Hawaii Condo Law

This post lists the bills and resolutions of interest to community associations that passed this year.

Bill/Resolution	Topic	Status	Blog Link
SB 923	Limited Priority Lien Sunset Date Removed	Act 21 effective 4/17/2007	4/18/2007
SB 600, CD1	Leased Fee Sales Tax Exemption	Awaiting Governor’s Signature	5/20/2007
SCR 160, SD1	Condominium Commission Sunrise Study	Waiting for Auditor’s Study	5/20/2007
SB 1704, CD1	Re-enacting Parts of HRS Chapter 514A	Awaiting Governor’s Signature	5/20/2007
SB 920, CD1	Use of Condominium Membership Lists	Awaiting Governor’s Signature	5/20/2007
SB 921, HD1	Reasonable Charges for Condominium Records	Awaiting Governor’s Signature	5/20/2007
SB 1675, CD1	Automated External Defribillator Liability	Act 91 effective date 5/23/2007	5/20/2007
SB1654, HD1	Condo Court	Awaiting Governor’s Signature	5/20/2007
HR 228	DCCA Report on Condo Court	Waiting for DCCA Study	5/20/2007

This post lists the bills and resolutions of interest to community associations that passed this year.

Bill/Resolution	Topic	Status	Blog Link
SB 923	Limited Priority Lien Sunset Date Removed	Act 21 effective 4/17/2007	4/18/2007
SB 600, CD1	Leased Fee Sales Tax Exemption	Awaiting Governor’s Signature	5/20/2007
SCR 160, SD1	Condominium Commission Sunrise Study	Waiting for Auditor’s Study	5/20/2007
SB 1704, CD1	Re-enacting Parts of HRS Chapter 514A	Awaiting Governor’s Signature	5/20/2007
SB 920, CD1	Use of Condominium Membership Lists	Awaiting Governor’s Signature	5/20/2007
SB 921, HD1	Reasonable Charges for Condominium Records	Awaiting Governor’s Signature	5/20/2007
SB 1675, CD1	Automated External Defribillator Liability	Awaiting Governor’s Signature	5/20/2007
SB1654, HD1	Condo Court	Awaiting Governor’s Signature	5/20/2007
HR 228	DCCA Report on Condo Court	Waiting for DCCA Study	5/20/2007

On May 3, 2007, the Legislature passed Senate Bill No. 600 CD1. The bill would amend Hawaii Revised Statutes §235-7(a) by adding a new subsection (13) which would eliminate from taxable income 100% of the gain realized by a fee simple owner of the sale of a leased fee interest in a condominium, residential cooperative or planned community if it is sold to a condominium association or residential cooperative corporation. Although the bill states it applies to the leased fee interest for planned communities, it only applies if the leased fee interest is sold to a condominium or cooperative, not a planned community association. The exemption would apply to taxable years beginning after December 31, 2007, and ending prior to January 1, 2013. The bill could help convince lessors to agree to convert condominiums and cooperatives because they would not be taxed on the gain.

Act 166 effective 6/8/2007.

6/12/2007: Deleted, “The bill is awaiting the governor review.” and added provisions about Act 166.

On April 26, 2007, the Legislature passed Senate Bill No. 1654 HD1. The bill attempts to clarify that mediations and “condo court” proceedings apply to condominiums created before July 1, 2006 and that any “condo court” cases dismissed because of the repeal of the condo court provisions would be reinstated.

Act 242 effective 7/2/2007

7/6/2007: Deleted, “The bill is awaiting the governor review.” and added provisions about Act 242.

On May 1, 2007, the legislature passed SCR 160, SD1 Under Hawaii law, before the state can implement a new scheme regulating a profession, it must first have the Auditor conduct a sunrise review. For example, a few years ago, a sunrise review was done for the certification of condominium managers. A sunrise review is a study evaluating the need for the regulation of the profession or industry. This resolution would require the auditor to conduct a study to determine whether it is appropriate for the State to establish a new Commission to:

1. Oversee the implementation and regulation of chapter 514B, Hawaii Revised Statutes, relating to condominiums; and
2. Develop, implement, and enforce policies relating to condominiums in the State.

I have some concerns about the resolution. First, the proposed Commission would have broader powers than the Hawaii Real Estate Commission. The Hawaii Real Estate Commission only has powers with respect to certain sections of Hawaii Revised Statutes Section 514B. In contrast, the proposed Condominium Commission would oversee the implementation and regulation of all of Chapter 514B. This may lead to even greater micromanagement of condominium associations in Hawaii.

