STAND. COM. REP. NO.1506

Honolulu, Hawaii

, 2001

RE: H.B. No. 1231

H.D. 1

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 1231, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO CONDOMINIUMS,"

begs leave to report as follows:

The purpose of this measure is to require the mediation of disputes between a condominium owner and the board of directors of an association of apartment owners (AOAO).

Your Committee received testimony in support of this measure from the Hawaii Independent Condominium and Cooperative Owners, Hawaii Council of Associations of Apartment Owners, Yacht Harbor Towers, and four individuals. Opposing testimony was received from the Real Estate Commission and Center for Alternative Dispute Resolution. The Community Associations Institute expressed concerns about the measure.

Your Committee finds that mediation is an effective method of resolving disputes between condominium owners, managing agents, and AOAOs, and less costly than settling disputes through litigation. This measure requires the good faith mediation of disputes arising out of the interpretation or enforcement of an AOAO's bylaws or house rules, or relating to certain statutory requirements, and precludes the recovery of attorney's fees and costs by a party that refused to mediate, in a subsequent judicial proceeding resolving the matter.

Concerns were expressed to your Committee regarding the scope of matters subject to mandatory mediation, the difficulty of enforcing a subjective "good faith" standard, and the strict preclusion of an award of fees and costs to a party refusing to mediate. Therefore, your Committee has amended this measure:

(1) To include within the scope of matters subject to mandatory mediation:

(A) Disputes arising out of the interpretation or enforcement of an AOAO's declaration; and

(B) Disputes relating to statutory requirements for an AOAO's bylaws, employment security checks, board representation for mixed use properties, borrowing of money by the board, pets, a purchaser's right to vote, board meetings, proxies, membership lists, meeting minutes, AOAO documents, and management contracts;

(2) By eliminating the "good faith" requirement for mediation;

(3) To make a refusal to mediate a factor for consideration by a court in awarding fees and costs, but not a bar to an award;

(4) To include a reference to section 514A-94, Hawaii Revised Statutes, relating to an award of fees and costs in disputes between owners and AOAOs; and

(5) By making technical, nonsubstantive amendments for purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1231, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1231, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

 

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,

____________________________

RON MENOR, Chair