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Recodifying Hawaii's Condominium HAWAII COMMUNITY ASSOCIATIONS A PUBLICATION OF COMMUNITY ASSOCIATIONS INSTITUTE - HAWAII CHAPTER Volume 19 Issue 4 August 2004 From Your Recodifying Hawaii’s President Condominium Law Happy “hot” summer! [Act 164, Session Laws of Hawaii (2004)] This summer seems to be the hottest one in years. If your By Gordon M. Arakaki, Esq., Ashford & Wriston newsletter comes late, you After considering the recommendations of the Real Estate Commission and can blame it on me; can’t the testimony of many stakeholders, the 2004 Legislature passed Parts I seem to get anything done in (General Provisions), II (Applicability), and VI (Management of Condominiums) of this heat. the recodification bill/SB 2100 [Act 164 (SLH 2004)]. Parts III (Creation, ABC followup — Your Alteration, and Termination of Condominiums), IV (Registration and Hawaii Chapter of CAI just Administration of Condominiums), and V (Protection of Condominium conducted a successful ABC Purchasers) were reserved for further consideration during the legislative interim Class with over 80 attendees. and next session. The Legislature also requested that the Commission develop The planning and setup of this recommendations for reintegrating HRS 514A Part VI (Sales to Owner- course was arranged by the Occupants) into the new condominium law. coordination and kokua from several property management Why recodify? companies. We thank Certified The 2000 Legislature recognized that “[Hawaii’s] condominium property Management, Hawaiiana regimes law is unorganized, inconsistent, and obsolete in some areas, and Management, Hawaii First, micromanages condominium associations ... [t]he law is also overly regulatory Metropolitan Management, … and ignores technological changes ...” [Act 213 (SLH 2000)] Consequently, and Touchstone Management the Legislature directed the Real Estate Commission to conduct a review of for working together to make Hawaii’s condominium property regimes law and to submit draft legislation to this class a success. Alan the Legislature. Takumi has provided us with The purpose of the recodification/Act 164 (SLH 2004) is “to update, clarify, an article containing more organize, deregulate, and provide for consistency and ease of use of the condo- details on the actual class. minium property regimes law.” [Act 213 (SLH 2000)] Mediation — I was privi- leged to attend the first day of Why should people care? a basic mediation training pro- 25% of Hawaii’s housing units are held in condominium ownership. For gram by the Mediation Center decades, Hawaii has had the highest percentage of condominium housing units of the Pacific, Inc. The in the United States of America.1 Enough said. Mediation Center of the Given the importance of condominiums to the quality of life of Hawaii’s peo- Pacific, Inc. is a not-for-profit ple, the goal of the recodification was to make Hawaii’s condominium property agency whose mission is to law better for people who build, sell, buy, manage, and live in condominiums. provide high quality mediation and dispute resolution ser- What are some of the recodification’s improvements to the vices that are affordable and accessible. They have existed condominium law’s management provisions for twenty-five years and cur- The recodification makes many improvements to help condominium com- rently serve more than 7,000 munities function fairly and efficiently while balancing the rights and responsibili- people annually through their ties of individual unit owners and the association of unit owners as a whole. continued on page 2 continued on page 14 1 Community Associations Factbook, by Clifford J. Treese (1999), at page 18, The law is also important for land use, housing, and growth policy reasons. 2 Recodifying Hawaii’s Condominium Laws continued from page 1 The improvements include: • Significantly better organized condominium management provisions; •Provisions that help avoid the “one-size fits all” (i.e., commercial, residential, big, small, attached, detached) requirements of the current HRS Chapter P.O. Box 976, Honolulu, Hawaii 96808 514A; (808) 488-1133 email: [email protected] • Encouraging owner participation by: • Expressly allowing e-mail notice of association meetings (at the unit Board of Directors owner’s option); President Steve Glanstein,PRP • Expressly allowing mail-in and e-mail voting by directed proxy; and Vice President Surita Savio • Removing the statutory requirement that, in order to be valid, a proxy Insurance Associates must have a “for quorum purposes only” box (which has caused the Secretary Agnes Ringle unnecessary disqualification of proxies and stymied the conduct of asso- Homeowner, Pacific Village ciation business) [Legislature reinserted box only for standard proxy forms Treasurer Mary Bergmann, CPA