Reversal: Homeowner cannot withhold HOA fees in protest

An Indianapolis resident who refused to pay his homeowner association fees due to the deteriorating conditions of the neighborhood couldn’t convince the Indiana Court of Appeals that he shouldn’t have to pay.

In Feather Trace Homeowners Association, Inc. v. Donald R. Luster, 19A-SC-300, Donald Luster objected to paying his homeowner association fees because of the way his neighborhood was being maintained. Luster, who owns a home in the Feather Trace neighborhood, alleged that the Feather Trace Homeowners Association was failing to keep up with the neighborhood’s needs.

He argued that the roads and sidewalks were full of potholes, the neighborhood pond was not maintained and therefore gave off a stench from dead fish and scum, and that the area surrounding the pond was dangerous. Additionally, he argued that homes in the neighborhood were advertising for renters, despite the HOA’s own rule against doing so and that the common areas of the neighborhood were not being maintained.

Luster informed an HOA member of his concerns, but that person moved out of the neighborhood not long afterward. When Luster ultimately refused to pay the 2018 fees, the Feather Trace HOA sued him, seeking its $200 annual fee plus attorney costs and fees. A trial court sided with Luster, noting that he wasn’t required to pay until the HOA addressed his concerns.

But the Indiana Court of Appeals reversed that decision, despite noting that it sympathized with Luster’s situation and found the neighborhood’s conditions to be “dramatic and disheartening.”

“It is apparent, however, that the result reached by the trial court will make the underlying problems worse, as it will quickly empty the HOA’s coffers when Luster’s neighbors learn that they, too, need not pay their annual fees,” Judge John Baker wrote for the court. “If that were to occur, it would quickly become impossible for the HOA to correct the very serious problems in the neighborhood.”

It found no cases holding that abrogation of homeowner association dues and assessments was the appropriate remedy for an owner’s dissatisfaction with the way an HOA performs or the conditions or quality of the neighborhood and its amenities. Instead, the appellate court suggested Luster had other legal remedies aside from abrogation that would better the residents’ situations.

“For example, he can mount a campaign to oust the current board members; he can participate with board meetings or strive to become a board member to influence the HOA’s decision-making process; he can seek injunctive relief against the HOA; he can seek a receivership for the HOA; or he can sue board members for a breach of fiduciary duty,” the panel wrote.

It therefore reversed and remanded the case with instructions to enter judgment in favor of the HOA and to calculate the amount Luster owes.