Hawaii Condo Law

I’m often asked what should be included in the meeting minutes. My wife, Lois Ekimoto is a Profession Registered Parliamentarian as well as a PCAM. She provides this list of items to be included in the minutes pursuant to Robert’s Rules of Order, Newly Revised (10th Edition):

1. The name of the organization (name of the association);
2. The type of meeting (e.g., regular or special board meeting);
3. Date and time of the meeting and the place, if it is not always the same;
4. The presence of the president and secretary, or their substitute if they are absent. Note: meetings covered by HRS Chapters 514A (condominiums), 421I (cooperatives) and 421J (planned communities) have special legal requirements concerning the recorded vote of each board member;
5. Whether the minutes of the preceding meeting were approved, and how (e.g., adopted as written, or as corrected);
6. All main motions, including the exact wording of the motion as it was finally adopted and whether it was adopted, lost, or temporarily set aside Note: meetings covered by HRS Chapters 514A (condominiums), 421I (cooperatives) and 421J (planned communities) have special legal requirements concerning the recorded vote of each board member);
7. Notices of motions (This does not usually apply to association meetings);
8. Points of order and appeals, whether sustained or lost and the chair’s ruling and reasons for the ruling; and
9. The time of adjournment.

Lois also lists the items not included in the minutes according to Robert’s:

1. The name of the person who seconded the motion;
2. Points of information and parliamentary inquires;
3. Rational for making the motion;
4. Discussion or debate about the motion;
5. Withdrawn motions;
6. Secondary motions (e.g. recess, amend, limit debate, etc.), unless they are necessary for clarity;
7. Copies or summaries of reports (e.g. from officers, managing agents, auditors, etc.); and
8. Copies or summaries of speeches and reports (although they can be referenced — for example: Mr. Smith presented a report on parking security.

Remember that the purpose of minutes is not to record what was said at the meeting, but only the major decisions. These lists are generally applicable to both Board minutes and Association minutes. As Lois notes in items 4 & 6, under Hawaii condominium law, the vote of each director is required to be placed in the board minutes. Although the statute requires the same information for association meetings, it is unlikely that a court would rule that the statute overrides the secret ballot requirements in Bylaws. The Hawaii Planned Community Association Act and the Hawaii Residential Cooperative Act also require that the vote of board members be included in the board minutes.

The Sunday Star-Bulletin reported that “Kauai Mayor Brian Baptiste wants to ban gated communities as part of his plan to build stronger communities on the Garden Island.” Mayor Baptiste said that he will be submitting a bill to the Kauai County council that would ban future gated communities. The Star-Bulletin reports that there are only two gated communities on Kauai. Mayor Baptiste said, “I envision our island with integrated communities where people of various socio-economic levels and cultures can live together without gates or barriers that hinder access.”

Government encourages community associations because associations allows government to shift certain costs and responsibilities to the communities. Counties typically require that developers build parks for the community and require the community associations to maintain them. This not only reduces the need for the county to build more parks, it eliminates the requirement that the county maintain them. The county does not provide trash services to many community associations even though there is no reduction in the property tax rate for associations. The shift of other costs and responsibilities are less overt. Many community associations provide security and enforcement of activities that might otherwise become police matters, thereby reducing the demand on overworked police officers.

While I’m not sure that gated communities promote the general good of the community at large, it appears to me unfair that the government would seek to ban them while at the same time shifting these costs and responsibilities to community associations. Moreover, why is it permissible for an owner of a single-family home to put up a fence and gate, but impermissible for a community to do the same thing? After all, the park located on private property that is paid for and maintained by the community association should be protected from trespass just like the swing set in my back yard. Rather than banning gated communities, it would be better to address some of the inequities I mentioned and address the problems that lead people to want to live in gated communities.

The College of Community Association Lawyers is a group of attorneys that practice community association law. Members have distinguished themselves through contributions to the evolution or practice of community association law. Admission requirements includes: (1) a minimum of 10 years of practice in community association law; (2) substantial writing in the area of community association law; (3) significant teaching on community association law; and (4) community service or legislative activity. The College plans and presents what many consider the best educational program on community associations. Hundreds of attorneys, managers and others attend the CAI Law Seminar each year.

I’ve written this article for two reasons. First, I want to encourage any attorneys that meet the requirements of the College to apply for membership. Second, I want you to know that I’ll be in Washington, DC from April 8 to 12, 2005 to attend strategic planning for the Board of Governors of the College of Community Association Lawyers. While I will continue to post updates while I’m away from the office, there may be some delays particularly while I’m traveling.

