SB 253: Condominiums; Budget Summaries; Condominium Associations; Boards of Directors; Compliance; Standing; Good Faith Defense; Burden of Proof
- Session Year: 2025-2026
- House: Senate
- Latest Version Date: 2025-03-17
Current Status:
Failed
(2026-04-21: Received notice of appointment of House conferees (Hse. Com. No. 800).)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Final Decking
Enacted
Requires a detailed budget summary to contain all required information without referring the reader to other portions of the budget or reserve study. Excludes the good faith defense for associations whose boards adopt a budget that omits the required detailed budget summary. Clarifies a unit owner's standing and the association's burden of proving substantial compliance. Effective 7/1/3000. (HD1)
Requires a detailed budget summary as required by section 514B‑148, HRS, to contain all required information without referring the reader to other portions of the budget or reserve study. Excludes the good faith defense for associations whose boards adopt a budget that omits a detailed budget summary as required by section 514B-148, HRS. Clarifies a unit owner's standing and the association's burden of proving substantial compliance. Effective 7/1/2050. (SD2)
Excludes the good faith defense for associations whose boards adopt a budget that omits a detailed budget summary as required by section 514B-148, HRS. Clarifies a unit owner's standing and the association's burden of proving compliance. Effective 7/1/2050. (SD1)
Excludes the good faith defense for associations whose boards adopt a budget that omits a detailed budget summary as required by section 514B-148, HRS. Clarifies a unit owner's standing and the association's burden of proving compliance.
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THE SENATE |
S.B. NO. |
253 |
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THIRTY-THIRD LEGISLATURE, 2025 |
S.D. 2 |
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STATE OF HAWAII |
H.D. 1 |
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A BILL FOR AN ACT
RELATING TO CONDOMINIUM RESERVES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
Despite these efforts to emphasize the importance of compliance with the disclosure requirements relating to association fiscal matters, further amendments are needed to explicitly state that the defense of good faith compliance shall be unavailable to any association whose board adopts a budget that omits the mandated budget summary. Moreover, clarifications are needed concerning unit owners' standing to enforce compliance and that an association has the burden of proving compliance when violations are alleged.
Accordingly, the purpose of this Act is to:
(1) Require the detailed budget summary to contain all required information without referring the reader to other portions of the budget or reserve study;
(2) Exclude the good faith defense for an association whose board adopts a budget that omits the required detailed budget summary; and
(3) Clarify a unit owner's standing and the association's burden of proving substantial compliance.
SECTION 2. Section 514B-148, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (a) to read:
"(a) The budget required under section 514B-144(a) shall include a summary with at least the following details:
(1) The estimated revenues and operating expenses of the association;
(2) Disclosure as to whether the budget has been prepared on a cash or accrual basis;
(3) The estimated costs of fire safety equipment or installations that meet the requirements of a life safety evaluation required by the applicable county for any building located in a county with a population greater than five hundred thousand; provided that the reserve study may forecast a loan or special assessment to fund life safety components or installation;
(4) The balance of the total replacement reserves fund of the association as of the date of the budget;
(5) The estimated replacement reserves assessments
that the association will require to maintain the property based on a reserve
study performed by or on behalf of the association; provided that the
reserve study, if not prepared by an independent reserve study preparer, shall
be reviewed by an independent reserve study preparer [not] no
less than every three years; provided further that a managing agent with
industry reserve study designations shall not be considered as having a
conflict of interest for purposes of this paragraph;
(6) A general explanation of how the estimated replacement reserves assessments are computed and detailing:
(A) The identity, qualifications, and potential conflicts of interest of the person or entity performing the reserve study, the update, or any review thereof;
(B) Disclosure of any component of association property omitted from the reserve study and the basis for the omission;
(C) Planned increases in the estimated replacement reserve assessments over the thirty-year plan; and
(D) Whether the actual estimated replacement reserves assessments for the prior year as defined in the study was less than the assessments provided for in the reserve study, and, if so, by how much, and explaining the impact of the lesser assessments on future estimated replacement reserves assessments;
(7) The amount the association must collect for the fiscal year to fund the estimated replacement reserves assessments; and
(8) Information as to whether the amount the association must collect for the fiscal year to fund the estimated replacement reserves assessments was calculated using a per cent funded or cash flow plan. The method or plan shall not circumvent the estimated replacement reserves assessments amount determined by the reserve study pursuant to paragraph (5).
The summary shall contain all required information without referring the reader to other portions of the budget or reserve study."
2. By amending subsection (d) to read:
"(d) No association or unit owner, director,
officer, managing agent, or employee of an association who makes a good faith
effort to calculate the estimated replacement reserves assessments for an association shall be liable if the
estimate subsequently proves incorrect[.]; provided that this
subsection shall not apply to an association if its board adopts a budget that
omits the summary required by subsection (a)."
3. By amending subsection (g) to read:
"(g) [Subject to the procedures of section 514B‑157
and any rules adopted by the commission, any] Any unit owner whose
association board fails to substantially comply with this section [may]
shall have standing to bring an action to enforce compliance by the
board. In any [proceeding] action
to enforce compliance, a board [that has not prepared an annual operating
budget and reserve study] shall have the burden of proving it has substantially
complied with this section."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 3000.
Report Title:
Condominiums; Budget Summaries; Condominium Associations; Boards of Directors; Compliance; Standing; Good Faith Defense; Burden of Proof
Description:
Requires a detailed budget summary to contain all required information without referring the reader to other portions of the budget or reserve study. Excludes the good faith defense for associations whose boards adopt a budget that omits the required detailed budget summary. Clarifies a unit owner's standing and the association's burden of proving substantial compliance. Effective 7/1/3000. (HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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THE SENATE |
S.B. NO. |
253 |
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THIRTY-THIRD LEGISLATURE, 2025 |
S.D. 2 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO CONDOMINIUM RESERVES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
Despite these efforts to emphasize the importance of compliance with the disclosure requirements relating to association fiscal matters, further amendments are needed to explicitly state that the defense of good faith compliance shall be unavailable to any association whose board adopts a budget that omits the mandated budget summary. Moreover, clarifications are needed concerning unit owners' standing to enforce compliance and that an association has the burden of proving compliance when violations are alleged.
Accordingly, the purpose of this Act is to:
(1) Require a detailed budget summary as required by section 514B-148, Hawaii Revised Statutes, to contain all required information without referring the reader to other portions of the budget or reserve study;
(2) Exclude the good faith defense for an association whose board adopts a budget that omits a detailed budget summary required by section 514B‑148(a), Hawaii Revised Statutes; and
(3) Clarify a unit owner's standing and the association's burden of proving substantial compliance.
SECTION 2. Section 514B-148, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (a) to read:
"(a) The budget required under section 514B-144(a) shall include a summary with at least the following details:
(1) The estimated revenues and operating expenses of the association;
(2) Disclosure as to whether the budget has been prepared on a cash or accrual basis;
(3) The estimated costs of fire safety equipment or installations that meet the requirements of a life safety evaluation required by the applicable county for any building located in a county with a population greater than five hundred thousand; provided that the reserve study may forecast a loan or special assessment to fund life safety components or installation;
(4) The balance of the total replacement reserves fund of the association as of the date of the budget;
(5) The estimated replacement reserves assessments that the association will require to maintain the property based on a reserve study performed by or on behalf of the association; provided that the reserve study, if not prepared by an independent reserve study preparer, shall be reviewed by an independent reserve study preparer not less than every three years; provided further that a managing agent with industry reserve study designations shall not be considered as having a conflict of interest for purposes of this paragraph;
(6) A general explanation of how the estimated replacement reserves assessments are computed and detailing:
(A) The identity, qualifications, and potential conflicts of interest of the person or entity performing the reserve study, update, or any review thereof;
(B) Disclosure of any component of association property omitted from the reserve study and the basis for the omission;
(C) Planned increases in the estimated replacement reserve assessments over the thirty-year plan; and
(D) Whether the actual estimated replacement reserves assessments for the prior year as defined in the study was less than the assessments provided for in the reserve study, and, if so, by how much, and explaining the impact of the lesser assessments on future estimated replacement reserves assessments;
(7) The amount the association must collect for the fiscal year to fund the estimated replacement reserves assessments; and
(8) Information as to whether the amount the association must collect for the fiscal year to fund the estimated replacement reserves assessments was calculated using a per cent funded or cash flow plan. The method or plan shall not circumvent the estimated replacement reserves assessments amount determined by the reserve study pursuant to paragraph (5).
