Indiana HOA Reserve Studies

Section 1: Overview — Reserve study requirements in Indiana

Indiana sets no statutory reserve-study mandate on any community association, and it sets no reserve-funding mandate on homeowners associations. For HOAs, the recorded declaration and the board's fiduciary duty govern reserve practice.¹ Condominiums are the exception. The Indiana Condominium Act, Ind. Code § 32-25, requires condominium associations to build the establishment and maintenance of a replacement reserve fund into their assessments — though it still does not require a reserve study.³ A separate statute, Ind. Code § 32-25.5, governs homeowners associations. It covers budget adoption, records access, and board procedure, but it says nothing about reserves.² Most associations also organize as nonprofit corporations under the Indiana Nonprofit Corporation Act of 1991, Ind. Code § 23-17, which sets corporate formalities and director standards rather than HOA-specific obligations.⁶ Nationally, Indiana belongs with the no-study-mandate states. It stands apart from the hard-mandate states that fix study intervals and funding rules, and from the disclosure-mandate states that require reserve information to reach owners and buyers.⁸ The sections that follow lay out the condominium reserve-fund requirement, the homeowners-association statute, the role of the declaration and corporate law, the specific compliance obligations, recent legislative activity, and where Indiana lands on the national map.

Section 2: The reserve framework under Indiana law

2A. The Indiana Condominium Act and reserves

The Indiana Condominium Act, Ind. Code § 32-25, governs condominiums that recorded condominium instruments lawfully submit to the article and in which the unit owners hold the undivided interests in the common areas and facilities.² The Act's budget and common-expense provision, Ind. Code § 32-25-4-4, requires the association of co-owners to set every assessment using generally accepted accounting principles applied on a consistent basis, and to include the establishment and maintenance of a replacement reserve fund.³ The statute then limits how the fund may be spent: it covers capital expenditures and the replacement and repair of common areas and facilities, and it may not cover usual and ordinary repairs.³ The Act also directs the association to hold the fund in a separate interest-bearing account at a qualifying bank or savings association, or in comparable permitted investments.³ Notice what this is — a reserve-funding obligation, not a reserve-study obligation. The Condominium Act does not require a condominium association to commission a reserve study, to inspect components physically, to use a qualified preparer, or to fund reserves to any percentage or dollar threshold. It sets a duty to maintain a segregated replacement reserve fund and to limit how that fund is spent, and it leaves the amount, the methodology, and the timing to the board and the declaration. The Act includes no statutory waiver mechanism, no underfunding cure, and no reserve-specific penalty.

2B. The homeowners-association governance statute

Ind. Code § 32-25.5 applies to homeowners associations formed after June 30, 2009, and to earlier associations that elect to be governed by the article.² It sets baseline governance rules, not capital-planning requirements. Under Ind. Code § 32-25.5-3-3, an HOA must prepare an annual budget that reflects estimated revenues, expenses, and any surplus or deficit; must give members the proposed budget (or notice of its availability) along with notice of any assessment change; and must obtain approval at a member meeting by a majority of those who attend.⁴ The same section requires the association to open its financial records and board-meeting minutes to member inspection, and it lets members attend board meetings, subject to limited exceptions for delinquencies and litigation.⁴ The article carries no reserve-study or reserve-funding mandate, and it does not require a reserve line in the budget. It differs from the Condominium Act in both scope and subject. Section 32-25.5 reaches planned-community and subdivision HOAs and concerns budget process, records, and board procedure; § 32-25 reaches condominiums and includes the replacement reserve fund requirement. The two statutes govern different community types, and the condominium reserve-fund duty does not carry over to HOAs under § 32-25.5.

2C. The declaration, corporate law, and fiduciary backstop

For homeowners associations — and for any condominium reserve question that § 32-25-4-4 does not resolve — the recorded declaration (the CC&Rs) is the primary source of any reserve obligation. Where the declaration specifies reserve contributions, study intervals, or funding targets, those provisions bind the board as a matter of contract and property law. Precedence runs from the Indiana Code, to the recorded declaration and bylaws, to board policy adopted under that authority. At the corporate level, most Indiana associations are nonprofit corporations under the Indiana Nonprofit Corporation Act of 1991, Ind. Code § 23-17. That Act governs corporate formalities and, in Ind. Code § 23-17-13-1, requires a director to act in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the director reasonably believes serves the best interests of the corporation.⁶ That standard of care — not a reserve statute — is the principal legal driver of prudent reserve funding for Indiana HOAs. The implication is direct. Outside the condominium replacement reserve fund, the declaration and prudent board judgment set Indiana reserve practice, not a statute. A board that ignores foreseeable capital needs can face a fiduciary-duty challenge even though no statute prescribes a study or a funding level.

Section 3: Compliance obligations

A. Study and inspection obligations

No Indiana statute requires a reserve study, a physical or on-site inspection of components, or a qualified study preparer — not for condominiums, and not for homeowners associations.¹ Any study or inspection obligation is contractual, arising only if the recorded declaration or bylaws require it, or it follows from the board's fiduciary duty of care under Ind. Code § 23-17-13-1.⁶ This holds for both condominiums and homeowners associations.

B. Funding obligations

Condominiums carry a statutory funding obligation: assessments must include the establishment and maintenance of a replacement reserve fund, restricted to capital expenditures and the replacement and repair of common areas (Ind. Code § 32-25-4-4).³ Homeowners associations carry no statutory reserve-funding obligation; any reserve funding is contractual under the declaration or a matter of board fiduciary judgment.¹ Neither statute sets a percentage-funded or dollar threshold.