A PCAM is a manager that has earned the highest designation available to a community association manager, the Professional Community Association Manager® designation. Managers that earn the PCAM® designation have, among other things, taken and passed six 200 level courses on Facilities Management, Association Communication, Community Leadership, Community Governance, Risk Management, and Financial Management. After passing the courses, the manager must successfully complete the Case Study, which includes a substantial paper on community association management.

The courses are taught by the National Faculty for the Community Associations Institute. I’m fortunate to be one of CAI’s National Faculty, teaching the course on Community Governance two or three times a year. While this means that I must occasionally travel to the mainland to teach courses (in addition to classes in Hawaii), it is fun teaching and learning from the managers taking the course.

Mark Speigler, one of the partners at the first firm I worked at, told me that a lot of the advice he gave his clients was not strictly legal, but business advice. I remembered that because to me it represented the difference between a competent attorney and an exceptional attorney. A competent attorney tells you what you are legally authorized to do, an exceptional attorney provides that plus a little more.

In community association law, identifying an association’s legal authority is only part of the process. Just because the association has the authority, does not mean it has to use it. Sometimes it makes sense to make a document available to an owner even if you aren’t legally required to do so. If the request has a legitimate purpose and it’s release would not harm the association or violate any laws or important policies, the board should consider approving the request.

Similarly, just because the association has the power to enforce a violation, does not mean that it should. Sometimes, an alleged violation is just a dispute between two neighbors. The board should consult with its attorney and consider the impact on the association and residents before acting. These types of disputes often have each neighbor pointing their finger at the other. I sometimes have trouble deciding which one of my kids is telling the truth when they’re saying that the other one started it. It’s even harder when a Board is dealing with bickering neighbors. Even if you can tell which neighbor might be at fault, the Association is not normally a substitute for the police or the court system. If the dispute does not affect anyone else, it may be more appropriate for the two neighbors to resolve the dispute themselves. That is why Hawaii condominium law permits owners to enforce the governing documents and house rules in appropriate cases. One area that the association may wish to be careful about is where there is an allegation of discrimination. I’ll explain why in a future article.

I was recently talking to a friend of mine that is purchasing a unit in a highrise condominium project that hasn’t been built yet. He made the remark that he’s only buying air 80 feet in the sky. I said that wouldn’t change very much once the building was built.

Under Hawaii condo law a condominium property regime consists of common elements (including limited common elements) and apartments. The condominium declaration defines what part of the project is an apartment, common element or limited common elements. Almost every condominium declaration in Hawaii first defines the apartment and states that everything else is a part of the common elements. Certain designated portions of the common elements are limited common elements.

Most condominium associations use an airspace definition for the apartments. The reason it is called an airspace definition is that the apartment is essentially a bubble made up of air, paint, carpeting and interior non-load-bearing walls. The boundaries of most apartments are the interior decorated surfaces of the perimeter of the apartment. Everything inside the decorated surfaces other than load-bearing walls and utilities that serve more than one apartment are part of the apartment.

The part of the condominium project that my friend is going to own by himself is the apartment, while he’ll jointly own the structural elements of the project with the other members, he will mostly own air even after the condominium project is built.

This is one of those situations where the legal definition of a word is different than its every day usage. Under Hawaii condominium law, a condominium is a special way of owning property. In the United States, condominiums could not exist until laws were adopted to permit them. Until the condominium statutes were adopted, someone owning the land automatically owned everything on it. If 100 people owned the land, they all jointly owned everything on it.

Hawaii Revised Statutes §514A-3 defines condominium as this special way of owning property. It states that a condominium is, “the ownership of single units, with common elements, located on property within the condominium property regime.” In a condominium property regime, every member owns their own apartment or unit and all the members jointly own the common elements.

Even though this is the legal definition of condominium, most people (me included) often use it to refer to the condominium apartment or the condominium project. There’s nothing wrong with that and it rarely has any consequences as long as everyone realizes what you’re talking about.

The Community Association Network has a Daily News weblog feed that reports on news relating to community associations. Today, it referenced a Sun-Sentinel story about two disabled people suing their association for having an inaccessible clubhouse. The South Florida newspaper reported that John Garon and Vatrice Rivera, who use wheelchairs, claim that they are unable to properly use the parking lot, bathrooms and water fountains in their community’s clubhouse. They have filed suit claiming that because the clubhouse is open to the public for political debates and some entertainment, the building must comply with the federal Americans with Disabilities Act (”ADA”).

There are two federal laws that may impose disability access requirements on community associations. The Federal Fair Housing Act and the ADA. The Federal Fair Housing Act is intended to apply to residential situations while the ADA is intended to apply to most commercial operations open to the public (sometimes referred to as public accommodations). The main difference between the two Acts is that those covered by the ADA are required to make the facilities of the public accommodations accessible to the disabled if it is readily achievable while the Fair Housing Act requires the housing provider to permit a disabled individual to make reasonable modifications to the project at the disabled individual’s expense. In other words, whether the ADA or the Federal Fair Housing Act applies to a project is important because it determines who pays for the cost of eliminating barriers to the disabled.

