SCR187

WHEREAS, condominium regimes make up a significant portion of Hawaii's housing supply, providing homes for residents from diverse backgrounds; and

WHEREAS, ensuring the effective governance and management of condominiums is essential for protecting the value and livability of these properties; and

WHEREAS, the Condominium Property Act, Chapter 514B, Hawaii Revised Statutes, governs the establishment, management, and operation of condominium regimes in Hawaii; and

WHEREAS, the Real Estate Commission, an agency administratively attached to the Department of Commerce and Consumer Affairs, is tasked with overseeing compliance with certain portions of the Condominium Property Act, including certain provisions relating to real estate management entities, property managers, and other parties responsible for managing condominiums; and

WHEREAS, while the Real Estate Commission performs critical work, there is growing concern among stakeholders, including condominium owners, residents, and property management professionals, that gaps in oversight and enforcement may allow violations to go unaddressed, undermining trust in condominium governance; and

WHEREAS, issues facing condominium governance include:

(1) Financial practices: Improper or unlawful non‑judicial foreclosures; the imposition of improper fines by real estate management entities that may not align with established bylaws or rules; and the use of attorneys rather than collection agencies to collect unpaid fees, which creates an undue financial burden on homeowners;

(2) Governance and transparency: Selective enforcement of bylaws, rules, or regulations; refusal or failure to provide condominium-related documents, including invoices, contracts, meeting minutes, and other materials necessary for condominium owners to fully understand and participate in the governance of their properties; and the appointment of industry personnel to commissions and boards, creating potential conflicts of interest that may hinder fair enforcement and oversight of condominium governance; and

(3) Mediation and conflict resolution: Lack of or ineffective mediation between associations of apartment owners and homeowners, which may lead to forced civil actions that require homeowners to incur unaffordable legal fees, including the hiring of counsel; and the failure to facilitate fair and equitable dispute resolution processes; and

WHEREAS, there is an urgent need to assess whether the Real Estate Commission's oversight and enforcement efforts are effective in ensuring compliance with Chapter 514B, Hawaii Revised Statutes, and whether more resources, clarity in enforcement practices, or changes to existing laws and rules, including changes in the statutory authority of the Real Estate Commission, are necessary to improve compliance with Chapter 514B, Hawaii Revised Statutes, and protect the public interest; and

WHEREAS, the Auditor is an independent body with the expertise to conduct audits of state agencies and programs to evaluate performance, identify areas for improvement, and recommend corrective actions; now, therefore,

BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2025, the House of Representatives concurring, that the Auditor is urged to conduct an audit of the Real Estate Commission's oversight of real estate management entities under Chapter 514B, Hawaii Revised Statutes, and to make recommendations to improve the effectiveness of the Commission's oversight of real estate management entities; and

BE IT FURTHER RESOLVED that the Auditor is requested to examine the following issues:

(1) The Real Estate Commission's oversight of real estate management entities under Chapter 514B, Hawaii Revised Statutes, including nonjudicial foreclosures, selective enforcement of bylaws and house rules, and violations of covenants, conditions, and restrictions in association bylaws, as well as whether statutory changes are needed to allow the Commission to provide more effective oversight over those matters;

(2) The use of unlicensed contractors for condominium‑related work, including whether enforcement is occurring over the use of unlicensed contractors;

(3) The Real Estate Commission's monitoring and investigative policies and procedures to detect and address violations of Chapter 514B, Hawaii Revised Statutes, including the refusal to provide essential condominium-related documents such as invoices, contracts, and meeting minutes to owners and residents;

(4) The adequacy of penalties or disciplinary actions imposed on persons found by the Real Estate Commission to be in violation of Chapter 514B, Hawaii Revised Statutes, including the deterrent effect of those penalties;

(5) The effectiveness of the Real Estate Commission's efforts to assure that real estate management entities, boards, associations, and homeowners are aware of alternative dispute resolution methods that could reduce the need for costly civil actions and unaffordable legal costs for homeowners;

(6) The imposition of improper fines by real estate management entities and the practices surrounding these fines, and ensuring that fines align with condominium bylaws and applicable laws;

(7) The use of attorneys for the collection of unpaid fees, rather than relying on collection agencies, and the financial impact this practice has on homeowners;

(8) The potential conflicts of interest arising from the appointment of industry personnel to commissions and boards overseeing condominium governance, and the effects of those appointments on the impartiality of enforcement actions;

(9) Recommendations for improving the Real Estate Commission's ability to effectively oversee compliance with Chapter 514B, Hawaii Revised Statutes, including statutory changes necessary for the Commission to facilitate more effective mediation processes, increased transparency in the management of condominium regimes, and the adoption of fair and equitable collection practices; and

(10) The potential benefits of implementing digital tools and platforms to improve public access to association governance documents and enhance the Real Estate Commission's capacity to monitor compliance; and

BE IT FURTHER RESOLVED that the Auditor is requested to submit a report of the Auditor's findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2026; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Auditor, Director of Commerce and Consumer Affairs, and Chairperson of the Real Estate Commission.

	OFFERED BY:	_____________________________

Report Title:

Auditor; DCCA; Real Estate Commission; Real Estate Management Agencies

THE SENATE	S.C.R. NO.	187
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII