Indiana small-claims appeal: the 10% assessment cap did not apply
Indiana small-claims appeal: the 10% assessment cap did not apply
2026-09-10 · Indiana · Courts
What happened. A homeowner who lost a $673.38 small-claims judgment appealed it, argued that a statutory cap on assessment increases protected her, and came away owing the association its appellate attorney fees on top of everything else. The Court of Appeals decided Tracy Talley v. Cheswick Homeowners' Association, Inc., No. 24A-SC-581, on 27 February 2025.1
This is a memorandum decision. Under Indiana Appellate Rule 65(D) it is not binding precedent, and we flag that because the reasoning is nonetheless a clean illustration of a rule that catches Indiana owners constantly.
The two arguments
Talley, appearing pro se, made two points. The first was that her association had raised the annual assessment by more than 10 percent, and that IC 32-25.5-3-3 requires homeowner ratification of an increase that size. The second was that a $35 special assessment was improperly levied.
Why the statute did not help her
Cheswick was formed in 2005. As in the Sandoval decision handed down two weeks later, the panel applied the threshold question first: Indiana's Homeowners Association Act reaches associations formed after 30 June 2009 unless an older association elects into it. Cheswick had not. The 10 percent ratification requirement therefore did not apply to this association at all, and what governed instead was the declaration and bylaws — which required a two-thirds vote of the board, not a vote of the membership.
The special assessment failed for a similar reason. The governing documents let the board levy special assessments “at any time,” without limiting them to enumerated purposes, so there was nothing for the $35 charge to violate.
The part that cost her
The declaration contained a prevailing-party clause providing for “reasonable attorneys' fees.” The panel held that such a clause reaches fees incurred on appeal, and that the award is not discretionary once the association has prevailed:
“The Association unquestionably prevailed in this action. It obtained judgment at trial and has successfully defended that judgment on appeal against Talley's arguments.”
The trial judgment — $673.38 in damages plus $700 in trial-level fees — was affirmed, and the case was remanded to fix the amount of additional appellate fees owed.
The arithmetic that should stop an appeal
Set the doctrine aside for a moment and look at the numbers, because they are the actual lesson. The disputed charge was $673.38. By the time the Court of Appeals was finished, the homeowner owed that, plus $700 of the association's trial fees, plus an unquantified award of its appellate fees — a figure that in Indiana practice routinely exceeds the trial-level award, and here was being fixed on remand with no cap in sight.
A prevailing-party fee clause makes a small covenant dispute asymmetric in a way that is easy to miss until it is too late. The association is spending money it will recover if it wins. The owner is spending money they will not recover, and is simultaneously accruing the other side's. An appeal of a several-hundred-dollar assessment judgment is, in fee terms, a bet at very poor odds.
The trap in the statute-first instinct
Talley's argument was not frivolous in substance. IC 32-25.5-3-3 does address assessment increases, and reading it would give an Indiana owner every impression that a large increase needs member ratification. The problem was one level up: the article's applicability.
This is now the second decision in a fortnight of the 2025 term to turn on the same threshold, and it is worth stating as a rule of thumb for anyone in an Indiana subdivision:
- Find out when your association was formed before you rely on IC 32-25.5. Articles of incorporation are searchable through the Indiana Secretary of State's business-entity database.
- If it predates 1 July 2009, ask whether it ever elected into the article. Most have not, and the election is a deliberate recorded act, not something that happens by default.
- If it did not elect in, the operative documents are the recorded declaration and bylaws, read alongside the Indiana Nonprofit Corporation Act at IC 23-17.
What changed in 2026, and what did not
Indiana's 2026 legislative session substantially rewrote IC 32-25.5, adding meeting-notice requirements, a $50 ceiling on resale statement fees, an express fine-schedule regime, and a tiered set of caps on adopting a budget without a quorum. Those are real changes and they took effect on 1 July 2026.
What that session did not obviously do is close the pre-2009 gap. An owner in a 2005-vintage association reading the 2026 headlines could easily conclude the new protections are theirs. On the reasoning in Talley and Sandoval, that conclusion needs checking against the article's applicability provision at IC 32-25.5-1-1 before it is relied on — and the answer will differ association by association.
For boards of pre-2009 associations
The defensive posture here worked because the governing documents were doing the work: a two-thirds board vote for the budget, an unrestricted special-assessment power, and a fee clause broad enough to reach appellate work. That is a document-quality outcome, not a statutory one. Associations relying on the same structure should confirm all three provisions actually exist in their recorded documents rather than assuming the pattern.
A caution on citation
Because this is a memorandum decision, it is not binding precedent and may not be cited as such. Use Sandoval, which is published, when you need authority for the applicability point.
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