Am I required to join the Home Owner’s Association?

Yes. Every Owner of a Lot in Marilyn Ridge is automatically a Member of the Marilyn Ridge Homeowner’s Association.

What documents govern the Marilyn Ridge Home Owner’s Association and its Members?

All community associations are regulated to some extent by Federal Laws (such as the Telecommunications Act of 1996, bankruptcy laws, and the Federal Fair Debt Collection Practices Act), by State Laws (such as those related to profit and nonprofit corporations under Indiana Code 23-17 et seq.), and Local Laws or Ordinances (such as those that related to parking, fire safety, trespassing, noise violations, vandalism, child safety, etc.)

Individual homeowners may also be governed by their mortgage documents. For instance, some Promissory Notes permit the mortgage company to accelerate payment of the Note if the homeowner fails to pay his or her HOA fees.

The decisions of state appellate courts also have an impact on the operation of a community association. These decisions are known as case law and may apply to all community associations within a particular jurisdiction.

The governing documents for Marilyn Ridge include the following:

a. The Map or Plat Document. This is a document that may be found at the Hamilton County Recorder’s Office and it designates which areas of Marilyn Ridge are Common Areas.

b. The Declaration of Covenants, Conditions and Restrictions for Marilyn Ridge dated 10/21/03, and the First Amendment to Declaration dated 2/13/04. These documents contain the restrictions that regulate the residents’ behavior. They bind all the owners in interlocking relationships, establish association responsibility, and define owners’ rights and obligations. The Covenants are recorded with the Hamilton County Recorder’s Office, “run with the land,” and are transferred to subsequent owners. To the extent that they are reasonable and not overruled by Case Law or later statutes, they are enforceable in a court of law.

c. Articles of Incorporation. The Articles of Incorporation are filed with the Secretary of State and define the basic purpose and powers of the corporation. The Articles often set forth the number of directors, their terms of office, and other specifics about how the association should be managed.

d. By-Laws. The By-Laws are the rules by which the Association is run. They address topics such as meetings, procedures for electing the board members and officer, and general duties of the board. They may be amended by a majority vote of the board.

e. Resolutions, Rules, and Regulations. Board members adopt rules and regulations through Resolutions. A resolution is a motion that follows a set format setting forth the reasons for the motion and is formally adopted by the board. It must be consistent with the covenants, the bylaws, the articles of incorporation, and Federal, State, or City law. Once adopted, the Resolution is kept in a Motions Book so that Members and future boards will know what the rules and regulations are at any point in time. In order to ensure Members are aware of rules and regulations that are not specified in the governing documents, Members should be promptly notified of Resolutions.

When documents conflict, a court will give the greatest weight to State, Federal, or Local Law, followed by the Declaration of Covenants, then the Articles of Incorporation, then the By-Laws, and finally by the Rules and Regulations. The hierarchy of documents is reflected in the difficulty of modifying them. The Covenants and the Articles can only be modified if 75% of the Voting Members approve the modification. The By-Laws, and Rules and Regulations, on the other hand, may be modified by a majority vote of the Board of Directors, or, if the motion has previously been voted on by a Board of Directors, then a 2/3 vote of the Board of Directors.

What are the “covenants?”

The Declaration of Covenants, Conditions and Restrictions for Marilyn
Ridge dated 10/21/03, and the First Amendment to Declaration dated 2/13/04. These documents contain the restrictions that regulate the residents’ behavior. They bind all the owners in interlocking relationships, establish association responsibility, and define owners’ rights and obligations. The Covenants are recorded with the Hamilton County Recorder’s Office, “run with the land,” and are transferred to subsequent owners. To the extent that they are reasonable and not overruled by Case Law or later statutes, they are enforceable in a court of law.
The covenants may only be modified with 75% approval of the Voting Members.

What are the “bylaws?”

The By-Laws are the rules by which the Association is run. They address topics such as meetings, procedures for electing the board members and officer, and general duties of the board. They may be amended by a majority vote of the Board of Directors.