The summary shall contain all required information without referring the reader to other portions of the budget or reserve study."
2. By amending subsection (d) to read:
"(d) No association or unit owner, director,
officer, managing agent, or employee of an association who makes a good faith
effort to calculate the estimated replacement reserves assessments for an association shall be liable if the
estimate subsequently proves incorrect[.]; provided that this
subsection shall not apply to an association if its board adopts a budget that
omits the summary required by subsection (a)."
3. By amending subsection (g) to read:
"(g) [Subject to the procedures of section 514B‑157
and any rules adopted by the commission, any] Any unit owner whose
association board fails to substantially comply with this section [may]
shall have standing to bring an action to enforce compliance by the
board. In any [proceeding] action
to enforce compliance, a board [that has not prepared an annual operating
budget and reserve study] shall have the burden of proving it has substantially
complied with this section."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 2050.
Report Title:
Condominiums; Budget Summaries; Associations; Boards; Compliance; Standing; Good Faith Defense; Burden of Proof
Description:
Requires a detailed budget summary as required by section 514B‑148, HRS, to contain all required information without referring the reader to other portions of the budget or reserve study. Excludes the good faith defense for associations whose boards adopt a budget that omits a detailed budget summary as required by section 514B-148, HRS. Clarifies a unit owner's standing and the association's burden of proving substantial compliance. Effective 7/1/2050. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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THE SENATE |
S.B. NO. |
253 |
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THIRTY-THIRD LEGISLATURE, 2025 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO CONDOMINIUM RESERVES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
Despite these efforts to emphasize the importance of compliance with the disclosure requirements relating to association fiscal matters, further amendments are needed to explicitly state that the defense of good faith compliance shall be unavailable to any association whose board adopts a budget that omits the mandated budget summary. Moreover, clarifications are needed concerning unit owners' standing to enforce compliance and that an association has the burden of proving compliance when violations are alleged.
Accordingly, the purpose of this Act is to:
(1) Exclude the good faith defense for an association whose board adopts a budget that omits a detailed budget summary required by section 514B‑148(a), Hawaii Revised Statutes; and
(2) Clarify a unit owner's standing and the association's burden of proving compliance.
SECTION 2. Section 514B-148, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (d) to read:
"(d) No association or unit owner, director,
officer, managing agent, or employee of an association who makes a good faith
effort to calculate the estimated replacement reserves assessments for an association shall be liable if the
estimate subsequently proves incorrect[.]; provided that this
subsection shall not apply to an association if its board adopts a budget that
omits the summary required by subsection (a)."
2. By amending subsection (g) to read:
"(g) [Subject to the procedures of section 514B‑157
and any rules adopted by the commission, any] Any unit owner whose
association board fails to comply with this section [may] shall have
standing to bring an action to enforce compliance by the board. In any [proceeding] action to
enforce compliance, a board [that has not prepared an annual operating
budget and reserve study] shall have the burden of proving it has complied
with this section."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 2050.
Report Title:
Condominiums; Budget Summaries; Associations; Boards; Compliance; Standing; Good Faith Defense; Burden of Proof
Description:
Excludes the good faith defense for associations whose boards adopt a budget that omits a detailed budget summary as required by section 514B-148, HRS. Clarifies a unit owner's standing and the association's burden of proving compliance. Effective 7/1/2050. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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THE SENATE |
S.B. NO. |
253 |
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THIRTY-THIRD LEGISLATURE, 2025 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO CONDOMINIUM RESERVES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
Despite these efforts to emphasize the importance of compliance with the disclosure requirements relating to association fiscal matters, further amendments are needed to explicitly state that the defense of good faith compliance shall be unavailable to any association whose board adopts a budget that omits the mandated budget summary. Moreover, clarifications are needed concerning unit owners' standing to enforce compliance and that an association has the burden of proving compliance when violations are alleged.