If a condominium or planned community is purely residential, the ADA does not apply. However, if the condominium or planned community contains commercial uses, the Americans with Disabilities may apply at least to the extent that the commercial uses fall within the ADA and the common area is open to the customers of the commercial establishment. In the case of a residential project that opens its amenities to the general public, the analysis is a little more involved. If the amenity is open only to the residents and their guests, the ADA does not apply. Federal Regulations (28 CFR § 36.102(e)) states that the ADA does not apply to private clubs, but will apply to the facilities of a private club that is made available to customers of a public accommodation. Appendix B to the Federal Regulations states that:

An entity that is not in and of itself a public accommodation, such as a trade association or performing artist, may become a public accommodation when it leases space for a conference or performance at a hotel, convention center, or stadium. For an entity to become a public accommodation when it is the lessee of space, however, the Department believes that consideration in some form must be given. Thus, a Boy Scout troop that accepts donated space does not become a public accommodation because the troop has not “leased'’ space, as required by the ADA.

Therefore, a factor in the analysis is whether the association charged for the use of the premises. Even if an association does not charge for the use of its amenities, it may wish to limit access to residents and their guests to avoid a claim that they must undertake modifications to the amenities to comply with the ADA.

The Americans with Disabilities Act (”ADA”) is a federal law that provides protections to people with disabilities. One part of the ADA provides protections for employees of employers with more than 15 employees. Other parts of the ADA applies to state and local government and transportation systems. Title III of the ADA applies to public accommodations and is usually the section of the ADA that community associations have questions about.

Public accommodations under the ADA are:

1. An inn, hotel, motel, or other place of lodging . . .
2. A restaurant, bar, or other establishment serving food or drink;
3. A . . . theater . . . or other place of exhibition or entertainment;
4. An auditorium . . . or other place of public gathering;
5. A bakery, grocery store, clothing store, hardware store, shopping center, or other sales or rental establishment;
6. A laundromat, dry-cleaner, bank, barber shop, beauty shop, travel service, shoe repair service, funeral parlor, gas station, office of an accountant or lawyer, pharmacy, insurance office, professional office of a health care provider, hospital, or other service establishment;
7. A . . . station used for specified public transportation;
8. A museum . . . or other place of public display or collection
9. A park, zoo . . . or other place of recreation;
10. A . . . place of education;
11. A day care center . . . or other social service center establishment;
12. A gymnasium . . . or other place of exercise or recreation.

If the business does not fall within one of the 12 categories, the ADA does not apply. However, the types of businesses within the 12 categories are illustrative. For instance, just because a service establishment is not listed under item six does not mean that it is not covered by the ADA.

If the business is a public accommodation, it has two major obligations under Title III of the ADA: (a) make reasonable accommodations in policies, practices or procedures when it’s necessary to afford the goods, services, facilities, privileges, advantages or accommodations to individuals with disabilities; and (b) remove barriers to disabled persons in the areas open to the general public at its own cost if the removal is readily achievable. Under the ADA, both the public accommodation and the landlord have obligations to remove barriers.

Last month, the National Association of Realtors (”NAR”) reported that condominiums are appreciating faster than single-family homes. NAR President Al Mansell, said the reputation of condos as an investment has changed dramatically. “In much of the 1980s and early 90s, condos earned a reputation for slow price growth, in many cases because there was an oversupply on the market,” he said. “With the maturation of this market segment, condos have been appreciating faster than single-family homes for the last four years. In the past, affordability was a bigger factor in condo sales – now, lifestyle choices have emerged as a driving force in their growing popularity.”

“Lifestyle choices” are what condominium associations are all about. Some people purchase a condominium unit because they chose a lifestyle where someone else maintains and repairs their home. Other people purchase a condominium unit because they chose a lifestyle where amenities are available to residents that would not be available to them if they lived outside a community association. Still other people purchase a condominium unit because they chose a lifestyle where they can rely on residents to abide by a shared set of rules and aesthetic appearance.

NAR’s pricing information is consistent with polling data. A 1999 Gallup poll showed that community association members were happy with their associations. The poll showed that 75% of association members were either extremely satisfied or very satisfied with their association. Another 20% were somewhat satisfied with their association. Not surprisingly, almost the same percentages thought their association was extremely, very and somewhat responsive. The poll also showed that 42% of community association members would not consider selling their home under any circumstances. Another 36% would consider selling at 15% above market value. While a condominium lifestyle choice is not for everyone, it is clear that they are translating into the bottom line for condominium owners.