SB 2837: Real Estate Commission; Condominiums; Associations; Boards; Elections; Proxies; Repeal

A BILL FOR AN ACT

relating to condominiums.

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

     SECTION 1.  The legislature finds that association-governed residential condominium communities comprise a significant portion of the State's housing stock.  The number of individuals living in residences governed by condominium associations has risen steadily for over sixty years and is expected to increase because it is one of the more affordable means of home ownership.

     The legislature also finds that the state should support policies that foster trust and confidence in association governance, maintain the representative character of associations, and ensure ongoing viability of this type of property ownership.

     The legislature also finds that, although the use of proxies in condominium association board elections provides the appearance of greater member participation, there have been numerous reports of cases where proxies are used by incumbent board directors to pre-determine the outcome of an association board election, at times with the assistance of managing agents, by using blocks of proxies to reelect themselves and remain in their positions for decades. 

     The legislature additionally finds that elections by direct owner ballot votes, by mail or in-person, remove the need for proxy assignments, ensuring fairer elections for condominium association boards.

     Accordingly, the purpose of this Act is to:

     (1)  Modify quorum requirements and repeal statutory proxy voting provisions for condominium association board elections;

     (2)  Authorize the real estate commission to take any of the following actions for alleged or actual violations of rules or laws relating to condominium association board elections:

          (A)  Undertake investigations;

          (B)  Undertake civil proceedings in a court with the intention of enjoining certain acts or practices;

          (C)  Issue and serve cease and desist orders; and

          (D)  Impose penalties;

     (3)  Impose certain duties and obligations on condominium association board members with regard to election processes;

     (4)  Clarify the conditions for a valid condominium association board election; and

     (5)  Substitute certain requirements for written affidavits with requirements for written certification in relation to access to certain association documents.

     SECTION 2.  Section 514B-61, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  If it appears that any person has engaged, is engaging, or is about to engage in any act or practice in violation of this part, part V, section 514B‑103, 514B-121, 514B-123, 514B-124.5, 514B‑132, 514B‑134, 514B‑149, sections 514B‑152 to 514B‑154, section 514B‑154.5, or any of the commission's related rules or orders, the commission, without prior administrative proceedings, may maintain an action in the appropriate court to enjoin that act or practice or for other appropriate relief.  The commission shall not be required to post a bond or to prove that no adequate remedy at law exists in order to maintain the action."

     SECTION 3.  Section 514B-65, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-65  Investigative powers.  If the commission has reason to believe that any person is violating or has violated this part, part V, section 514B‑103, 514B-121, 514B-123, 514B‑124.5, 514B‑132, 514B‑134, 514B‑149, sections 514B‑152 to 514B‑154, section 514B‑154.5, or the rules of the commission adopted pursuant thereto, the commission may conduct an investigation of the matter and examine the books, accounts, contracts, records, and files of all relevant parties.  For purposes of this examination, the developer and the real estate broker shall keep and maintain records of all sales transactions and of the funds received by the developer and the real estate broker in accordance with chapter 467 and the rules of the commission, and shall make the records accessible to the commission upon reasonable notice and demand."

     SECTION 4.  Section 514B-66, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-66  Cease and desist orders.  In addition to its authority under sections 514B‑67 and 514B‑68, whenever the commission has reason to believe that any person is violating or has violated this part, part V, section 514B‑103, 514B-121, 514B-123, 514B-124.5, 514B‑132, 514B‑134, 514B‑149, sections 514B‑152 to 514B‑154, section 514B‑154.5, or the rules of the commission adopted pursuant thereto, it may issue and serve upon the person a complaint stating its charges in that respect and containing a notice of a hearing at a stated place and upon a day at least thirty days after the service of the complaint.  The person served [has] shall have the right to appear at the place and time specified and show cause why an order should not be entered by the commission requiring the person to cease and desist from the violation of the law or rules charged in the complaint.  If the commission finds that this chapter or the rules of the commission have been or are being violated, it shall make a report in writing stating its findings as to the facts and shall issue and cause to be served on the person an order requiring the person to cease and desist from the violations.  The person, within thirty days after service upon the person of the report or order, may obtain a review thereof in the appropriate circuit court."

     SECTION 5.  Section 514B-68, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-68  Power to enjoin.  Whenever the commission believes from satisfactory evidence that any person has violated this part, part V, section 514B‑103, 514B-121, 514B-123, 514B‑124.5, 514B‑132, 514B‑134, 514B‑149, sections 514B‑152 to 514B‑154, section 514B‑154.5, or the rules of the commission adopted pursuant thereto, it may conduct an investigation of the matter and bring an action against the person in any court of competent jurisdiction on behalf of the State to enjoin the person from continuing the violation or doing any acts in furtherance thereof."

     SECTION 6.  Section 514B-69, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-69  Penalties.  (a) Any person who violates or fails to comply with this part, part V, section 514B‑103, 514B-121, 514B-123, 514B-124.5, 514B‑132, 514B‑134, 514B‑149, sections 514B‑152 to 514B‑154, or section 514B‑154.5, shall be guilty of a misdemeanor and shall be punished by a fine not exceeding $10,000, or by imprisonment for a term not exceeding one year, or both.  Any person who violates or fails to comply with any rule, order, decision, demand, or requirement of the commission under this part, part V, section 514B‑103, 514B-121, 514B-123, 514B-124.5, 514B‑132, 514B‑134, 514B‑149, sections 514B‑152 to 514B‑154, or section 514B‑154.5, shall be punished by a fine not exceeding $10,000.

