REPORT TITLE:
Condominiums


DESCRIPTION:
Authorizes the association of apartment owners to withhold common
privileges to owner-occupied units that are delinquent in paying
their share of common expenses.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.647        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO CONDOMINIUM PROPERTY REGIMES.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Section 514A-90, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "§514A-90  Priority of lien.(a)  All sums assessed by the
 
 4 association of apartment owners but unpaid for the share of the
 
 5 common expenses chargeable to any apartment constitute a lien on
 
 6 the apartment prior to all other liens, except (1) liens for
 
 7 taxes and assessments lawfully imposed by governmental authority
 
 8 against the apartment, and (2) all sums unpaid on any mortgage of
 
 9 record which was recorded prior to the recordation of a notice of
 
10 a lien by the association of apartment owners, and costs and
 
11 expenses including attorneys' fees provided in such mortgages.
 
12 The lien of the association of apartment owners may be foreclosed
 
13 by action by the [manager] managing agent or board of directors,
 
14 acting on behalf of the association of apartment owners, in like
 
15 manner as a mortgage of real property.  In any such foreclosure
 
16 the apartment owner shall be required to pay a reasonable rental
 
17 for the apartment, if so provided in the bylaws, and the
 
18 plaintiff in the foreclosure shall be entitled to the appointment
 
19 of a receiver to collect the same.  The manager or board of
 

 
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 1 directors, acting on behalf of the association of apartment
 
 2 owners, [may,] unless prohibited by the declaration, may bid on
 
 3 the apartment at foreclosure sale, and acquire and hold, lease,
 
 4 mortgage, and convey the same.  Action to recover a money
 
 5 judgment for unpaid common expenses shall be maintainable without
 
 6 foreclosing or waiving the lien securing the same.
 
 7      (b)  Where the mortgagee of a mortgage of record or other
 
 8 purchaser of an apartment obtains title to the apartment as a
 
 9 result of foreclosure of the mortgage, the acquirer of title and
 
10 the acquirer's successors and assigns shall not be liable for the
 
11 share of the common expenses or assessments by the association of
 
12 apartment owners chargeable to the apartment which became due
 
13 prior to the acquisition of title to the apartment by the
 
14 acquirer.  The unpaid share of common expenses or assessments
 
15 shall be deemed to be common expenses collectible from all of the
 
16 apartment owners, including the acquirer and the acquirer's
 
17 successors and assigns.
 
18      (c)  No apartment owner shall withhold any assessment
 
19 claimed by the association.  An apartment owner who disputes the
 
20 amount of an assessment may request a written statement clearly
 
21 indicating:
 
22      (1)  The amount of common expenses included in the
 
23           assessment, including the due date of each amount
 

 
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                                     H.B. NO.647        
                                                        
                                                        

 
 1           claimed;
 
 2      (2)  The amount of any penalty, late fee, lien filing fee,
 
 3           and any other charge included in the assessment;
 
 4      (3)  The amount of attorneys' fees and costs, if any,
 
 5           included in the assessment;
 
 6      (4)  That under Hawaii law, an apartment owner has no right
 
 7           to withhold assessments for any reason;
 
 8      (5)  That an apartment owner has a right to demand mediation
 
 9           or arbitration to resolve disputes about the amount or
 
10           validity of an association's assessment, provided the
 
11           apartment owner immediately pays the assessment in full
 
12           and keeps assessments current; and
 
13      (6)  That payment in full of the assessment does not prevent
 
14           the owner from contesting the assessment or receiving a
 
15           refund of amounts not owed.
 
16 Nothing in this section shall limit the rights of an owner to the
 
17 protection of all fair debt collection procedures mandated under
 
18 federal and state law.
 
19      (d)  An apartment owner who pays an association the full
 
20 amount claimed by the association may file in small claims court
 
21 or require the association to mediate to resolve any disputes
 
22 concerning the amount or validity of the association's claim.  If
 
23 the apartment owner and the association are unable to resolve the
 

 
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                                     H.B. NO.647        
                                                        
                                                        

 
 1 dispute through mediation, either party may file for arbitration
 
 2 under part VII [of this chapter]; provided that an apartment
 
 3 owner may only file for arbitration if all amounts claimed by the
 
 4 association are paid in full on or before the date of filing.  If
 
 5 the apartment owner fails to keep all association assessments
 
 6 current during the arbitration, the association may ask the
 
 7 arbitrator to temporarily suspend the arbitration proceedings.
 
 8 If the apartment owner pays all association assessments within
 
 9 thirty days of the date of suspension, the apartment owner may
 
10 ask the arbitrator to recommence the arbitration proceedings.  If
 
11 the owner fails to pay all association assessments by the end of
 
12 the thirty-day period, the association may ask the arbitrator to
 
13 dismiss the arbitration proceedings.  The apartment owner shall
 
14 be entitled to a refund of any amounts paid to the association
 
15 which are not owed.
 
16      (e)  As an alternative to foreclosure proceedings under
 
17 subsection (a) where an apartment is owner-occupied, the
 
18 association of apartment owners may authorize its managing agent
 
19 or board of directors to, after thirty days' written notice to
 
20 the apartment owner and the apartment's first mortgagee of the
 
21 nonpayment of the unit's share of the common expenses, terminate
 
22 the delinquent unit's access to the common elements and cease
 
23 supplying a delinquent unit with any and all services normally
 

 
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                                     H.B. NO.647        
                                                        
                                                        

 
 1 supplied or paid for by the association of apartment owners.  Any
 
 2 terminated services and privileges shall be restored upon payment
 
 3 of all assessments."
 
 4      SECTION 2.  Statutory material to be repealed is bracketed.
 
 5 New statutory material is underscored.
 
 6      SECTION 3.  This Act shall take effect upon its approval.
 
 7 
 
 8                           INTRODUCED BY:  _______________________