HB 2041: Condominium Regulation; Ombudsman; Documents, Records; Transparency

HOUSE OF REPRESENTATIVES	H.B. NO.	2041
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII

A BILL FOR AN ACT

 

 

Relating to Condominiums.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The legislature finds nearly forty per cent of Hawaii's population lives in condominiums.  The legislature finds that while homeowner association self-governance can be successful, there have been many cases of abuse of power and other acts of malfeasance by certain association boards, association management, managing agents, and association attorneys.  Local news outlets have published articles dating nearly a decade ago, calling attention to the need to strengthen regulations of associations and the need for a condominium ombudsman.  Instead, the only oversight offered is through the Regulated Industries Complaints Office, which focuses on ensuring boards abide by legal requirements to provide homeowners with certain financial documents, and the Real Estate Branch emphasizes public outreach and education.  In addition, the state Department of Commerce and Consumer Affairs has publicly noted the lack of any power to enforce provisions of Hawaii's condominium statue.  Thus, time and time again these cries fall on deaf ears as local residents continue to struggle.

     Therefore, the purpose of this Act is to:

     (1)  Establish an ombudsman's office to receive and investigate complaints by condominium unit owners against associations that are subject to condominium laws;

     (2)  Authorize the Real Estate Commission to investigate complaints;

     (3)  Amend the documents required for association registration; and

     (4)  Broadens the list of documents an association must maintain and provide to unit owners. 

PART I

     SECTION 2.  Chapter 96, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§96-    Condominium ombudsman; real estate commission; certain matters.  (a)  There is established a condominium ombudsman to be administratively attached to the real estate commission to receive and investigate complaints by condominium unit owners against the real estate commission regarding the real estate commission's duties under section 467-4(9).

     (b)  With respect to any investigation under subsection (a), the condominium ombudsman's findings shall be issued no later than thirty business days after the filing of the complaint with the condominium ombudsman.

     (c)  This section shall not be construed to establish the condominium ombudsman as an authority to which any party may file an appeal in any matter relating to the real estate commission."

     SECTION 3.  Section 467-4, Hawaii Revised Statutes, is amended to read as follows:

     "§467-4  Powers and duties of commission.  In addition to any other powers and duties authorized by law, the real estate commission shall:

     (1)  Grant licenses, registrations, and certificates pursuant to this chapter;

     (2)  Adopt, amend, or repeal rules as it may deem proper to effectuate this chapter and carry out its purpose, which is the protection of the general public in its real estate transactions.  All rules shall be approved by the governor and director of commerce and consumer affairs, and when adopted pursuant to chapter 91 shall have the force and effect of law.  The rules may forbid acts or practices deemed by the commission to be detrimental to the accomplishment of the purpose of this chapter[, and the rules may]; require real estate brokers and salespersons to complete educational courses or to make reports to the commission containing items of information [as] that will better enable the commission to enforce this chapter and the rules, or [as] that will better enable the commission from time to time to amend the rules to more fully effect the purpose of this chapter[,]; and[, further,] the rules may require real estate brokers and salespersons to furnish reports to their clients containing matters of information [as] that the commission deems necessary to promote the purpose of this chapter.  This enumeration of specific matters that may properly be made the subject of rules shall not be construed to limit the commission's broad general power to make all rules necessary to fully effectuate the purpose of this chapter;

     (3)  Enforce this chapter and rules adopted pursuant thereto;

     (4)  Suspend, fine, terminate, or revoke any license, registration, or certificate for any cause prescribed by this chapter, or for any violation of the rules, and may require additional education or reexamination, and refuse to grant any license, registration, or certificate for any cause that would be a ground for suspension, fine, termination, or revocation of a license, registration, or certificate;

     (5)  Report to the governor and legislature relevant information that shall include but not be limited to a summary of the programs and financial information about the trust funds, including balances and budgets, through the director of commerce and consumer affairs annually, before the convening of each regular session, and at other times and in other manners as the governor or [the] legislature may require concerning its activities;

     (6)  Publish and distribute pamphlets and circulars, produce seminars and workshops, hold meetings in all counties, and require other education regarding any information as is proper to further [the accomplishment of] accomplish the purpose of this chapter;

     (7)  Enter into a contract or contracts with qualified persons to assist the commission in effectuating the purpose of this chapter;

     (8)  Develop a curriculum for leadership training for condominium boards of directors, including pertinent provisions of chapter 514B, association governing documents, and the fi­duciary duties of board members; [and]

     (9)  Receive and investigate complaints by condominium unit owners against associations that are subject to chapter 514B; and

  [(9)] (10)  Establish standing committees to assist in effectuating this chapter and carry out its purpose, which shall meet no less than ten times annually, and shall from time to time meet in each of the counties."