What are the “articles of incorporation?”

The Articles of Incorporation are filed with the Secretary of State and define the basic purpose and powers of the corporation. The Articles often set forth the number of directors, their terms of office, and other specifics about how the association should be managed. They may only be modified with approval of 75% of the Voting Members of the Association.

Can the covenants be enforced by the police or other government entity?

Sometimes. If the covenant is identical to a Federal, State, or Local law, Ordinance or Restriction, the government entity will enforce the restriction. If the covenant is MORE restrictive than the government law, ordinance or restriction, the government entity will not enforce the greater restriction. In that case, the covenant may only be enforced through HOA fines or a Court of Law. If the covenant is LESS restrictive than the government law, ordinance or restriction, the government entity will enforce the greater restriction according to law.

In other words, the greater restriction (as between the HOA covenants and the law) is always enforceable but not always enforceable by the police.

Can the covenants, bylaws, or articles of incorporation be enforced in a Court of law?

Yes. Covenants may be enforced in a court of law as long as they are reasonable. Covenants may be enforced in a court of law by individual homeowners or by the HOA. As a general rule, if the Court rules in favor of the complaining party, the party who violated the covenant will be ordered to pay the attorney fees of the complaining party.

Can the HOA assess fines against homeowners who are not in compliance with the covenants?

Yes. The Board may adopt Rules and Regulations as are necessary for management of the HOA and enforcement of covenants.

Can the HOA enforce a covenant that is MORE restrictive than a city, county or state ordinance or law, such as for the height of a fence, parking restrictions, etc.?

Yes. If the covenant is MORE restrictive than the government law, ordinance or restriction, the government entity will not enforce the greater restriction. However, the covenant may be enforced through HOA fines or in a court of law.

Can the City or County enforce a city, county or state ordinance or law if the HOA covenants are LESS restrictive?

Yes. If the covenant is LESS restrictive than the government law, ordinance or restriction, the government entity will enforce the greater restriction according to the law.

Does the HOA have a duty to comply with the governing documents?

Yes. The HOA must comply with the governing documents. The Board of Directors is responsible for assuring the HOA is in compliance.

What HOA members make decisions for the HOA?

The Board of Directors makes decisions related to the maintenance, repair, and replacement of HOA assets, the determination of Common Expenses, and the collection of annual and special assessments. Certain decisions, such as whether or not to build a pool or clubhouse or to spend more than $1,250.00 on a new acquisition, require approval of the Membership.

How is an HOA member elected or appointed to the Board of Directors?

There are three Directors who are generally elected by the Membership, and additional board members are designated as Officers and appointed by the board of directors for one-year terms. In 2008, one Director will be elected to a one-year term and two Directors will be elected to two-year terms. Beginning in 2009, each Director will hold the office for a two year term. In order to ensure that the Board always has at least one experienced member, two Directors will be elected in even-numbered years and one Director will be elected in odd-numbered years.

Who determines the budget for the HOA?

The Board of Directors shall establish an annual budget prior to the beginning of each fiscal year, setting forth estimates of all Common Expenses for the coming fiscal year, together with a reasonable allowance for contingencies and reserves of the Association. Such budget serves as the basis for establishing the annual assessment. The budget must include in its reserves a sum that will allow the HOA to replace its assets as they wear out. For instance, if a playground needs to be replaced in fifteen years and the cost of replacement is estimated to be $45,000, the Board has a duty to budget a Capital Improvements Fund at $3,000.00 per year ($45,000 divided by 15 years) for that asset alone.

Will the HOA have enough money to replace current assets when they wear out?

The budget must include in its reserves a sum that will allow the HOA to replace its assets as they wear out. For instance, if a playground needs to be replaced in fifteen years and the cost of replacement is estimated to be $45,000, the Board has a duty to budget a Capital Improvements Fund at $3,000.00 per year ($45,000 divided by 15 years) for that asset alone.

Can the HOA assess fees for a pool, tennis court or other expensive asset without my permission?