Accordingly, the purpose of this Act is to:
(1) Exclude the good faith defense for an association whose board adopts a budget that omits a detailed budget summary as required by section 514B‑148(a), Hawaii Revised Statutes; and
(2) Clarify a unit owner's standing and the association's burden of proving compliance.
SECTION 2. Section 514B-148, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (d) to read:
"(d) No association or unit owner, director,
officer, managing agent, or employee of an association who makes a good faith
effort to calculate the estimated replacement reserves assessments for an association shall be liable if the
estimate subsequently proves incorrect[.]; provided that this
subsection shall not apply to an association if its board adopts a budget that omits
the summary required by subsection (a)."
2. By amending subsection (g) to read:
"(g) [Subject to the procedures of section 514B‑157
and any rules adopted by the commission, any] Any unit owner whose
association board fails to comply with this section [may] shall have
standing to bring an action to enforce compliance by the board. In any [proceeding] action to
enforce compliance, a board [that has not prepared an annual operating
budget and reserve study] shall have the burden of proving it has complied
with this section."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.
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INTRODUCED BY: |
_____________________________ |
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Report Title:
Condominiums; Budget Summaries; Associations; Boards; Compliance; Standing; Good Faith Defense; Burden of Proof
Description:
Excludes the good faith defense for associations whose boards adopt a budget that omits a detailed budget summary as required by section 514B-148, HRS. Clarifies a unit owner's standing and the association's burden of proving compliance.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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Date
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Status
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|---|---|
| Apr 21, 2026 | Received notice of appointment of House conferees (Hse. Com. No. 800). |
| Apr 21, 2026 | House Conferees Appointed: Matayoshi, Tarnas Co-Chairs; Pierick. |
| Apr 2, 2026 | Received notice of the discharge of all House Conferees (Hse. Com. No. 457). |
| Apr 1, 2026 | House Conferee(s) discharged. |
| Mar 20, 2026 | Received notice of all Senate conferees being discharged (Sen. Com. No. 409). |
| Mar 20, 2026 | Senate Conferee(s) discharged. |
| Dec 8, 2025 | Carried over to 2026 Regular Session. |
| Apr 21, 2025 | Received notice of appointment of House conferees (Hse. Com. No. 754). |
| Apr 17, 2025 | House Conferees Appointed: Matayoshi, Todd Co-Chairs; Pierick. |
| Apr 16, 2025 | Received notice of Senate conferees (Sen. Com. No. 811). |
| Apr 16, 2025 | Senate Conferees Appointed: Keohokalole Chair; Rhoads Co-Chair; Fukunaga, McKelvey, Awa. |
| Apr 10, 2025 | Received notice of disagreement (Sen. Com. No. 779). |
| Apr 10, 2025 | Senate disagrees with House amendments. |
| Apr 10, 2025 | Received from House (Hse. Com. No. 633). |
| Apr 8, 2025 | Passed Third Reading with none voting aye with reservations; none voting no (0) and Representative(s) Cochran excused (1). Transmitted to Senate. |
| Apr 4, 2025 | Reported from JHA (Stand. Com. Rep. No. 2035), recommending passage on Third Reading. |
| Apr 2, 2025 | The committee on JHA recommend that the measure be PASSED, UNAMENDED. The votes were as follows: 9 Ayes: Representative(s) Tarnas, Poepoe, Belatti, Hashem, Kahaloa, Perruso, Takayama, Todd, Shimizu; Ayes with reservations: none; 1 Noes: Representative(s) Garcia; and 1 Excused: Representative(s) Cochran. |
| Mar 28, 2025 | Bill scheduled to be heard by JHA on Wednesday, 04-02-25 2:00PM in House conference room 325 VIA VIDEOCONFERENCE. |
| Mar 18, 2025 | Passed Second Reading as amended in HD 1 and referred to the committee(s) on JHA with none voting aye with reservations; none voting no (0) and Representative(s) Cochran, Ward excused (2). |
| Mar 18, 2025 | Reported from CPC (Stand. Com. Rep. No. 1295) as amended in HD 1, recommending passage on Second Reading and referral to JHA. |
| Mar 12, 2025 | The committee on CPC recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 8 Ayes: Representative(s) Matayoshi, Chun, Ilagan, Iwamoto, Kong, Marten, Tam, Pierick; Ayes with reservations: none; Noes: none; and 2 Excused: Representative(s) Ichiyama, Lowen. |
| Mar 10, 2025 | Bill scheduled to be heard by CPC on Wednesday, 03-12-25 2:00PM in House conference room 329 VIA VIDEOCONFERENCE. |
| Mar 6, 2025 | Referred to CPC, JHA, referral sheet 19 |
| Mar 6, 2025 | Pass First Reading |
| Mar 4, 2025 | Received from Senate (Sen. Com. No. 115) in amended form (SD 2). |