PART II

     SECTION 4.  Section 514B-154, Hawaii Revised Statutes, is amended by amending subsection (a) through (i) to read as follows:

     "§514B-154  Association records; availability; disposal; prohibitions.  (a)  [The association's most current financial statement shall be provided to any interested unit owner at no cost or on twenty-four-hour loan, at a convenient location designated by the board.  The meeting minutes of the board of directors, once approved, for the current and prior year shall either:] Any unit owner of an association shall have the right to inspect, examine, and make copies of the records required to be maintained in section 514B-153, in person or by authorized agent, at any reasonable time, at the association's principal office or with the board or managing agent.  To exercise this right, a unit owner shall submit a written request to the board or managing agent, stating the records sought to be inspected, examined, or copied.  Failure of a board or managing agent to make available all records requested within ten business days of receipt of the unit owner's written request shall be deemed a denial.  Any unit owner who prevails in an enforcement action to compel inspection, examination, or copying the records required to be maintained in section 514B-153 shall be entitled to recover reasonable attorneys' fees and costs from the association.  These documents shall either:

     (1)  Be available for examination by apartment owners at no cost or on twenty-four-hour loan at a convenient location at the project, to be determined by the board of directors; or

     (2)  Be transmitted to any apartment owner making a request [for the minutes], by the board of directors, the managing agent, or the association's representative[, within fifteen days of receipt of the request]; provided that the [minutes] documents shall be transmitted by mail, electronic mail transmission, or facsimile, by the means indicated by the owner, if the owner indicated a preference at the time of the request; and provided further that the owner shall pay a reasonable fee for administrative costs associated with handling the request.

Costs incurred by apartment owners pursuant to this subsection shall be subject to section 514B‑105(d).

     (b)  Financial statements, general ledgers, the accounts receivable ledger, accounts payable ledgers, check ledgers, insurance policies, contracts, and invoices of the association for the duration those records are kept by the association and delinquencies of ninety days or more shall be available for examination by unit owners at convenient hours at a place designated by the board; provided that:

     (1)  The board may require owners to furnish to the association a [duly executed and acknowledged affidavit] written certification stating that the information is requested in good faith [for the protection of the interests of the association, its members, or both;] and will not be used by the unit owner for any commercial purpose or any purpose that does not relate to the association; and

     (2)  Owners shall pay for reasonable administrative costs in excess of eight hours per year.

     Copies of these items shall be provided to any owner upon the owner's request; provided that the owner pays a reasonable fee for duplication, postage, stationery, and other administrative costs associated with handling the request.

     (c)  After any association meeting, and not earlier, unit owners shall be permitted to examine proxies, tally sheets, ballots, owners' check-in lists, and the certificate of election; provided that:

     (1)  Owners shall make a request to examine the documents within thirty days after the association meeting;

     (2)  The board may require owners to furnish to the association a [duly executed and acknowledged affidavit] written certification stating that the information is requested in good faith for the protection of the interest of the association or its members or both; and

     (3)  Owners shall pay for administrative costs in excess of eight hours per year.

     The documents may be destroyed ninety days after the association meeting; provided that in the event of a contested election, the documents shall be retained until the contested election is resolved.  Copies of tally sheets, owners' check-in lists, and the certificates of election from the most recent association meeting shall be provided to any owner upon the owner's request; provided that the owner pays a reasonable fee for duplicating, postage, stationery, and other administrative costs associated with handling the request.

     (d)  The managing agent shall provide copies of association records maintained pursuant to this section and sections 514B-103, 514B‑152, and 514B‑153 to owners, prospective purchasers and their prospective agents during normal business hours, upon payment to the managing agent of a reasonable charge to defray any administrative or duplicating costs.  If the project is not managed by a managing agent, the foregoing requirements shall be undertaken by a person or entity, if any, employed by the association, to whom this function is delegated.