C. Disclosure obligations

Homeowners associations must prepare an annual budget, distribute it (or notice of its availability) to members, and win member approval at a meeting (Ind. Code § 32-25.5-3-3) — a budget-disclosure obligation, not a reserve-disclosure obligation.⁴ Indiana has no reserve-specific resale disclosure statute. When residential real estate changes hands, the seller must complete the residential real estate sales disclosure form adopted under Ind. Code § 32-21-5, which addresses property condition; association-governed sales customarily disclose membership, assessments, and governing documents.⁵ Budget disclosure applies to homeowners associations; the residential disclosure form applies to individual home sales in either community type.

D. Account and governance obligations

For condominiums, the association must hold the replacement reserve fund in a separate interest-bearing account or permitted investment and may not commingle it with operating funds for spending purposes (Ind. Code § 32-25-4-4).³ For homeowners associations, financial records and board minutes must stay open to member inspection (Ind. Code § 32-25.5-3-3), and the Attorney General may bring an action against a board for misappropriation, fraud, or budgeting violations (Ind. Code § 32-25.5-4).⁶ Across both community types, directors of associations organized as nonprofits owe the duty of care in Ind. Code § 23-17-13-1.⁶

Section 4: Recent legislative and judicial activity

A. Recent bills

B. Recent appellate rulings

Over the past 36 months, no published Indiana Court of Appeals or Indiana Supreme Court decision squarely addresses condominium or homeowners association reserve funds, reserve adequacy, or board fiduciary duty in the reserve-funding context.¹¹

C. Active legislative debates

The 2026 session trained its attention on budget-quorum thresholds, fee caps, fines authority, and records access — not reserves — and no reserve-study or reserve-funding bill was introduced. As of this update, no reserve mandate is pending in Indiana.

Section 5: National positioning and related coverage

Indiana sits among the no-study-mandate states for community association reserves. It fixes no reserve-study interval and no funding formula — unlike the hard-mandate states. California requires a visual inspection and reserve study at least once every three years (Civ. Code § 5550); Florida requires structural integrity reserve studies at least every 10 years for condominium and cooperative buildings three stories or higher under Senate Bill 4-D; and Maryland requires a reserve study with updates every five years.⁸ Indiana also stops short of the policy-disclosure approach that Colorado takes, which directs associations to adopt a written reserve-study and funding policy under its Common Interest Ownership Act.¹² Instead, Indiana lines up with no-mandate states such as Iowa, Georgia, and Kentucky — while still requiring condominium associations to maintain a replacement reserve fund.³ Indiana keeps separate condominium (§ 32-25) and homeowners-association (§ 32-25.5) governance statutes.² For a multi-state operator entering Indiana, the practical point is this: the declaration and the board's fiduciary duty drive capital planning, not a state reserve schedule — with one discrete condominium reserve-fund duty to satisfy.

HOA Weekly updates its Indiana Reserve Studies coverage quarterly as the General Assembly and the Indiana appellate courts act. Federal frameworks — including the Fair Housing Act, the Americans with Disabilities Act, the Fair Debt Collection Practices Act, the Servicemembers Civil Relief Act, and the FCC's OTARD rule — also apply to Indiana associations regardless of the state framework.

1. Community Associations Institute, Reserve Requirements and Funding for Community Associations (Indiana entry: "There is no statutory requirement to conduct a reserve study") ↩
2. Ind. Code Title 32 (Property), Article 25 (Condominiums) and Article 25.5 (Homeowners Associations), iga.in.gov ↩
3. Ind. Code § 32-25-4-4 (assessments must "include the establishment and maintenance of a replacement reserve fund," usable for "capital expenditures and replacement and repair of the common areas and facilities" but not "usual and ordinary repair expenses," maintained in a "separate interest bearing account"), iga.in.gov ↩
4. Ind. Code § 32-25.5-3-3 (annual budget; budget approval; records available to members; right to attend board meetings), iga.in.gov ↩
5. Ind. Code § 32-21-5 (residential real estate sales disclosure; § 32-21-5-10 requires the owner to complete and sign a disclosure form before an offer is accepted), iga.in.gov ↩
6. Ind. Code § 23-17-13-1 (a director shall discharge duties "[i]n good faith," "[w]ith the care an ordinarily prudent person in a like position would exercise under similar circumstances," and "[i]n a manner the director reasonably believes to be in the best interests of the corporation"); Ind. Code § 32-25.5-4 (Attorney General action against association or board member; misappropriation; budgeting violations), iga.in.gov ↩
7. Ind. Code §§ 32-25-4-4, 32-25.5-3-3, 32-21-5 (Title 32) and § 23-17-13-1 (Title 23), iga.in.gov ↩
8. Cal. Civ. Code § 5550(a): "At least once every three years, the board shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components... as part of a study of the reserve account requirements." Florida SB 4-D (signed May 26, 2022; structural integrity reserve study at least every 10 years for buildings three stories or higher), amending Fla. Stat. § 718.112. Maryland reserve-study mandate (study with updates every five years), Md. Real Prop. §§ 11-109.4 and 11B-112.3 ↩
9. Indiana House Bill 1152 (2026), Homeowners association matters; signed by the Governor March 3, 2026; effective July 1, 2026; amends IC 32-25.5-3-3, iga.in.gov ↩
10. Indiana House Bill 1115 (2026), Homeowners association governance; signed by the Governor March 12, 2026; effective July 1, 2026, iga.in.gov ↩
11. Indiana Court of Appeals, published opinions, courts.in.gov (no reserve-specific condominium or HOA decision identified in the June 2023–June 2026 window) ↩
12. Colorado Common Interest Ownership Act, C.R.S. § 38-33.3-209.5(1)(b)(IX) (requires a policy addressing "[w]hen the association has a reserve study prepared... whether there is a funding plan for any work recommended by the reserve study... and whether the reserve study is based on a physical analysis and financial analysis," and providing that "an internally conducted reserve study shall be sufficient"; this mandates a policy, not a study) ↩