Report Title:

Condominiums; Mediation

 

Description:

Specifies dispute resolution parameters related to the interpretation or enforcement of a condominium association's bylaws, house rules, or certain other matters.  Allows parties whose dispute is not resolved by mediation to file for arbitration no sooner than 30 days from the termination date of mediation.  Makes more widely available the option for an administrative hearing.  Requires the real estate commission to submit a written report to the legislature regarding disputes handled through mediation. (SD1)

 

HOUSE OF REPRESENTATIVES

H.B. NO.

3331

TWENTY-FOURTH LEGISLATURE, 2008

H.D. 2

STATE OF HAWAII

S.D. 1

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO CONDOMINIUMS.

 

 

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

 

     SECTION 1.  Section 514A-121.5, Hawaii Revised Statutes, is amended to read as follows:

     "§514A‑121.5  Mediation; condominium management dispute resolution; request for hearing; hearing.  (a)  If an apartment owner or the board of directors requests mediation of a dispute involving the interpretation or enforcement of the association of apartment owners' declaration, bylaws, [or] house rules, or a matter involving section 514A-82(b)(1) to (13), 514A-82.1, 514A‑82.15, 514A-82.3, 514A-82.5, 514A-82.6, 514A-83, 514A-83.1, 514A‑83.2, 514A-83.3, 514A-83.4, 514A-83.5, 514A-84, 514A-84.5, or 514A‑92.5, the other party in the dispute shall be required to participate in mediation.  Upon being selected to provide mediation services, the mediator or the mediation service shall notify the commission in writing of the requested mediation proceeding.  Each party shall be wholly responsible for its own costs of participating in mediation; unless at the end of the mediation process, both parties agree that one party shall pay all or a specified portion of the mediation costs.  If an apartment owner or the board of directors refuses to participate in the mediation of a particular dispute, a court may take this refusal into consideration when awarding expenses, costs, and attorney's fees.

     For the purposes of this subsection, participation in mediation is deemed to have occurred when a party receives written notice of the mediation proceedings from the mediator, whether or not the party chooses to attend the mediation.  The mediation service shall notify the parties in writing of the disposition of the mediation, and shall specify the termination date thereof.  The mediation service or mediator shall notify the commission in writing of the disposition of the mediation proceeding, including failure to reach a disposition and reasons for failure to complete mediation, within a reasonable time after the disposition of the mediation.

     (b)  If a dispute is not resolved by mediation as provided in this section, any party to that mediation may file for arbitration no sooner than thirty days from the termination date of the mediation.

     [(b)] (c)  If a dispute is not resolved by mediation as provided in subsection (a), [in addition to any other legal remedies that may be available,] any party to that [participated in the] mediation may file a request for a hearing with the office of administrative hearings, department of commerce and consumer affairs, as follows:

     (1)  The party requesting the hearing [must] shall be a board of directors of a duly registered association of apartment owners, or an apartment owner that is a member of [a duly registered] an association[;] duly registered pursuant to section 514A-95.1;

     (2)  The request for hearing [must] shall be filed within thirty days from the [final day of mediation;] termination date as specified in writing by the mediation service;

     (3)  The request for hearing [must] shall name one or more parties [that participated] in the mediation as an adverse party and identify the statutory provisions in dispute; and

     (4)  The subject matter of the hearing before the [hearing] hearings officer may include any matter that was the subject of the mediation pursuant to subsection (a).

     [(c)] (d)  For purposes of this section, the office of administrative [hearing] hearings for the department of commerce and consumer affairs shall accept no more than thirty requests for hearing per fiscal year under this section.

     [(d)] (e)  The party requesting the hearing shall pay a filing fee of $25 to the department of commerce and consumer affairs, and the failure to do so shall result in the request for hearing being rejected for filing.  All other parties shall file a response, accompanied by a filing fee of $25 to the department of commerce and consumer affairs, within twenty days of being served with the request for hearing.

     [(e)] (f)  The hearings officers appointed by the director of commerce and consumer affairs pursuant to section 26-9(f) shall have jurisdiction to review any request for hearing filed under subsection (b).  The hearings officers shall have the power to issue subpoenas, administer oaths, hear testimony, find facts, make conclusions of law, and issue written decisions that shall be final and conclusive, unless a party adversely affected by the decision files an appeal in the circuit court under section 91-14.

     [(f)] (g)  Chapter 16-201, Hawaii Administrative Rules, shall govern all proceedings brought under this section.  The burden of proof, including the burden of producing the evidence and the burden of persuasion, shall be upon the party initiating the proceeding.  Proof of a matter shall be by a preponderance of the evidence.

     [(g)] (h)  Hearings to review and make determinations upon any requests for hearings filed under subsection (b) shall commence within sixty days following the receipt of the request for hearing.  The [hearing] hearings officer shall issue written findings of fact, conclusions of law, and an order as expeditiously as practicable after the hearing has been concluded.

     [(h)] (i)  Each party to the hearing shall bear the party's own costs, including attorney's fees, unless otherwise ordered by the [hearing] hearings officer.

     [(i)] (j)  Any party to a proceedings under this section who is aggrieved by a final decision of a hearings officer may apply for judicial review of that decision pursuant to section 91-14; provided that any party seeking judicial review pursuant to section 91-14 shall be responsible for the costs of preparing the record on appeal, including the cost of preparing the transcript of the hearing.

     [(j)] (k)  The department of commerce and consumer affairs may adopt rules and forms, pursuant to chapter 91, to effectuate the purpose of this section and to implement its provisions."

