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Indiana omnibus law curtails city-enforced rental caps; Carmel officials urge HOAs to act
Summary
An Indiana omnibus finance bill (HEA 1210) and concurrent amendments to the HOA statute mean Carmel’s city-enforced rental-cap ordinance can remain only until Jan. 1, 2028; officials told neighborhood leaders that private HOA covenants, voting-rule changes and legal counsel are now the primary tools to limit rentals locally.
Councilor Rich Taylor, at-large city councilor for the City of Carmel, told residents the Indiana Department of Local Government Finance omnibus bill and related changes will effectively end the city’s power to enforce local rental caps after Jan. 1, 2028. “Though we can, as director Hovall mentioned, we can keep that in place until January 2028,” Taylor said.
The changes originated in a broad legislative package (referred to at the meeting as House Enrolled Act 1210) and include amendments to the Indiana Homeowners Associations Act. Greg Chandler, an HOA attorney with Williams and Strom, explained how the statutory changes shift some control from municipalities to private HOA governance: “If property essentially is not claimed as a homestead by the title owner, then the owner of the property is not eligible to vote on any rental-related restrictions,” Chandler said, summarizing the new homestead-voter limitation.
Why it matters: Carmel’s city ordinance capped rentals in many older single-family neighborhoods to protect owner-occupied character and guard against institutional buyers. City staff and councilors said the law change does not eliminate HOAs’ ability to adopt private covenant restrictions; it instead narrows what the city can enforce directly and alters who may vote on covenant amendments.
What changed and the local implications: - City-enforced rental caps: The council’s ordinance will remain in force only until the statutory sunset (Jan. 1, 2028) unless state law is changed. Officials urged HOAs that want local controls to consider covenant amendments now. - HOA voting eligibility: The statute limits votes on rental-related covenant amendments to owners who occupy the property as a homestead primary residence; owners of non‑owner‑occupied properties cannot vote on those specific questions. - Amendment thresholds: The legislature capped document-amendment thresholds so associations now may rely on a two-thirds owner vote in many cases rather than higher percentages sometimes required by older covenants.
At the meeting DOCS and council members recounted local numbers: DOCS staff said roughly 70 of 426 residential subdivisions (about 15%) had reached the city’s 10% rental cap, underscoring the degree of local concern over rental concentrations.
What residents were told to do: Presenters urged HOA boards to consult their attorneys about (1) whether their covenants already restrict rentals, (2) using covenant amendments to establish caps or waiting periods, and (3) adopting implementation plans that comply with the statute’s new voting and notice requirements. Taylor and attorney presenters recommended early outreach and legal guidance if neighborhoods want private covenants to remain a tool.
Next steps: Council members said they had worked with state legislators to seek mitigating language and advised residents to monitor the statehouse, but encouraged HOAs to pursue covenant remedies where feasible before the statutory sunset.
