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STAND. COM. REP. NO. 2489

Honolulu, Hawaii

RE:    S.B. No. 2164

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2010

State of Hawaii

Madam:

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 2164 entitled:

"A BILL FOR AN ACT RELATING TO CONDOMINIUMS,"

begs leave to report as follows:

     The purpose of this measure is to protect purchasers of condominiums by requiring notice of amendments to project documents and requiring a developer to seed the estimated replacement reserve fund with a percentage of the purchase price of the project's residential units. 

     Your Committee received testimony with comments on this measure from the Condominium Review Committee of the Real Estate Commission.  Written testimony presented to the Committee may be reviewed on the Legislature's website.

     Your Committee finds that this measure will protect consumers by increasing transparency in condominium sales and ensuring that condominium purchasers are able to make accurate purchasing decisions.  Your Committee finds that this measure will help prevent condominium foreclosures by ensuring that potential buyers are aware of the actual costs of living in a particular condominium unit. 

     Your Committee has amended this measure by:

     (1)  Deleting the amendment made to section 514B-23, Hawaii Revised Statutes (HRS);

     (2)  Adding a new provision to chapter 514B, HRS, to specify the notice required for changes to the declaration, bylaws, condominium map, public report, or designation of residential units and to clarify that amendments that result in a material change to the project shall trigger a buyer's right of rescission pursuant to section 514B‑87, HRS;

     (3)  Adding a new definition of "capital equipment";

     (4)  Deleting the amendments to section 514B-98, HRS, and replacing the new language in section 514B-41, HRS, in order to make monitoring and enforcement easier;

     (5)  Specifying that the developer shall disclose the existence and cost of capital equipment installed by the developer;

     (6)  Specifying that the developer shall set aside an amount equal to one per cent of the sales price of each residential apartment plus an amount equal to one hundred eighty days of operating capital to be held in escrow until it is transferred to the association of apartment owners on the date of the first meeting of the association; and   

     (7)  Making technical, nonsubstantive changes for the purposes of clarity and accuracy. 

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2164, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2164, S.D. 1, and be placed on the calendar for Third Reading.

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

____________________________

ROSALYN H. BAKER, Chair