STAND. COM. REP. 2443

Honolulu, Hawaii

, 2004

RE: S.B. No. 2210

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2210 entitled:

"A BILL FOR AN ACT RELATING TO CONDOMINIUMS,"

begs leave to report as follows:

The purpose of this measure is to recodify the laws governing the condominium property regimes.

Testimony in support of the measure was received from the following: Real Estate Commission, Hawaii Association of Realtors, Mortgage Bankers Association of Hawaii, American Resort Development Association, Hawaii Council of Associations of Apartment Owners, Association of Apartment Owners of Royal Kahili, Armstrong Properties, Ltd., Neeley and Anderson LLP, Community Associations Institute, Armstrong Builders, Ltd., Hawaii Developer's Council, Association of Apartment Owners of Makani Kai Marina, Castle and Cooke Homes Hawaii, Inc., Association of Apartment Owners of Nuuanu Parkside, Association of Apartment Owners of Haleakala Gardens, Real Property and Financial Services Section of the Hawaii State Bar Association, Association of Apartment Owners of Makakilo Hale I, A & B Properties, Inc., Gentry Homes, Ltd., and several individuals. Numerous condominium owners testified in opposition to the measure. The Hawaii Inspection Group, Inc., Hawaii's Thousand Friends, and Hawaii Independent Condominium and Cooperative Owners presented comments on the measure.

Act 213, Session Laws of Hawaii 2000, directed the Real Estate Commission to "review Hawaii's condominium property regimes law, make findings and formulate recommendations for recodification of the law, and develop draft legislation consistent with its review and recommendations." This measure is a result of that mandate.

Among other things, this measure:

(1) Updates, clarifies, organizes, and deregulates the condominium laws;

(2) Simplifies the disclosure process for purchasers and developers;

(3) Establishes additional disclosure requirements for condominiums projects built on agriculturally designated lands;

(4) Clarifies the circumstances under which a condominium project's common elements may undergo a change in use;

(5) Repeals the owner-occupant presale notice requirement;

(6) Establishes new requirements relating to "aging-in-place" issues, including additional disclosures for projects containing assisted living facilities;

(7) Clarifies the powers, duties, and limitations of condominium associations and boards;

(8) Authorizes mail-in and Internet voting by directed proxy;

(9) Authorizes condominium associations to require maintenance of high-risk components such as water heaters; and

    (10) Allows any affected party, and not just apartment owners or the condominium board, to request the mediation of a dispute.

Your Committee wishes to commend and acknowledge the efforts of all of the parties involved in the difficult and time-consuming task of reviewing the State's condominium laws and developing a comprehensive new system of laws. These parties include the Real Estate Commission, the staff of the Real Estate Branch of the Department of Commerce and Consumer Affairs, the Blue Ribbon Advisory Committee, and the numerous organizations and individuals who participated in the public hearings on this measure and who otherwise contributed to the process. All of their efforts have resulted in the development of a comprehensive set of laws that clarifies the rights of developers, lenders, owners, buyers, condominium boards, and condominium associations, and streamlines the regulatory process.

Your Committee finds that several condominium owners have expressed concerns about proposed law, including concerns that under the proposed measure:

(1) Condominium boards by resolution, and without authorization from owners, may mete out unlimited fines for violations of the house rules and bylaws;

(2) There is no provision prohibiting the assessment of charges against an owner for the provision of information or documents to which the owner is entitled to receive;

(3) The fiduciary duty of board members to all owners has been eliminated;

(4) The board's authority to fill membership vacancies only on an interim basis is not clarified;

(5) The minimum number of directors that must sit on a board has been reduced; and

(6) Proxies may no longer be submitted for quorum purposes only.

Your Committee acknowledges that this measure remains a work-in-progress and that continued discussion between the parties is necessary in order to address the above and other unresolved issues. Therefore, your Committee has inserted into the measure a delayed effective date, and encourages all stakeholders to continue their dialogue on issues of concern.

Additionally, your Committee has amended this measure by:

(1) Deleting provisions relating to the development of an alternative dispute resolution since this issue is being addressed in another measure pending before the Legislature; and

(2) Making numerous technical changes for purposes of formatting, clarity, consistency, 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 S.B. No. 2210, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2210, S.D. 1, and be referred to the Committee on Ways and Means.

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

____________________________

RON MENOR, Chair