issued by associations]; Homeowner, Makakilo Hale I • Allowing boards to meet by telephone conference call and video-conferenc- Directors Steve Elisha, Esq. ing (and allowing associations to do so if provided for in the declaration or Elisha Ekimoto Harada bylaws); Ruth Okada, PCAM Aston Hotels & Resorts •Protecting the interests of associations by allowing executive session for attorney-client privileged matters and while negotiating contracts, leases, Boyd Ready and other commercial transactions; Akahi Service Terrance Revere, Esq. • Improved insurance provisions that, among other things, distinguish between Motooka Yamamoto & Revere attached and detached unit condominiums, allow responsible parties to be billed for deductibles, and allow association to require unit owners to carry Ted Walkey, PCAM Hawaiiana Management insurance covering their personal liability (helping to make sure that the right people pay for the right things); Newsletter Committee • Permitting associations to maintain and repair “high risk components” (e.g., Editor Steve Pherigo, PCAM Hawaiiana Management washing machine hoses, water heaters, toilet “O” rings) before they fail (which should help with insurance premiums); Jodee Acoba-Suganuma, PCAM Hawaiiana Management •To avoid harm to an elderly resident’s self or others and to avoid disruption Legal Coordination Jacqueline Thurston, Esq. to the condominium community, a Good Samaritan provision that limits the Motooka Yamamoto & Reveret liability of an association in requesting a functional assessment and recom- mendations for services; The Hawaii Community Associations newsletter is • Giving associations the tools to deal with obsolete provisions in their decla- published for associations leaders and other relat- rations and bylaws by allowing circuit courts to excuse compliance with pro- ed professionals of CAI. Authors are visions in governing documents that unreasonably interfere with associa- encouraged to submit articles for publishing consideration. tion’s ability to manage its property; This publication is designed to provide accurate and authoritative information regarding the • Recognizing subject matter covered. It is issued with the the scope, understanding that the publisher is not engaged complexity, in rendering legal, accounting or other and impor- professional services. tance of improving CAI Hawaii Community Associations newsletter condominium provides an opportunity for information and/or comment. Articles do not necessarily reflect the alternative dis- viewpoint of the Chapter. The reader should not pute resolution act on information contained herein without mechanisms, seeking more specific professional advice. the Legislature continued on page 12 3 What’s All The Paperwork About? Disclosure Documents For Residential Real Estate Transactions By Melanie Labudovski, Hawaii Account Executive, CondoCerts In the real estate industry, the aging agent treats the association to rescind the contract based on the axiom “location, location, location” is like the business that it is and keeps disclosure statement and other pro- being replaced by “disclose, dis- certain basic information available, visions. The Hawaii Association of close, disclose.” In Hawaii, the seller such as: Governing documents, Realtors (“HAR”) has drafted in a residential real estate transaction meeting minutes, annual budgets, Property Information Forms on which is statutorily required to provide a financial reports, collection activity, disclosures are made. Buyers written disclosure statements that litigation and reserve studies. This is require information from sellers, fully and accurately report any mate- information that any informed buyer which is provided on HAR form rial fact, defect or condition, past or would (or should) want to know prior “RR105a”. Sellers get the informa- present, relating to the property that to purchase. Sellers may be charged tion on their unit in these ways: per- may influence the decision of the for the cost of providing information, sonal knowledge, from the associa- buyer (see numbers for disclosure such as administrative and postage tion’s managing agent, from govern- forms below). Anything that could charges. mental agencies and departments negatively impact the value or mar- and from reports prepared for the With new emerging technology, it ketability of the property needs to be seller by third party consultants, that is becoming more and more com- divulged before closing. This leads deal with matters within the scope of mon for sellers and buyers to access to a lot of paperwork for the new the professional’s license or exper- some of this information easily and buyer to review. tise. quickly via the Internet. For exam- However, it is important for a ple, this technology
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