| Mar 4, 2025 | Report Adopted; Passed Third Reading, as amended (SD 2). Ayes, 25; Aye(s) with reservations: Senator(s) San Buenaventura. Noes, 0 (none). Excused, 0 (none). Transmitted to House. |
| Feb 28, 2025 | 48 Hrs. Notice 03-04-25. |
| Feb 28, 2025 | Reported from JDC (Stand. Com. Rep. No. 907) with recommendation of passage on Third Reading, as amended (SD 2). |
| Feb 26, 2025 | The committee(s) on JDC recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in JDC were as follows: 3 Aye(s): Senator(s) Rhoads, Gabbard, Chang; Aye(s) with reservations: none ; 1 No(es): Senator(s) San Buenaventura; and 1 Excused: Senator(s) Awa. |
| Feb 21, 2025 | The committee(s) on JDC will hold a public decision making on 02-26-25 9:40AM; Conference Room 016 & Videoconference. |
| Feb 14, 2025 | Report adopted; Passed Second Reading, as amended (SD 1) and referred to JDC. |
| Feb 14, 2025 | Reported from CPN (Stand. Com. Rep. No. 508) with recommendation of passage on Second Reading, as amended (SD 1) and referral to JDC. |
| Feb 7, 2025 | The committee(s) on CPN recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in CPN were as follows: 5 Aye(s): Senator(s) Keohokalole, Fukunaga, McKelvey, Richards, Awa; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none. |
| Feb 5, 2025 | The committee(s) on CPN deferred the measure until 02-07-25 9:46AM; Conference Room 229. |
| Jan 31, 2025 | The committee(s) on CPN has scheduled a public hearing on 02-05-25 10:00AM; Conference Room 229 & Videoconference. |
| Jan 27, 2025 | Re-Referred to CPN, JDC. |
| Jan 21, 2025 | Referred to CPN. |
| Jan 15, 2025 | Introduced and passed First Reading. |
| Jan 13, 2025 | Pending Introduction. |
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Date
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Description
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Location
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Votes
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| Apr 8, 2025 | Third Reading | House Floor |
Passed |
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| Apr 2, 2025 | The committee on JHA recommend that the measure be PASSED, UNAMENDED | House Standing Committee on Judiciary & Hawaiian Affairs |
Passed |
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| Mar 12, 2025 | The committee on CPC recommend that the measure be PASSED, WITH AMENDMENTS | House Standing Committee on Consumer Protection & Commerce |
Passed |
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| Mar 4, 2025 | Third Reading | Senate Floor |
Passed |
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| Feb 26, 2025 | The committee(s) on JDC recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Judiciary |
Passed |
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| Feb 7, 2025 | The committee(s) on CPN recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Commerce and Consumer Protection |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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|---|---|---|
| AOAO Lakeview Sands | ** Against | |
| Community Associations Institute | ** Support | |
| Hawaii Council of Community Associations | ** Against | |
| Hawaii First Realty | ** Support | |
| Hawaiʻi Association of REALTORS | ** Support | |
| Honolulu Tower AOAO | *** Against | Apr 2, 2025 |
| Kokua Council | *** Support | Apr 2, 2025 |
| Law Offices of Mark K. McKellar, LLLC | *** Against | Apr 2, 2025 |
| Law Offices of Philip S. Nerney, LLLC | ** Support | |
| Mariner’s Village 1 | *** Against | Feb 25, 2025 |
| Nakamoto Realty, LLC | ** Against | |
| Palehua Townhouse Association | ** Against | |
| Palehua Townhouse Association | ** Against | |
| Palehua Townhouse Association | *** Against | Apr 2, 2025 |
STAND. COM. REP. NO. 2035
Honolulu, Hawaii
, 2025
RE: S.B. No. 253
S.D. 2
H.D. 1
Honorable Nadine K. Nakamura
Speaker, House of Representatives
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Madame:
Your Committee on Judiciary & Hawaiian Affairs, to which was referred S.B. No. 253, S.D. 2, H.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO CONDOMINIUM RESERVES,"
begs leave to report as follows:
The purpose of this measure is to:
(1) Require condominium association budget summaries to include all required information without referring the reader to other portions of the budget or reserve study;
(2) Provide that the defense of good faith compliance is unavailable to any condominium association whose board adopts a budget that omits the required detailed budget summary; and
(3) Provide that a unit owner has standing to enforce a board's compliance with the statutory provisions relating to a condominium association's budget, if the board failed to substantially comply with those provisions.
