STAND. COM. REP. NO. 3659

Honolulu, Hawaii

RE: H.B. No. 2562

H.D. 2

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2020

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Health, to which was referred H.B. No. 2562, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO COMMON INTEREST COMMUNITIES,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Specify the manner in which a member of a board of a planned community association or condominium association may resign; and

(2) Limit a planned community association board's ability to fill a vacancy.

Your Committee received testimony in support of this measure from the Hawaii Chapter of the Community Associations Institute; Hawai‘i State Association of Parliamentarians; Associa; Case Lombardi & Pettit, a Law Corporation; Law Offices of Mark K. McKeller, LLLC; and nine individuals. Your Committee received testimony in opposition to this measure from one individual.

Your Committee finds that existing law governing common interest communities requires clarification to avoid further disputes. This measure seeks to clarify and resolve several issues that have occurred in condominium and planned community association meetings concerning resignations and the filling of vacancies.

Your Committee has heard the concerns raised in testimony that this measure, as written, could allow a board whose majority habitually disagrees with one board member to simply state that the board member gave their resignation orally and there would be no way to prove otherwise. Further, requiring written statements of resignation to be signed by the member is not an unreasonable burden to better protect board members. Therefore, amendments to this measure are necessary to address these concerns.

Your Committee has amended this measure by:

(1) Clarifying that, for condominium associations, a member of the board of directors may resign from the board at any time by delivering a signed written notice of resignation to the association's property manager, board of directors, president, or secretary;

(2) Clarifying that a member of the board may resign from the board by communicating the notice of resignation by electronic mail to certain persons, provided that an electronic signature is attached;

(3) Providing a definition for "electronic signature";

(4) Removing language that would have allowed a board member of a condominium association board of directors to provide oral notice of resignation during a meeting; and

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

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2562, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2562, H.D. 2, S.D. 1, and be referred to your Committee on Judiciary.

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

________________________________

ROSALYN H. BAKER, Chair