     SECTION 2.  Section 514B-161, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-161  Mediation[.]; condominium management dispute resolution; request for hearing; hearing.  (a)  If [an apartment] a unit owner or the board of directors requests mediation of a dispute involving the interpretation or enforcement of the [association of apartment owners'] association's declaration, bylaws, or house rules, or a matter involving part VI, the other party in the dispute shall be required to participate in mediation.  Upon being selected to provide mediation services, the mediator or the mediation service shall notify the commission in writing of the requested mediation proceeding.  Each party shall be wholly responsible for its own costs of participating in mediation[,]; unless at the end of the mediation process, both parties agree that one party shall pay all or a specified portion of the mediation costs.  If a [party] unit owner or the board of directors refuses to participate in the mediation of a particular dispute, a court may take this refusal into consideration when awarding expenses, costs, and attorneys' fees.

     For the purposes of this subsection, participation in mediation is deemed to have occurred when a party receives written notice of the mediation proceedings from the mediator, whether or not the party chooses to attend the mediation.  The mediator or mediation service shall notify the parties in writing of the disposition of the mediation, and shall specify the termination date thereof.  The mediation service or mediator shall notify the commission in writing of the disposition of the mediation proceeding, including failure to reach a disposition and reasons for failure to complete mediation, within a reasonable time after the disposition of the mediation.

     [(b)  Nothing in subsection (a) shall be interpreted to mandate the mediation of any dispute involving:

     (1)  Actions seeking equitable relief involving threatened property damage or the health or safety of association members or any other person;

     (2)  Actions to collect assessments;

     (3)  Personal injury claims; or

     (4)  Actions against an association, a board, or one or more directors, officers, agents, employees, or other persons for amounts in excess of $2,500 if insurance coverage under a policy of insurance procured by the association or its board would be unavailable for defense or judgment because mediation was pursued.

     (c)  If any mediation under this section is not completed within two months from commencement, no further mediation shall be required unless agreed to by the parties.]

     (b)  If a dispute is not resolved by mediation as provided in this section, any party to that mediation may file for arbitration no sooner than thirty days from the termination date of the mediation.

     (c)  If a dispute is not resolved by mediation as provided in subsection (a), any party to that mediation may file a request for a hearing with the office of administrative hearings of the department of commerce and consumer affairs, as follows:

     (1)  The party requesting the hearing shall be a board of directors of a duly registered association or a unit owner that is a member of a duly registered association pursuant to section 514B-103;

     (2)  The request for hearing shall be filed within thirty days from the termination date as specified in writing by the mediator;

     (3)  The request for hearing shall name one or more parties in the mediation as an adverse party and identify the statutory provisions in dispute; and

     (4)  The subject matter of the hearing before the hearings officer may include any matter that was the subject of the mediation pursuant to subsection (a).

     (d)  For purposes of this section, the office of administrative hearings of the department of commerce and consumer affairs shall accept no more than thirty requests for hearing per fiscal year under this section.

     (e)  The party requesting the hearing shall pay a filing fee of $25 to the department of commerce and consumer affairs, and the failure to do so shall result in the request for hearing being rejected for filing.  All other parties shall file a response, accompanied by a filing fee of $25 to the department of commerce and consumer affairs, within twenty days of being served with the request for hearing.

     (f)  The hearings officers appointed by the director of commerce and consumer affairs pursuant to section 26-9(f) shall have jurisdiction to review any request for hearing filed under subsection (b).  The hearings officers shall have the power to issue subpoenas, administer oaths, hear testimony, find facts, make conclusions of law, and issue written decisions that shall be final and conclusive, unless a party adversely affected by the decision files an appeal in the circuit court under section 91-14.

     (g)  The department of commerce and consumer affairs' rules of practice and procedure shall govern all proceedings brought under this section.  The burden of proof, including the burden of producing the evidence and the burden of persuasion, shall be upon the party initiating the proceeding.  Proof of a matter shall be by a preponderance of the evidence.

     (h)  Hearings to review and make determinations upon any requests for hearings filed under subsection (b) shall commence within sixty days following the receipt of the request for hearing.  The hearings officer shall issue written findings of fact, conclusions of law, and an order as expeditiously as practicable after the hearing has been concluded.

     (i)  Each party to the hearing shall bear the party's own costs, including attorney's fees, unless otherwise ordered by the hearings officer.

     (j)  Any party to a proceeding under this section who is aggrieved by a final decision of a hearings officer may apply for judicial review of that decision pursuant to section 91-14; provided that any party seeking judicial review pursuant to section 91-14 shall be responsible for the costs of preparing the record on appeal, including the cost of preparing the transcript of the hearing.

     (k)  The department of commerce and consumer affairs may adopt rules and forms, pursuant to chapter 91, to effectuate the purpose of this section and to implement its provisions."

     SECTION 3.  The real estate commission shall submit to the legislature a written report that includes the following information:

     (1)  The number of disputes under sections 514A-121.5 and 514B-161, Hawaii Revised Statutes, in which a mediation service or mediator is selected to provide mediation services to resolve disputes;

     (2)  The outcomes and disposition of the mediation proceedings pursuant to sections 514A-121.5 and 514B‑161, Hawaii Revised Statutes, including any failures to reach a disposition and the reasons for the failure;

     (3)  A determination of the effectiveness and impact of mediation proceedings to resolve disputes pursuant to sections 514A-121.5 and 514B-161, Hawaii Revised Statutes, and any recommendations to improve the mediation option to resolve disputes involving the interpretation or enforcement of association declaration, bylaws, or house rules; and

     (4)  Any proposed legislation.

The real estate commission shall submit the written report to the legislature no later than twenty days prior to the 2009 regular session.

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval; provided that the amendments to sections 514A-121.5(b) to (j), Hawaii Revised Statutes, in section 2 of this Act shall be repealed on June 30, 2009.