     (e)  [Prior to the organization of the association, any] Any unit owner shall be entitled to inspect as well as receive a copy of the management contract from the entity that manages the operation of the property.

     (f)  Owners may file a written request with the board to examine other documents.  The board shall give written authorization or written refusal with an explanation of the refusal within [thirty] ten calendar days of receipt of the request.

     (h)  A managing agent retained by one or more associations may dispose of the records of any association which are more than [five] ten years old, except for tax records, which [shall] may be [kept for] disposed of after seven years, without liability if the managing agent first provides the board of the association affected with written notice of the managing agent's intent to dispose of the records if not retrieved by the board within sixty days, which notice shall include an itemized list of the records proposed to be disposed.

     (i)  No person shall knowingly make any false certificate, entry, or memorandum upon any of the books or records of any managing agent or association.  No person shall knowingly alter, destroy, mutilate, or conceal any books or records of a managing agent or association.  Any violation of this subsection shall constitute forgery in the third degree under section 708-853."

     SECTION 6.  Section 514B-154.5, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-154.5  Association documents to be provided.  (a)  Notwithstanding any other provision in the declaration, bylaws, or house rules, if any, the following documents, records, and information, whether maintained, kept, or required to be provided pursuant to this section or section 514B-103, 514B-152, 514B-153, or 514B-154, shall be made available to any unit owner and the owner's authorized agents by the managing agent, resident manager, board through a board member, or the association's representative:

     (1)  All financial and other records sufficiently detailed in order to comply with requests for information and disclosures related to the resale of units;

     (2)  [An accurate copy of the declaration, bylaws, house rules, if any, master lease, if any, a sample original conveyance document, and all public reports and any amendments thereto;] All records required to be maintained pursuant to section 514B-153(a);

     (3)  Detailed, accurate records in chronological order of the receipts and expenditures affecting the common elements, specifying and itemizing the maintenance and repair expenses of the common elements and any other expenses incurred and monthly statements indicating the total current delinquent dollar amount of any unpaid assessments for common expenses;

     (4)  All records and the vouchers authorizing the payments and statements kept and maintained at the address of the project, or elsewhere within the State as determined by the board, subject to section 514B-152;

     (5)  All signed and executed agreements for managing the operation of the property, expressing the agreement of all parties, including but not limited to financial and accounting obligations, services provided, and any compensation arrangements, including any subsequent amendments;

     (6)  An accurate and current list of members of the condominium association and the members' current addresses and the names and addresses of the vendees under an agreement of sale, if any.  A copy of the list shall be available, at cost, to any unit owner or owner's authorized agent who furnishes to the managing agent, resident manager, or the board a [duly executed and acknowledged affidavit] written certification stating that the list:

          (A)  Shall be used by the unit owner or owner's authorized agent personally and only for the purpose of soliciting votes or proxies or for providing information to other unit owners with respect to association matters; and

          (B)  Shall not be used by the unit owner or owner's authorized agent or furnished to anyone else for any other purpose;

     (7)  The association's most current financial statement, at no cost or on twenty-four-hour loan, at a convenient location designated by the board;

    [(8)  Meeting minutes of the association, pursuant to section 514B-122;

     (9)  Meeting minutes of the board, pursuant to section 514B-126, which shall be:

          (A)  Available for examination by unit owners or owners' authorized agents at no cost or on twenty-four-hour loan at a convenient location at the project, to be determined by the board; or

          (B)  Transmitted to any unit owner or owner's authorized agent making a request for the minutes within fifteen days of receipt of the request by the owner or owner's authorized agent; provided that:

              (i)  The minutes shall be transmitted by mail, electronic mail transmission, or facsimile, by the means indicated by the owner or owner's authorized agent, if the owner or owner's authorized agent indicated a preference at the time of the request; and

             (ii)  The owner or owner's authorized agent shall pay a reasonable fee for administrative costs associated with handling the request, subject to section 514B-105(d);

