that a member attending remotely counts toward attendance, alongside in person and by proxy. For the very many Indiana associations whose quorum failures are a logistics problem rather than an apathy problem — owners who travel, work evenings, or live elsewhere — remote attendance may put a quorum back within reach for the first time in years.

The sequence for a board facing a genuine funding need is therefore:

1. Try for the quorum first, using remote attendance and proxies, with four days' notice and an agenda that says the budget is being adopted.
2. If the quorum holds, adopt the budget you actually need. No statutory ceiling applies.
3. Only if it fails, fall back to the tier your association sits in — and check first that your documents expressly permit any increase at all.

Reserves, and the January problem

There is a timing collision worth flagging for condominium boards specifically. Fannie Mae and Freddie Mac raise the minimum reserve allocation for condominium projects from 10 to 15 percent of budgeted assessment income for loan applications dated on or after 4 January 2027.

A board that needs to increase reserve funding by half to keep its units financeable, and which cannot raise a quorum, may find the increase it needs sits above the ceiling it is allowed. There is no statutory reserve carve-out in the Indiana tiers. The answer, again, is the quorum — which makes the autumn budget meeting the most consequential one these associations will hold.

What to watch

Whether Indiana associations begin amending their documents specifically to add express budget-increase authority, now that the tiers reward having it and the amendment threshold has fallen to two-thirds. Also whether any board tests what “amended or renewed” means for the grandfather clause — whether, for instance, an unrelated amendment forfeits the 110 percent authority, or only one touching the budget provision.