HB2034

SECTION 1. Unlike condominium property regimes, homeowners' associations in Hawaii are not governed by statutory provisions of the Hawaii Revised Statutes that address issues such as dispute resolution, education of board members, maintenance of common elements, handling of fees collected from association members, and numerous administrative tasks. Homeowners and homeowners' associations must often rely upon case law and litigation in court to settle various types of disputes.

In the county of Hawaii, a number of subdivisions were built without adequate infrastructure such as utilities, fire hydrants, and paved roads. This resulted in the creation of numerous homeowners' associations organized by residents to try to collect fees and disburse funds to pay for the creation, repair, and maintenance of basic infrastructure and common areas of the subdivision, as well as address other issues facing the subdivision. However, the creation of these mostly volunteer organizations had unintended consequences. Many of these organizations were administered by individuals with little to no experience, training, skill, or education in subjects such as the administration of meetings, dispute resolution, procurement of services, and the maintenance and repair of infrastructure such as roads and utilities. As a result, disputes between homeowners and homeowners' associations began to arise with the majority of disputes rooted in issues concerning infrastructure within the subject subdivision, the administration of the homeowners' association, and the collection and disbursement of fees by the homeowners' association.

The legislature finds that disputes between homeowners and homeowners' associations often involve neighbors, at times involve law enforcement, attorneys, and the courts, and have depleted resources in legal fees that are meant for common ownership maintenance. Additionally, a single homeowner may not have the resources to dispute actions by a homeowners' association board member or the homeowners' association board itself. As such, the development of an alternative dispute resolution mechanism to resolve disputes between a homeowner and homeowners' association will be beneficial for all parties involved.

Accordingly, the purpose of this Act is to establish a five-year homeowners' association dispute mediation pilot project within the office of the ombudsman to provide an alternative dispute resolution mechanism to address disputes between individual homeowners and a homeowners' association in a county with a population greater than 170,000 but less than 200,000.

SECTION 2. Section 96-5, Hawaii Revised Statutes, is amended to read as follows:

"§96-5 Jurisdiction. The ombudsman has jurisdiction to investigate the administrative acts of agencies and the ombudsman may exercise the ombudsman's powers without regard to the finality of any administrative act[.]; provided that the ombudsman shall also have jurisdiction and may exercise the ombudsman's powers for the establishment and administration of the five-year homeowners' association dispute mediation pilot project established by Act , Session Laws of Hawaii 2018."

SECTION 3. (a) There is established within the office of the ombudsman a five-year homeowners' association dispute mediation pilot project to provide an alternative dispute resolution mechanism to address disputes between individual homeowners and a homeowners' association involving the interpretation or enforcement of the declaration, bylaws, or rules of the homeowners' association. The pilot project shall be implemented, and shall only be applicable to disputes between individual homeowners and a homeowners' association, in a county with a population greater than 170,000 but less than 200,000.

(b) The office of the ombudsman shall develop policies and procedures for the homeowners' association dispute mediation pilot project. At a minimum, the homeowners' association dispute mediation pilot project policies and procedures shall include policies and procedures to:

(1) Receive, process, and investigate any complaints regarding disputes between individual homeowners and a homeowners' association;

(2) Determine whether the dispute warrants mediation, including the methodology used to make this determination, or whether the parties involved need to seek redress through the judicial system;

(3) Report any findings made in any investigation conducted regarding a dispute;

(4) Make inquiries and obtain information in conducting an investigation;

(5) Maintain confidentiality in respect to all matters and the identities of the parties or witnesses except so far as disclosures may be necessary to enable the office of the ombudsman to carry out the office of the ombudsman's duties and to support the office of the ombudsman's recommendations;

(6) Provide notification to a complainant and the homeowners' association upon initiation and conclusion of an investigation;

(7) Provide notification to a complainant and the homeowners' association of the availability of a report of the investigation;

(8) Address situations where a party involved in the dispute refuses to participate in mediation of a particular dispute;

(9) Address situations where mediation may not be warranted;

(10) Determine the timeframe in which mediation shall be completed and the process for obtaining any extensions to this timeframe; and

(11) Determine the responsibility for the costs of providing mediation services.

(c) The office of the ombudsman shall adopt rules in accordance with chapter 91, Hawaii Revised Statutes, necessary to carry out the purposes of this section.

(d) For the purposes of this section, "homeowners' association" means an association in which the voting membership is made up of ten or more parcel owners or their proxies, or a combination thereof and assessments may be imposed that, if unpaid, may become a lien on the parcel.

(e) The office of the ombudsman shall submit a progress report of its findings and recommendations regarding the development and implementation of the homeowners' association dispute mediation pilot project to the legislature no later than twenty days prior to the convening of the regular sessions of 2019, 2020, 2021,and 2022, and shall submit a final report of its findings and recommendations, including any proposed legislation, to the legislature no later than twenty days prior to the convening of the regular session of 2023.

(f) The homeowners' association dispute mediation pilot project shall cease to exist on June 30, 2023.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2018-2019 to establish the homeowners' association dispute mediation pilot project.

The sum appropriated shall be expended by the office of the ombudsman for the purposes of this Act.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2018, and shall be repealed on June 30, 2023, and section 96-5, Hawaii Revised Statutes, shall be reenacted in the form in which it read on June 30, 2018.

INTRODUCED BY:

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HOUSE OF REPRESENTATIVES	H.B. NO.	2034
TWENTY-NINTH LEGISLATURE, 2018
STATE OF HAWAII