Indiana • Reserve study / underfunding
Is your Indiana condo's reserve underfunded — and does the state require funding?
A reserve study can read as reassuring while quietly showing your Indiana building is years behind on saving for its roof, elevators, or façade. What matters is how funded the reserves actually are — and what Indiana requires.
The short answer
Indiana does not require a reserve study and does not require the association to fund it. Condos must establish and maintain a replacement reserve fund (IC 32-25-4-4) but with no funding target, percent-funded standard, schedule, or study requirement. HOAs (IC 32-25.5) have no reserve-study or reserve-funding mandate at all. A thin reserve is the most common reason a special assessment lands later, so the study-versus-actual-balance gap is the number that matters. CondoSignal reads your reserve study and budget against Indiana's rules. Free.Indiana at a glance
Reserve study
Not required
No state mandate
Reserve funding
Not required
Underfunding is legal here
Super-lien
None
Resale disclosure
Cancellation right
No general cooling-off period. Two-business-day rescission only when a late/amended sales-disclosure form reveals a defect (IC 32-21-5-11).
What Indiana requires
Condos must establish and maintain a replacement reserve fund (IC 32-25-4-4) but with no funding target, percent-funded standard, schedule, or study requirement. HOAs (IC 32-25.5) have no reserve-study or reserve-funding mandate at all. Whether a thin reserve is merely risky or actually out of compliance depends on that rule — which is the first thing to establish.
Why underfunding becomes an assessment
HOA borrowing capped at the greater of $5,000 or 10% of the prior year's budget per calendar year without an affirmative majority member vote by paper ballot (IC 32-25.5-3-5; emergency/enforcement exceptions). The 'percent funded' figure in the study, compared to the actual reserve balance, tells you how exposed you are.
What it means for collection and resale
No super-lien. Under IC 32-25-6-3 the association lien is subordinate to property-tax liens and all sums unpaid on a first mortgage of record; a first-mortgage foreclosure extinguishes pre-foreclosure assessments. HOA liens (IC 32-25.5) likewise subordinate. No statutory condo resale/estoppel certificate. Disclosure runs through the general Residential Real Estate Sales Disclosure Form (IC 32-21-5-10) plus the HOA-document delivery rule (IC 32-21-5-8.5: recorded governing docs, assessment statement, management contact ≥10 days before closing).
Your rights in Indiana
As a Indiana owner, your reserve information and any approved special assessments should appear in the association's budget and resale disclosures (no general cooling-off period. two-business-day rescission only when a late/amended sales-disclosure form reveals a defect (ic 32-21-5-11).). None of this is legal advice — confirm against the current statute and a licensed professional in your state.
What to check
- Find the reserve study's 'percent funded' figure.
- Compare the recommended contribution to what's budgeted.
- Confirm whether Indiana mandates reserve funding.
- Check the remaining life of the roof, elevators, and façade.
- Look for a reserve catch-up or a recent special assessment.
- Check the study's date — an old study understates today's costs.
Sources
- Indiana Code § 32-25-6-3 — Unpaid Assessments; Lien (no super-lien)(High)
- Indiana Code Title 32, Article 25 — Indiana Condominium Act(High)
- Indiana Code § 32-25.5-3-3 — Annual Budget; Records; Meetings(High)
Educational only — not legal, financial, or engineering advice. Confirm against the current statute and, where it matters, a Indiana-licensed professional.
FAQ
Frequently asked questions
Not sure what your documents are really telling you?
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