STAND. COM. REP. NO.570
Honolulu, Hawaii
, 2001
RE: H.B. No. 1231
H.D. 1
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-First State Legislature
Regular Session of 2001
State of Hawaii
Sir:
Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 1231 entitled:
"A BILL FOR AN ACT RELATING TO CONDOMINIUMS,"
begs leave to report as follows:
The purpose of this bill is to require mediation between an apartment owner and the condominium's Board of Directors (Board) for disputes involving:
(1) The interpretation or enforcement of the Association of Apartment Owners' (AOAO) bylaws or house rules;
(2) Section 514A-82, Hawaii Revised Statutes (HRS), contents of the bylaws;
(3) Section 514A-83, HRS, voting rights of an agreement of sale purchaser; or
(4) Section 514A-84, HRS, management and contracts of a managing agent.
A concerned citizen submitted testimony in support of this bill. The Community Associations Institute submitted testimony in support of the intent of this bill. Hawaii Independent Condominium and Cooperative Owners and the Hawaii Council of Associations of Apartment Owners submitted testimony in support of the intent of this bill with proposed amendments. The Real Estate Commission of the Department of Commerce and Consumer Affairs, Mediation Center of the Pacific, Inc., and a concerned citizen submitted testimony in opposition to this bill.
Your Committee finds that mediation is an appropriate first step in the resolution of disputes between an apartment owner and the Board. It is a relatively inexpensive alternative to the time-consuming and often expensive judicial dispute resolution process, where the Board may use owners' money against the individual owner.
Your Committee further finds that under normal circumstances, mediation is a voluntary process where both sides agree to negotiate in good faith, with the understanding that all negotiations are confidential and cannot be revealed in arbitration or litigation. The bill as drafted, however, challenges these fundamental principles.
Your Committee has amended this measure by:
(1) Requiring disputes involving the interpretation or enforcement of the AOAO's bylaws or house rules to be subject to mediation;
(2) Deleting the requirement that the Real Estate Commission approve the mediation entity;
(3) Deleting the requirement that the entity conducting the mediation file a report if the dispute is not resolved in mediation;
(4) Adding the condition that if a party refuses to participate in mediation, it shall be precluded from being awarded its attorney's fees and costs in any subsequent mediation, arbitration, or legal action concerning that dispute; and
(5) Making technical, nonsubstantive amendments for purposes of clarity, consistency, and style.
As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1231, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1231, H.D. 1, and be placed on the calendar for Third Reading.
Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,
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____________________________ KENNETH T. HIRAKI, Chair |