SB1197.DOC

SECTION 1. The legislature finds that a condominium's board of directors acts on behalf of the association of apartment owners of a condominium, except as otherwise provided in the declaration, bylaws, or by statute. An association's board has broad powers that impact condominium owners, including: adopting and amending budgets for revenues, expenditures, and reserves; hiring and discharging managing agents and other independent contractors; instituting, defending, or intervening in a civil or administrative action; regulating the use, maintenance, repair, replacement, or modification of common elements; imposing and receiving payments, fees, or charges; imposing penalties as specified by statute; and levying fines for violations of the association's declaration, bylaws, or rules.

The legislature further finds that managing agents and resident managers, also known as community association managers, are the front line advisors to a condominium's board of directors. Among other requirements, existing law imposes a fiduciary duty upon managing agents and requires managing agents to be licensed real estate brokers. However, resident managers are not regulated under existing law.

The legislature notes that because managing agents and resident managers are the principal advisors to condominium associations on essential association matters such as elections, budget and financial matters, contracts, personnel issues, and maintenance and replacement of equipment, it is critical that boards have qualified people to serve in these roles. Establishing licensure requirements for resident managers will meet this need.

Accordingly, the purpose of this Act is to require resident managers who will engage in community association management to be licensed by the department of commerce and consumer affairs prior to engaging in community association management on behalf of a condominium association.

SECTION 2. Chapter 514B, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§514B- Resident managers; licensure required. (a) No person or entity shall practice, offer to engage, advertise, or announce oneself as qualified to engage in community association management without being licensed by the department of commerce and consumer affairs as a resident manager.

(b) The department shall develop a licensing program for resident managers, including requirements for professional practice standards, liability, continuing education, fees, disciplinary actions, and penalties.

SECTION 3. Section 514B-3, Hawaii Revised Statutes, is amended as follows:

1. By adding a new definition to be appropriately inserted and to read:

""Community association management" means any of the following practices that require substantial specialized knowledge, judgment, or managerial skill when performed by a resident manager on behalf of an association:

(1) Controlling or disbursing funds of an association;

(2) Preparing budgets or other financial documents for an association;

(3) Assisting in the noticing or conduct of association meetings;

(4) Determining or collecting amounts due to the association;

(5) Calculating the votes required for a quorum;

(6) Completing forms related to the management of an association;

(7) Drafting meeting notices and agendas;

(8) Negotiating contracts subject to approval by an association;

(9) Coordinating or performing maintenance and other related routine services involved in the operation of an association;

(10) Complying with the association's governing documents; and

(11) Other related duties.

"Community association management" shall not include the activities of a person who performs clerical or ministerial functions under the direct supervision and control of a licensed resident manager or who is charged only with performing the maintenance of an association."

2. By amending the definition of "resident manager" to read:

""Resident manager" means any person retained as an employee by the association to [~~manage, on-site, the operation of the property.~~] conduct on-site community association management for the property."

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.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1197
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII