Hawaii Condo Law

There is a hearing on Wednesday, February 1, 2006 at 2:10 p.m. in room 325 on a bill of interest to community associations before the House Consumer Protection Committee before Chair, Rep. Robert N. Herkes. The hearing notice discusses the following bills of interest to community associations:

HB 2787 would require the counties to establish a permitting process for cellular antenna towers and other structures higher than 10 feet. The FCC currently allows under its OTARD regulations allow a permit process for masts higher than 12 feet above the roofline. Therefore, the bill appears to be in violation of the OTARD regulations at least as it applies to antennas covered by the OTARD regulations.

PERSONS WISHING TO TESTIFY ARE REQUESTED TO SUBMIT 40 COPIES OF THEIR TESTIMONY AT LEAST 24 HOURS PRIOR TO THE HEARING TO: (1) THE CPC COMMITTEE’S VICE CHAIR IN ROOM 425, STATE CAPITOL, OR (2) THE HOUSE SGT.-AT-ARMS TESTIMONY DROP OFF BOX IN THE TURNAROUND AREA OF THE CAPITOL BASEMENT PARKING LOT. TESTIMONY MAY ALSO BE FAXED IF LESS THAN 5 PAGES IN LENGTH TO THE HOUSE SGT.-AT-ARMS OFFICE AT: 586-6501 (OAHU) OR 1-800-535-3859 (NEIGHBOR ISLANDS). WHEN FAXING, PLEASE INDICATE TO WHOM THE TESTIMONY IS BEING SUBMITTED, THE DATE AND TIME OF THE HEARING, AND THE REQUIRED NO. OF COPIES THAT IS NEEDED FOR SUBMITTAL.

02/11/06: Corrected the title of the post.

Section 207 of the Telecommunications Act of 1996 required the Federal Communications Commission to adopt regulations that would permit individuals to place antennas for the reception of video programing services despite governmental or community association restrictions. The FCC referred to these devices as Over The Air Reception Devices. The FCC adopted OTARD regulations which prohibit many restrictions about antennas and similar devices.

For instance, restrictions requiring “prior approval” of satellite dishes and broadcast antennas, commonly found in association governing documents, are now preempted for antennas covered by the rule. Devices that only transmit signals remain subject to private restrictions. Examples of antennas covered by the rule include those that provided direct broadcast satellite services (e.g. Direct TV), multipoint distribution services (i.e. wireless cable), television broadcast signals and wireless signals used to provide telephone service or high speed internet access to a fixed location.

Homeowners and their tenants have the right to erect covered antennas on individually owned property, or property in which they have a direct or indirect ownership interest and over which they have exclusive use or control (limited common elements in condominiums). Homeowners may not install any antenna on common elements of a condominium, or common areas of a planned community association owned by the association under OTARD.

The FCC allows some flexibility for associations to regulate covered antennas so long as such rules do not impair homeowners’ rights under OTARD. A rule impairs rights if it precludes reception of an acceptable quality signal, unreasonably prevents or delays installation, maintenance or use of an antenna, or unreasonably increases the cost of installing, maintaining or using an antenna. Reasonable safety requirements may be imposed under OTARD even if it impairs rights under OTARD, but you must be very careful in crafting safety requirements. Community association rules must be carefully crafted to comply with OTARD.

I, along with attorneys Stephen Marcus, Tom Hindman, Marvin Nodiff and Karyn Kennedy drafted model rules for the Community Associations Institute along with a publication on OTARD. The out-of-print publication is being revised with an anticipated publication date of early 2007. The FCC has an Information Sheet that is for the most part accurate.

There is a hearing on Wednesday, February 1, 2006 at 9:00 a.m. in room 329 on a bill of interest to community associations before the House Housing Committee before Chair, Rep. Michael Puamamo Kahikina. The hearing notice discusses the following bills of interest to community associations:

HB 1981 provides for a tax credit for the sale of leased fee interests. This is similar to bills that were introduced last year such as HB 1554. The bill would at least provide an incentive to lessors to sell the leased fee interest in light of the loss of the City and County of Honolulu’s mandatory conversion law.

There is a hearing on Monday, January 30, 2006 at 2:00 p.m. in room 325 on bills of interest to community associations before the House Consumer Protection Committee before Chair, Rep. Robert N. Herkes. The hearing notice discusses the following bills of interest to community associations:

HB 1905 changes the definition of limited common element from those elements designated in the Declaration to those common elements “stipulated under unit boundaries and benefits fewer than all of the units”. It also provides eliminates the requirement that amendments to the Declaration affected the limited common elements require the approval of the owners of the owners of the apartments attached to the limited common elements. This bill would create problems because it would allow the someone to take someone’s limited common elements without their consent. In addition, the definitional change would create confusion about what is a limited common element.

HB 1936 would:

• Require planned community associations to post notices of board meetings even if was not practicable to do so.
• Require planned community associations to post notices of committee and subcommittee meetings.
• Require that minutes of committee and subcommittee meetings for planned community associations include the recorded votes of the members.
• Prohibit proxy voting in committees and subcommittees for planned community associations
• Require that planned community associations notify members of the appointment, alteration and termination of committees and subcommittees
• Require that the current financial statements for planned community associations be available to members within the planned community.
• Require that board, committee and subcommittee minutes for planned community associations be kept for 5 years and be provided to members either at: (a) no cost or on 24 hour loan to all members at the project; or (b) mailed, faxed or emailed to the owner within 15 days of the request. If the owner indicates a preference for mail, fax or email in his or her request, the association must use that method of transmission. The cost must be paid for by the Association.
• Require that financial statements, general ledgers, the accounts receivable ledger, accounts payable ledgers, check ledgers, insurance policies, contracts, and invoices be made available to members for the duration that the records are kept by the planned community association.
• Requires that financial statements and all supporting documents required for tax purposes be kept for seven years.

This bill doesn’t make sense. First, it will substantially increase the cost of operation of planned communities. Some planned communities consist of tens of thousands of members. Notifying every member of committees and subcommittees will either cost associations thousands of dollars or encourage them to eliminate them. Second, it misunderstands how committees and subcommittees work in community associations. Committees and subcommittees in planned communities normally have no powers. The review matters and make recommendations to the Board. While it is possible for Boards to establish committees and delegate some of their powers to them, the bill does not address those committees. Third, the reason for an exception in the current law to posting notices when it is not practicable is because sometimes Boards are required to meet on short notice to address pressing issues. It makes no sense to require the posting of notices when it is not practicable to do so. Fourth, the bill is an example of micromanagement of community associations. The vast majority of owners in community associations are happy with the management of their communities. They do not want the State of Hawaii telling them what they have to do and pay for the additional costs of operating their communities. When there is a problem, the communities elect new Board members that reflect the way the majority of the owners want their community managed.

HB 2196 would change the law so that planned community associations would be required to make financial statements, general ledgers, accounts receivable ledgers, accounts payable ledgers, check ledgers, insurance policies, contracts, invoices of the association for the duration those records are kept by the association rather than just for the current and prior year.

HB 2197 would require that planned community associations inform its members that there will be a charge for information at least 10 days prior to imposing the charge. Excluded from the law is situations involving delinquent assessments and enforcement proceedings. The problem with both HB 2196 and HB 2197 is that there is no evidence that there is any need for either law. The legislature decided that community associations should be self-governed. These bills are examples of the State telling the elected representatives of planned community associations how they would like their associations governed.

PERSONS WISHING TO TESTIFY ARE REQUESTED TO SUBMIT 40 COPIES OF THEIR TESTIMONY AT LEAST 24 HOURS PRIOR TO THE HEARING TO: (1) THE CPC COMMITTEE’S VICE CHAIR IN ROOM 425, STATE CAPITOL, OR (2) THE HOUSE SGT.-AT-ARMS TESTIMONY DROP OFF BOX IN THE TURNAROUND AREA OF THE CAPITOL BASEMENT PARKING LOT. TESTIMONY MAY ALSO BE FAXED IF LESS THAN 5 PAGES IN LENGTH TO THE HOUSE SGT.-AT-ARMS OFFICE AT: 586-6501 (OAHU) OR 1-800-535-3859 (NEIGHBOR ISLANDS). WHEN FAXING, PLEASE INDICATE TO WHOM THE TESTIMONY IS BEING SUBMITTED, THE DATE AND TIME OF THE HEARING, AND THE REQUIRED NO. OF COPIES THAT IS NEEDED FOR SUBMITTAL..

There is a hearing on Thursday, January 26, 2006 at 2:00 p.m. in room 325 on a bill of interest to community associations before the House Consumer Protection Committee before Chair, Rep. Robert N. Herkes and before the House Judiciary Committee before Chair, Rep. Sylvia Luke. The hearing notice discusses the following bills of interest to community associations:

HB 1935 would create a 15 day right of recession for purchasers of units in planned community associations. Buyers would have 15 days after signing the contract and receipt of the governing documents to cancel the contract without penalty. The problem with this bill is that it would apply to all sales of units in planned community associations, not just sales by the developer. There does not appear to be any rational reaons to treat the sale of a home differently because it is in a planned community. Purchasers of homes that are not in planned communities do not have a right to recission.

PERSONS WISHING TO TESTIFY ARE REQUESTED TO SUBMIT 40 COPIES OF THEIR TESTIMONY AT LEAST 24 HOURS PRIOR TO THE HEARING TO: (1) THE CPC COMMITTEE’S VICE CHAIR IN ROOM 425, STATE CAPITOL, OR (2) THE HOUSE SGT.-AT-ARMS TESTIMONY DROP OFF BOX IN THE TURNAROUND AREA OF THE CAPITOL BASEMENT PARKING LOT. TESTIMONY MAY ALSO BE FAXED IF LESS THAN 5 PAGES IN LENGTH TO THE HOUSE SGT.-AT-ARMS OFFICE AT: 586-6501 (OAHU) OR 1-800-535-3859 (NEIGHBOR ISLANDS). WHEN FAXING, PLEASE INDICATE TO WHOM THE TESTIMONY IS BEING SUBMITTED, THE DATE AND TIME OF THE HEARING, AND THE REQUIRED NO. OF COPIES THAT IS NEEDED FOR SUBMITTAL.

Revised 1/24/2006 to add comments about HB 1934.

Bills from the 2006 Hawaii Legislative Session have been introduced with more coming. The following is a listing of the bills. Please remember that in addition to these bills, any bills introduced last year remains available for consideration by the Legislature.

Senate Bills

SB 2057 authorizes counties to restrict time share units and time share plans in other zoning districts if they establish a time share zoning district. The status is: Introduced

SB 2076 provides for a tax credit for the sale of leased fee interests. This is similar to bills that were introduced last year such as HB 1554. The bill would remove a disincentive for lessors from selling the leased fee interest. The status is: Introduced.

SB 2092 prohibits planned community associations from charging members costs for information unless the association notifies the member in writing at least 10 days prior. The bill would exclude prior notice of information on delinquent assessments or in connection with proceedings to enforce the law or governing documents. The status is: Introduced.

SB 2103 would make the Recodification applies to all condominiums. While it makes sense that certain provisions of the Recodification applies to existing condominiums, the bill would create problems. For instance, since the Recodification changes the provisions for creating and the initial disclosure for condominiums, all existing condominiums would be in violation of the law if the bill were passed. A better approach would be to make certain provisions applicable to existing condominiums. The status is: Introduced.

House Bills

HB 1905 changes the definition of limited common element from those elements designated in the Declaration to those common elements “stipulated under unit boundaries and benefits fewer than all of the units”. It also provides eliminates the requirement that amendments to the Declaration affected the limited common elements require the approval of the owners of the owners of the apartments attached to the limited common elements. This bill would create problems because it would allow the someone to take someone’s limited common elements without their consent. In addition, the definitional change would create confusion about what is a limited common element. The status is: Introduced.

HB 1935 would create a 15 day right of recession for purchasers of units in planned community associations. The problem with this bill is that it would apply to all sales of units in planned community associations, not just sales by the developer. There does not appear to be any rational reaons to treat the sale of a home differently because it is in a planned community. Purchasers of homes that are not in planned communities do not have a right to recission. The status is: Introduced.

HB 1936 would:

• Require planned community associations to post notices of board meetings even if was not practicable to do so.
• Require planned community associations to post notices of committee and subcommittee meetings.
• Require that minutes of committee and subcommittee meetings for planned community associations include the recorded votes of the members.
• Prohibit proxy voting in committees and subcommittees for planned community associations
• Require that planned community associations notify members of the appointment, alteration and termination of committees and subcommittees
• Require that the current financial statements for planned community associations be available to members within the planned community.
• Require that board, committee and subcommittee minutes for planned community associations be kept for 5 years and be provided to members either at: (a) no cost or on 24 hour loan to all members at the project; or (b) mailed, faxed or emailed to the owner within 15 days of the request. If the owner indicates a preference for mail, fax or email in his or her request, the association must use that method of transmission. The cost must be paid for by the Association.
• Require that financial statements, general ledgers, the accounts receivable ledger, accounts payable ledgers, check ledgers, insurance policies, contracts, and invoices be made available to members for the duration that the records are kept by the planned community association.
• Requires that financial statements and all supporting documents required for tax purposes be kept for seven years.

This bill doesn’t make sense. First, it will substantially increase the cost of operation of planned communities. Some planned communities consist of tens of thousands of members. Notifying every member of committees and subcommittees will either cost associations thousands of dollars or encourage them to eliminate them. Second, it misunderstands how committees and subcommittees work in community associations. Committees and subcommittees in planned communities normally have no powers. The review matters and make recommendations to the Board. While it is possible for Boards to establish committees and delegate some of their powers to them, the bill does not address those committees. Third, the reason for an exception in the current law to posting notices when it is not practicable is because sometimes Boards are required to meet on short notice to address pressing issues. It makes no sense to require the posting of notices when it is not practicable to do so. Fourth, the bill is an example of micromanagement of community associations. The vast majority of owners in community associations are happy with the management of their communities. They do not want the State of Hawaii telling them what they have to do and pay for the additional costs of operating their communities. When there is a problem, the communities elect new Board members that reflect the way the majority of the owners want their community managed.

HB 1981 provides for a tax credit for the sale of leased fee interests. This is similar to bills that were introduced last year such as HB 1554. The status is: Introduced.

Revised 1/22/2006 to add bills introduced since last post.

Revised 1/24/2006 to add comments about HB 1934.