Second, there does not appear to be a limit of the powers of the proposed Condominium Commission to enforce policies relating to condominiums. This, too, could increase the extent of micromanagement of condominium associations in Hawaii.

Third, there is some concern that a Condominium Commission might be a magnet for individuals with an agenda rather than people with concerns about a how a regulatory system affects thousands of condominiums of different sizes and needs throughout the State. Explaining this to legislators who must answer to voters is a lot easier than explaining it to appointed commissioners.

On April 26, 2007, the Legislature passed Senate Bill No. 1704 CD1. The bill would amend Hawaii Revised Statutes Chapter 514A by re-enacting Parts I, V, and VII of the old Act. The legislature accidentally deleted these parts of HRS Chapter 514A. As I explained, even when portions of the new Condominium Property Act (514B) are normally automatically applicable to existing condominiums, they still may not apply. Specifically, the statutory sections listed above are automatically applicable to existing condominiums unless:

1. you are dealing with an event or circumstance occurring before July 1, 2006;
2. It conflicts with the existing provision of one of the condominium documents and the conflict would invalidate a reserve right of a developer; or
3. It conflicts with the existing provision of one of the condominium documents and the conflict would be an unreasonable impairment of contract.

Therefore, the bill would re-enact these provisions so that they would be applicable when one of these three exceptions apply. In addition, the re-enacted provisions of HRS Chapter 514A would apply in existing condominiums that have not opted-in on topics that are not automatically applicable in HRS Chapter 514B.

Act 244 effective 7/2/2007

Deleted, “The bill is awaiting the governor review.” and added provisions about Act 244.

On April 27, 2007, the Legislature passed Senate Bill No. 920 CD1. The bill would amend Hawaii Revised Statutes §514B-153 by adding 3 new subsections (f), (g) & (h) which would require that managing agents obtain the prior written consent to use a condominium association’s owners’ list. If read literally, the provision would require prior written board approval for the managing agent to send out the notice of annual meeting. The bill would also provide that membership lists in the possession of the managing agent or the resident manager are the property of the Association. This is apparently true even if they purchase the owners list from the tax department. Finally, the bill provides that the managing agent, resident manager, or board may not use the information contained in the lists to create any separate list for the purpose of evading this section. It is unclear why the Board is included since they are entitled to authorize the managing agent to use the Association’s list. The changes in the bill does not apply to any time share plan.

Act 243 effective 7/2/2007

7/6/2007: Deleted, “The bill is awaiting the governor review.” and added provisions about Act 243

On April 26, 2007, the Legislature passed Senate Bill No. 921 HD1. The bill would amend Hawaii Revised Statutes §514B-154 by adding a new subsection (j) which requires that charges for association documents to owners must be reasonable and in no event more than $1 a page (except for pages larger than 12 x 11 inches).

Act 241 effective 7/2/2007

7/6/2007: Deleted, “The bill is awaiting the Governor’s review.” changed, “8&frac 12; x 11″ to “12 x 11″ and added provisions about Act 241.

On April 12, 2007, the House passed HR 228 a resolution requesting the Department of Commerce & Consumer Affairs (”DCCA”) to report on its experiences of the Administrative Hearings process that is often referred to as Condo Court. To date, only a couple of hearings have been held each year of the pilot program. The proponents of Condo Court believed that there were hundreds of disputes which were going unresolved. It appears that they were mistaken.

Note: This resolution did not pass the Senate. While studies can be requested by one House, the resolution constitutes the request of only the House of Representatives.

5/20/2007: Added Note.

On May 1, 2007, the Legislature passed Senate Bill No. 1675 CD1. The bill would amend Hawaii Revised Statutes §453-2 and §663-1.5 by eliminating the requirement that training for Automated External Defribillators (”AEDs”) must be administered by a physician. If adopted, volunteers attempting to resuscitate a person in immediate danger of loss of life with AEDs will not be liable for any civil damages except for gross negligence or wanton acts or omissions. The current law has little impact because most individuals using AEDs were not trained by physicians.

Act 91 effective on 5/23/2007.

5/25/2007: Deleted, “The bill is awaiting the governor review.” and added provisions about Act 91.