STAND. COM. REP. NO. 2925

Honolulu, Hawaii

RE:    H.B. No. 2045

       H.D. 1

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committee on Commerce and Consumer Protection, to which was referred H.B. No. 2045, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO PLANNED COMMUNITY ASSOCIATIONS,"

begs leave to report as follows:

     The purpose and intent of this measure is to provide a remedy for community associations to recover unpaid assessments for a share of common expenses up to the time of a grant or conveyance of property.

     Your Committee received testimony in support of this measure from the Community Associations Institute Hawaii Chapter.

     Your Committee finds that escrow companies and other interested parties are usually aware of a lien in favor of a condominium association.  However, it is common for escrow companies and other interested parties to handle the sale of a non-condominium, planned community association unit and overlook the collection of the association's unpaid assessments for the unit.  Transfers of units outside of escrow, such as transfers to individual trusts, companies controlled by owners, or family members, may also result in uncured assessment debt owed to community associations.  Your Committee further finds that this measure addresses these concerns by providing a remedy for community associations to recover unpaid assessments for a share of common expenses up to the time of a grant or conveyance of property.  This measure also clarifies the responsibilities of a planned community association, unit owners, the buyer, and escrow officers in a voluntary conveyance and protects the interests of the planned community association and the purchasers of a unit governed by a planned community association.

     Your Committee has heard the concerns about the use of the term "lot" in this measure.  Your Committee notes that although "lot" is not defined under chapter 421J, Hawaii Revised Statutes, section 421J-2, Hawaii Revised Statutes, defines "unit" to mean a physical portion of the planned community designated for separate ownership or occupancy.  Your Committee concludes that the definition of "unit" is sufficient to refer to an individually owned property, whether developed or undeveloped, that is part of a planned community association and finds that references to the undefined term "lot" are unnecessary and should be deleted to avoid ambiguity.

     Accordingly, your Committee has amended this measure by:

     (1)  Removing references to the term "lot";

     (2)  Inserting an effective date of upon approval; and

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

     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 H.B. No. 2045, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2045, 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 and Consumer Protection,

____________________________

ROSALYN H. BAKER, Chair