Your Committee received testimony in support of this measure from the Hawaiʻi Association of REALTORS; Community Associations Institute; Hawaii First Realty; and five individuals. Your Committee received testimony in opposition to this measure from Honolulu Tower AOAO; Palehua Townhouse Association; Law Offices of Mark K. McKellar, LLLC; and numerous individuals.
Your Committee finds that while previous efforts by the Legislature have improved transparency regarding condominium association fiscal matters, further steps are necessary to ensure full compliance with the disclosure of budget summaries and reserve studies. Your Committee believes there is a need for explicit clarification regarding the unavailability of the good faith defense for associations whose boards fail to include a detailed budget summary and for ensuring that unit owners have standing to enforce compliance. This measure strengthens transparency and promotes greater accountability.
As affirmed by the record of votes of the members of your Committee on Judiciary & Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 253, S.D. 2, H.D. 1, and recommends that it pass Third Reading.
Respectfully submitted on behalf of the members of the Committee on Judiciary & Hawaiian Affairs,
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____________________________ DAVID A. TARNAS, Chair |
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STAND. COM. REP. NO. 1295
Honolulu, Hawaii
, 2025
RE: S.B. No. 253
S.D. 2
H.D. 1
Honorable Nadine K. Nakamura
Speaker, House of Representatives
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Madame:
Your Committee on Consumer Protection & Commerce, to which was referred S.B. No. 253, S.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO CONDOMINIUM RESERVES,"
begs leave to report as follows:
The purpose of this measure is to:
(1) Require condominium association budget summaries to include all required information without referring the reader to other portions of the budget or reserve study;
(2) Provide that the defense of good faith compliance is unavailable to any condominium association whose board adopts a budget that omits the required detailed budget summary; and
(3) Provide that a unit owner has standing to enforce a board's compliance with the statutory provisions relating to a condominium association's budget, if the board failed to substantially comply with those provisions.
Your Committee received testimony in support of this measure from Hawaii First Realty; Hawaiʻi Association of REALTORS; and five individuals. Your Committee received testimony in opposition to this measure from the Palehua Townhouse Association; Honolulu Tower AOAO; Hawaii Council of Community Associations; AOAO Lakeview Sands; and numerous individuals.
Your Committee finds that the Legislature has recently passed laws to increase transparency and accuracy with respect to condominium association replacement reserves and reserve studies. Your Committee further finds that additional effort is needed to ensure that condominium associations are complying with these new laws. Accordingly, this measure is intended to increase condominium association compliance with recent disclosure requirements associated with reserve studies and budget summaries.
Your Committee has amended this measure by:
(1) Changing the effective date to July 1, 3000, to encourage further discussion; and
(2) Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.
As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 253, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 253, S.D. 2, H.D. 1, and be referred to your Committee on Judiciary & Hawaiian Affairs.
Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,
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____________________________ SCOT Z. MATAYOSHI, Chair |
STAND. COM. REP. NO. 907
Honolulu, Hawaii
RE: S.B. No. 253
S.D. 2
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Sir:
Your Committee on Judiciary, to which was referred S.B. No. 253, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO CONDOMINIUM RESERVES,"
begs leave to report as follows:
The purpose and intent of this measure is to:
(1) Exclude the good faith defense for associations whose boards adopt a budget that omits a detailed budget summary as required by section 514B-148, Hawaii Revised Statutes; and
(2) Clarify a unit owner's standing and the association's burden of proving compliance.
