Hawaii Condo Law

Until the new condominium law, there was no formal statutory definition of a conflict of interest. HRS §514B-125(f) now defines:

“Conflict of interest”, as used in this subsection, means an issue in which a director has a direct personal or pecuniary interest not common to other members of the association.

Until the new condominium law, there was no formal statutory definition of a fiduciary duty. HRS §514B-106(a) now states:

In the performance of their duties, officers and members of the board shall owe the association a fiduciary duty and exercise the degree of care and loyalty required of an officer or director of a corporation organized under chapter 414D.

Chapter 414D is the Hawaii Nonprofit Corporation Act and it defines the duty of directors in Hawaii Revised Statutes §414D-149. A director must act:

1. In good faith;
2. With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and
3. In a manner the director reasonably believes to be in the best interests of the corporation.

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.

Under Hawaii Condo Law, boards of directors are authorized to enter executive session under certain limited situations. In executive session, the members of the Board of Directors have a duty to keep the discussions confidential and people unnecessary to the deliberations are excluded from the executive session. As a general rule, the Association members are not permitted to attend an executive session of the Board of Directors.

Before the Board enters executive session, a majority of the Board must approve the executive session. The nature, but not the details about the business to be conducted in executive session must first be announced in open session. Currently, executive session is appropriate for personnel matters and litigation in which the association is or may become involved.

Under the Recodification, the provisions relating to the appropriate topics for executive session have been clarified. Executive session will be appropriate under the Recodification for personnel matters, litigation in which the association is or may become involved, matters necessary to protect the attorney-client privilege of the association, and matters necessary to protect the interests of the association while negotiating contracts, leases, and other commercial transactions. The two additional matters permitted for executive session under the Recodification were probably included as litigation in which the association is or may become involved under current law.