Pursuant to the covenants, 75% of the Voting Members of the HOA must approve any expenditure that requires a mortgage (such as would be required for a pool, tennis court, or clubhouse). Further, the Board has adopted a Rule that HOA fees may not be used for any expense greater than $1,250.00, other than for the normal maintenance and management of the HOA, without approval of a majority of Voting Members who are present, either in person or by proxy, at a Meeting of Members. This limitation would not apply to any miscellaneous fees earned by the HOA through fines, late fees, sale of permits, lien fees, etc.

Can the Board of Directors of the HOA adopt rules and regulations?

Board members may adopt rules and regulations through Resolutions. A resolution is a motion that follows a set format setting forth the reasons for the motion and is formally adopted by the board. It must be consistent with the covenants, the bylaws, the articles of incorporation, and Federal, State, or City law. Once adopted, the Resolution is kept in a Motions Book so that Members and future boards will know what the rules and regulations are at any point in time. In order to ensure Members are aware of rules and regulations that are not specified in the governing documents, Members should be promptly notified of Resolutions.

Can the HOA increase my yearly fees?

Yes. The Board has a fiscal duty to assess enough fees to adequately manage the communities’ anticipated assets and expenses and to set aside enough funds to replace assets as they wear out. The Board should always estimate high in order to avoid the necessity of a Special Assessment. In the event the Board estimates too high, however, any fees remaining at the end of the year will be returned to homeowners as a credit against the next year’s fees.

Can the HOA require fees in addition to the yearly assessment?

Yes. Should the Board at any time during the fiscal year determine that the Assessment levied with respect to such year are insufficient to pay the Common Expenses, the Board may levy a special assessment as it may deem necessary for meeting the Common Expenses. In addition, the Board has the right to levy special assessments for the purpose of defraying any unanticipated Common Expense not provided for by the annual assessment.

Can the Assessment be adjusted at the end of each year?

Yes. In the event the amount actually expended by the Association for Common Expenses in any fiscal year exceed the amount budgeted and assessed for Common Expenses for that fiscal year, the amount of such deficit shall be carried over and become an additional basis for Assessments for the following fiscal year. Such deficit may be recouped either by inclusion in the budget for annual Assessments or by the making of one or more special Assessments for such purpose, at the option of the Association.

In the event that the amounts budgeted and assessed or Common Expenses in any fiscal year exceed the amount actually expended by the Association for Common Expenses for that fiscal year, a Pro-rata Share of such excess shall be a credit against the Assessment(s) due from each Owner for the next fiscal year(s).

How many votes may be cast for each Lot at a Meeting of Members?

Each Lot is entitled to only one vote regardless of how many owners there are. An Owner of more than one Lot may cast one vote for each Lot.

What are the duties of the HOA?

The HOA is authorized to act on behalf of the individual Owners in all matters pertaining to a) the maintenance, repair, and replacement of the Common Areas and Private Lanes, b) the determination of Common Expenses, and c) the collection of annual and special Assessments. The Association shall also have the right, but not the obligation, to act on behalf of any Owner or Owners in seeking enforcement of the terms, covenants, conditions and restrictions contained in the Declaration.

Can the Board of Directors choose NOT to enforce a particular covenant?

Yes. Pursuant to the Covenants, he HOA has the “duty, but not the obligation” to enforce the covenants. Over time, statutes and case law may make a particular covenant no longer applicable or reasonable. Therefore, the Board has a duty NOT to enforce a covenant if they believe it is not enforceable in a court of law or not in the best interests of Marilyn Ridge. For instance, the current covenants do not permit Members to post political signs in their front yards. The board may choose not to enforce that covenant because the long-term benefits of political involvement outweigh any benefits that might accrue from enforcement of the covenant. On the other hand, the Board may not pick and choose which covenants to enforce based merely on personal preferences. When the board chooses not to enforce a covenant, such decision will be reflected in a Resolution that is available for review by future boards and HOA Members.