Your Committee received testimony in support of this measure from the Community Associations Institute and three individuals.
Your Committee received testimony in opposition to this measure from the Palehua Townhouse Association; Honolulu Tower; Nakamoto Realty, LLC; and seventeen individuals.
Your Committee finds that a reserve study is a budgeting tool utilized by a condominium association for financial planning, including the accumulation of reserve funds for routine repair and maintenance. Recent amendments to existing law to increase transparency require external periodic review of reserve studies, increase the study period to thirty years, and require a detailed budget summary be prepared to better inform owners of the financial condition of an association. However, associations acting in bad faith may publish a misleading reserve study under existing good faith provisions. Your Committee believes that clarification is needed to effectuate the intent of existing law regarding condominium association finances. This measure will establish greater financial transparency between associations and condominium owners to ensure responsible financial management over reserve funds.
Your Committee has amended this measure by:
(1) Inserting language requiring a detailed budget summary as required by section 514B-148, Hawaii Revised Statutes, to contain all required information without referring the reader to other portions of the budget or reserve study;
(2) Clarifying that an association is required to prove that it substantially complied with the requirements of section 514B-148, Hawaii Revised Statutes;
(3) Amending section 1 to reflect its amended purpose; and
(4) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.
As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 253, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 253, S.D. 2.
Respectfully submitted on behalf of the members of the Committee on Judiciary,
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________________________________ KARL RHOADS, Chair |
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STAND. COM. REP. NO. 508
Honolulu, Hawaii
RE: S.B. No. 253
S.D. 1
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2025
State of Hawaii
Sir:
Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 253 entitled:
"A BILL FOR AN ACT RELATING TO CONDOMINIUM RESERVES,"
begs leave to report as follows:
The purpose and intent of this measure is to:
(1) Exclude the good faith defense for associations whose boards adopt a budget that omits a detailed budget summary required by section 514B-148, Hawaii Revised Statutes; and
(2) Clarify a unit owner's standing and the association's burden of proving compliance.
Your Committee received testimony in support of this measure from the Community Associations Institute; Law Offices of Philip S. Nerney, LLLC; and six individuals.
Your Committee received testimony in opposition to this measure from one individual.
Your Committee received comments on this measure from the Law Offices of Mark K. McKellar, LLLC and five individuals.
Your Committee finds that under existing law, a condominium's board of directors is required to create an annual operating budget and to update the association's reserve study at a minimum of once per year. These two documents determine the amount of maintenance fees homeowners must pay to maintain the association property. Condominiums are occasionally required to make certain upgrades, which can cost a condominium association millions of dollars. As a result, condominium associations can be forced to drastically increase maintenance fees. The requirement that condominium associations provide complete and accurate information on required expenditures allows association members to plan accordingly.
Your Committee finds that while these existing requirements are intended to protect homeowners through a policy of transparency, they require fortification by further deterring condominium associations from failing to execute full compliance. This measure provides increased deterrence by making the defense of good faith compliance unavailable to any association whose board adopts a budget that omits the mandated budget summary and by clarifying that unit owners shall have the right to sue the board to enforce compliance.
Your Committee has amended this measure by:
(1) Inserting a defective date of July 1, 2050, to encourage further discussion; and
(2) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.
As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 253, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 253, S.D. 1, and be referred to your Committee on Judiciary.
Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,
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________________________________ JARRETT KEOHOKALOLE, Chair |
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Date
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Testimony PDF
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| Apr 2, 2025 | SB253_HD1_TESTIMONY_JHA_04-02-25_.PDF |
| Mar 12, 2025 | SB253_SD2_TESTIMONY_CPC_03-12-25_.PDF |
| Feb 25, 2025 | SB253_SD1_TESTIMONY_JDC_02-26-25_.PDF |
| Feb 4, 2025 | SB253_TESTIMONY_CPN_02-05-25_.PDF |
Discussed in Hearing
6MIN
House Standing Committee on Judiciary & Hawaiian Affairs
8MIN
House Standing Committee on Consumer Protection & Commerce
26SEC
Senate Floor
Bill Author
