‘Self-inflicted’ disaster: Judge orders demolition of $2.2M duplex after builder violated HOA rules. How the construction gamble backfired badly

The “harm” to the builder, according to Hamilton County Judge David Najjar's November ruling, is “almost entirely self-inflicted,” and due to Mercho’s continued construction of the duplex despite an HOA conflict that questioned its compliance with zoning rules, according to a report by WTHR 13 Newss (1).

“It was obvious that it was not in compliance,” Watersedge HOA president Harold Warden told WTHR 13 about the construction, which dates back to 2023.

“We contacted the builder, asked to meet him on site at the time and see what the heck was going on [and] if we could get it taken care of."

However, it would appear that Mercho sees it differently. His lawyer, Tarek Mercho, told The Indiana Lawyer (2) that the builder plans to appeal in defence of Indiana property owners whose land rights, he says, “should be defined by public law and recorded plats, not just the shifting opinions of a private committee and an overzealous board president.”

A blueprint for a duplex debacle

The duplex dispute stems, according to WTHR 13, from the fact that the Watersedge HOA rules “required 15 feet between homes” when Mercho bought his plot of land. Those rules eventually changed, though, to add five extra feet between homes, and any structure to be built at least 15 feet from the property line.

Mercho, however, began building the duplex to the original property specifications. As a result, the judge said that Mercho and his company violated the HOA rules “by not getting approval from the association’s architectural committee prior to the start of construction and by encroaching on setback provisions,” according to a report by Current (3). The court found that the duplex “encroaches on required side-yard setbacks by about 600 square feet,” reported The Indiana Lawyer.

The order also claimed, according to Current, that Mercho “continued construction … after the association intervened in November 2023 when footings were installed and despite the ongoing civil court case.”

Mercho initiated the litigation by suing the HOA and, according to The Indiana Lawyer, Judge Najjar warned last year that continuing construction during litigation “risked ‘very costly remediation’” should he lose.

“We viewed it as we had a contract with the HOA and the community to build under certain conditions, and those conditions were changed,” attorney Tarek Mercho told WTHR 13.

The judge, however, in his order explained that HOA rules exist for “the protection of the present and future owners” and that allowing a violation of those rules “would render the purpose of these governing documents, and planned community living in general, moot,” adding “there is no way to ensure that further violations will not occur” (3).

The order to Mercho includes paying more than $70,000 in fees as well as the estimated $1.5 million cost of demolishing the duplex and the expense of relocating the tenants who live in the duplex.

And while both sides agree that the ordering of the destruction of the duplex is out of the ordinary, the judge did offer them the opportunity to negotiate an agreement to allow the building and tenants to remain. If not, Mercho must provide a plan for demolition by February.

“I think the judge built in some time, hoping that the parties could find a resolution, but it's going to be on the builder, quite honestly,” HOA president Warden told WTHR 13. “We've been trying to find a resolution on our side since day one.”

In an email to the news outlet, Michael Mercho wrote, “We are appealing not just to save a building, but to clarify a legal principle that protects every property owner in Indiana: that your land rights are defined by public law and recorded plats, not just the shifting opinions of a private committee.”

How to handle HOA disputes

According to the Foundation for Community Association Research, in 2024 more than 77 million Americans (4) lived in 369,000 U.S. communities run by HOAs — which can hold authority over everything from the building and appearance of homes to rules around use of amenities on the property. As such, it’s not uncommon for residents and HOAs to clash over said rules.

Real estate dispute firm LS Carson Law notes (5) that violating HOA rules could lead to punishments ranging from fines and “loss of community privileges” all the way to foreclosure and court action.

That’s why Grover Collins, founder of real estate litigation firm Collins Legal, advises (6) that when dealing with an HOA dispute, it’s always best to address concerns with respect and professionalism — and after reviewing HOA guidelines to ensure you understand them correctly. “Constructive conversation,” he adds, “is the foundation of positive interactions, facilitating a better understanding and resolution of issues.”