STAND. COM. REP. NO. 137

Honolulu, Hawaii

RE:    S.B. No. 92

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2011

State of Hawaii

Sir:

     Your Committees on Commerce and Consumer Protection and Judiciary and Labor, to which was referred S.B. No. 92 entitled:

"A BILL FOR AN ACT RELATING TO CONDOMINIUM DISPUTE RESOLUTION,"

beg leave to report as follows:

     The purpose and intent of this measure is to facilitate dispute resolution for matters involving condominium associations by mandating mediation for certain disputes arising between condominium owners and condominium associations and repealing the existing process that allows for mediation, arbitration, administrative hearing, and litigation to resolve certain condominium disputes.

     Your Committees received testimony in support of this measure from the Hawaii Chapter of the Community Associations Institute, Hawaii First, Hawaii Council of Associations of Apartment Owners, Pearl Regency Home Owners Association, Certified Management, Mililani Town Association, Wailuna AOAO, Ke Noho Kai Community Association, and twenty private individuals.  Your Committees received testimony in opposition to this measure from one private individual.  Your Committees received comments on this measure from the Real Estate Commission.

     Your Committees find that mediation is frequently the most appropriate means of resolving disputes between parties where it is important to preserve an on-going relationship after the dispute is over, such as in the case of condominium owners and condominium associations.  Your Committees note that under current law, the condo court system created by section 514B-161, Hawaii Revised Statutes, includes a mediation component that constitutes the first step in a dispute resolution process that also includes a choice between binding arbitration or an administrative hearing with the right of judicial appeal.  Your Committees also find that these subsequent avenues of relief are important mechanisms for avoiding a costly court process in many disputes and, therefore, should be preserved.

     Your Committees have amended this measure by:

     (1)  Clarifying that the remedies available under section 514B-146(d) remain available for disputes relating to the collection of assessments;

     (2)  Deleting references to requirements for standards of participation in mediation;

     (3)  Deleting the requirement that mediation take place with an entity that contracts with the Real Estate Commission; 

     (4)  Deleting amendments to the Condominium Education Trust Fund;

     (5)  Preserving provisions that authorize arbitration, administrative hearing, and judicial appeal in the event that mediation is unsuccessful;

     (6)  Deferring its effective date to July 1, 2112, for the purposes of facilitating further discussion on this measure; and

     (7)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Commerce and Consumer Protection and Judiciary and Labor that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 92, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 92, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Commerce and Consumer Protection and Judiciary and Labor,

____________________________ CLAYTON HEE, Chair

____________________________ ROSALYN H. BAKER, Chair