    (10)] (8)  Financial statements, general ledgers, the accounts receivable ledger, accounts payable ledgers, check ledgers, insurance policies, contracts, and invoices of the association for the duration those records are kept by the association, and any documents regarding delinquencies of ninety days or more shall be available for examination by unit owners or owners' authorized agents at convenient hours at a place designated by the board; provided that:

          (A)  The board may require unit owners or owners' authorized agents to furnish to the association a [duly executed and acknowledged affidavit] written certification stating that the information is requested in good faith for the protection of the interests of the association, its members, or both; and

          (B)  Unit owners or owners' authorized agents shall pay for administrative costs in excess of eight hours per year;

   [(11)] (9)  Proxies, tally sheets, ballots, unit owners' check-in lists, and the certificate of election subject to section 514B-154(c);

   [(12)] (10)  Copies of an association's documents, records, and information, whether maintained, kept, or required to be provided pursuant to this section or section 514B‑152, 514B-153, or 514B-154;

   [(13)] (11)  A copy of the management contract from the entity that manages the operation of the property before the organization of an association;

   [(14)] (12)  Other documents requested by a unit owner or owner's authorized agent in writing; provided that the board shall give written authorization or written refusal with an explanation of the refusal within [thirty] ten calendar days of receipt of a request for documents pursuant to this paragraph; and

   [(15)] (13)  A copy of any contract, written job description, and compensation between the association and any person or entity retained by the association to manage the operation of the property on-site, including but not limited to the general manager, operations manager, resident manager, or site manager; provided that personal information may be redacted from the contract copy, including but not limited to the manager's date of birth, age, signature, social security number, residence address, telephone number, non-business electronic mail address, driver's license number, Hawaii identification card number, bank account number, credit or debit card number, access code or password that would permit access to the manager's financial accounts, or any other information that may be withheld under state or federal law.

     (b)  Subject to section 514B-105(d), copies of the items in subsection (a) shall be provided to any unit owner or owner's authorized agent upon the owner's or owner's authorized agent's request; provided that the owner or owner's authorized agent pays a reasonable fee for duplication, postage, stationery, and other administrative costs associated with handling the request.

     (c)  Notwithstanding any provision in the declaration, bylaws, or house rules providing for another period of time, all documents, records, and information listed under subsection (a), whether maintained, kept, or required to be provided pursuant to this section or section 514B-152, 514B-153, or 514B-154, shall be provided no later than [thirty] ten calendar days after receipt of a unit owner's or owner's authorized agent's written request, unless a lesser time is provided pursuant to this section or section 514B-152, 514B-153, or 514B‑154, and except as provided in subsection (a)(14).

     (d)  Any documents, records, and information, whether maintained, kept, or required to be provided pursuant to this section or section 514B-152, 514B-153, or 514B-154, may be made available electronically to the unit owner or owner's authorized agent if the owner or owner's authorized agent requests such in writing.

     (e)  An association may comply with this section or section 514B-152, 514B-153, or 514B-154 by making the required documents, records, and information available to unit owners or owners' authorized agents for download through an internet site, at the option of each unit owner or owner's authorized agent and at no cost to the unit owner or owner's authorized agent.

     (f)  Any fee charged to a unit owner or owner's authorized agent to obtain copies of the association's documents, records, and information, whether maintained, kept, or required to be provided pursuant to this section or section 514B-152, 514B-153, or 514B-154, shall be reasonable; provided that a reasonable fee shall include administrative and duplicating costs and shall not exceed $1 per page, or portion thereof, except that the fee for pages exceeding eight and one-half inches by fourteen inches may exceed $1 per page.

     (g)  This section shall apply to all condominiums organized under this chapter or any predecessor thereto.

     (h)  If the board fails to provide records properly requested under this section, the owner may seek appropriate relief and shall be entitled to an award of reasonable attorneys' fees and costs if the unit owner prevails.

     [(h)] (i)  Nothing in this section shall be construed to create any new requirements for the release of documents, records, or information."

PART III

     SECTION 7.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect upon its approval.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Condominium Regulation; Ombudsman; Documents, Records; Transparency

 

Description:

Part I: Establishes an Ombudsman's Office and gives the Real Estate Commission the authority to investigate complaints.  Part II: Broadens the list of documents an association must maintain and provide to unit owners. 

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.