     (b)  In addition to any other actions authorized by law, any person who violates or fails to comply with this part, part V, section 514B‑103, 514B-121, 514B-123, 514B-124.5, 514B‑132, 514B‑134, 514B‑149, sections 514B‑152 to 514B‑154, section 514B‑154.5, or the rules of the commission adopted pursuant thereto, shall also be subject to a civil penalty not exceeding $10,000 for any violation.  Each violation shall constitute a separate offense."

     SECTION 7.  Section 514B-106, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-106  Board; powers and duties.  (a)  Except as provided in the declaration, the bylaws, subsection (b), or other provisions of this chapter, the board may act in all instances on behalf of the association.  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.  Any violation by a board or its officers or members of the mandatory provisions of section 514B‑161 or 514B-162 may constitute a violation of the fiduciary duty owed pursuant to this subsection; provided that a board member may avoid liability under this subsection by indicating in writing the board member's disagreement with [such] the board action or rescinding or withdrawing the violating conduct within forty-five days of the occurrence of the initial violation.

     (b)  The board may not act on behalf of the association to amend the declaration or bylaws (sections 514B-32(a)(11) and 514B-108(b)(7)), to remove the condominium from the provisions of this chapter (section 514B-47), or to elect members of the board or determine the qualifications, powers and duties, or terms of office of board members (subsection (e)); provided that nothing in this subsection shall be construed to prohibit board members from voting [proxies] (section 514B-123) to elect members of the board; provided further that notwithstanding anything to the contrary in the declaration or bylaws, the board may only fill vacancies in its membership to serve until the next annual or duly noticed special association meeting.  Notice of a special association meeting to fill vacancies shall include notice of the election.  Any special association meeting to fill vacancies shall be held on a date that allows sufficient time for owners to declare their intention to run for election and to solicit [proxies] votes for that purpose.

     (c)  Within thirty days after the adoption of any proposed budget for the condominium, the board shall make available a copy of the budget to all the unit owners and shall notify each unit owner that the unit owner may request a copy of the budget.

     (d)  The declaration may provide for a period of developer control of the association, during which a developer, or persons designated by the developer, may appoint and remove the officers and members of the board.  Regardless of the period provided in the declaration, a period of developer control terminates no later than the earlier of:

     (1)  Sixty days after conveyance of seventy-five per cent of the common interest appurtenant to units that may be created to unit owners other than a developer or affiliate of the developer;

     (2)  Two years after the developer has ceased to offer units for sale in the ordinary course of business;

     (3)  Two years after any right to add new units was last exercised; or

     (4)  The day the developer, after giving written notice to unit owners, records an instrument voluntarily surrendering all rights to control activities of the association.

A developer may voluntarily surrender the right to appoint and remove officers and members of the board before termination of that period, but in that event the developer may require, for the duration of the period of developer control, that specified actions of the association or board, as described in a recorded instrument executed by the developer, be approved by the developer before they become effective.

     (e)  Not later than the termination of any period of developer control, the unit owners shall elect a board of at least three members; provided that projects created after May 18, 1984, with one hundred or more individual units, shall have an elected board of at least nine members unless the membership has amended the bylaws to reduce the number of directors; and provided further that projects with more than one hundred individual units where at least seventy per cent of the unit owners do not reside at the project may amend the bylaws to reduce the board to as few as five members by the written consent of a majority of the unit owners or the vote of a majority of a quorum at any annual meeting or special meeting called for that purpose.  The association may rely on its membership records in determining whether a unit is owner-occupied.  A decrease in the number of directors shall not deprive an incumbent director of any remaining term of office.

     (f)  At any regular or special meeting of the association, any member of the board may be removed and successors shall be elected for the remainder of the term to fill the vacancies thus created.  The removal and replacement shall be by a vote of a majority of the unit owners and, otherwise, in accordance with all applicable requirements and procedures in the bylaws for the removal and replacement of directors and, if removal and replacement is to occur at a special meeting, section 514B‑121(c).

     (g)  Within ninety days after being elected or appointed to the board, each newly elected or appointed director shall certify in writing to the secretary of the association that the director:

     (1)  Has read the association's declaration, articles of incorporation, bylaws, house rules, and other association documents necessary for the operation of the property;

     (2)  Shall work to uphold the association's declaration, articles of incorporation, bylaws, house rules, and other association documents to the best of the director's ability; and

     (3)  Shall faithfully discharge the director's fiduciary duty to the association;

provided that the written certification shall be valid for the entirety of the director's uninterrupted term of office.  A director who fails to timely file the written certification shall be automatically suspended from service on the board until the director complies with this subsection.  The board may appoint a member to temporarily fill the vacancy during the director's period of suspension.  The secretary shall retain the director's written certification for inspection by association members for five years after a director's election or appointment, or the duration of the director's uninterrupted term of office, whichever is longer.  Failure to retain a record of a director's written certification shall not affect the validity of any board action."

     SECTION 8.  Section 514B-121, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (c) to read:

     "(c)  Special meetings of the association may be called by the president, a majority of the board, or by a petition to the secretary or managing agent signed and dated by [no] not less than twenty-five per cent of the unit owners as shown in the association's record of ownership; provided that if the secretary or managing agent fails to send out the notices for the special meeting within fourteen days of receipt of the petition, the petitioners shall have the authority to set the time, date, and place for the special meeting and to send out the notices [and proxies] for the special meeting at the association's expense in accordance with the requirements of the bylaws and of this part; provided further that a special meeting based upon a petition to the secretary or managing agent shall be set no later than sixty days from receipt of the petition.  The petition shall be valid only if submitted within one hundred twenty days of the earliest signature."

     2.  By amending subsection (e) to read:

     "(e)  Notwithstanding any provision to the contrary in the association's declaration or bylaws, electronic meetings, electronic voting, and mail voting may be authorized by the board in its sole discretion:

     (1)  During any period in which a state of emergency or local state of emergency, declared pursuant to chapter 127A, is in effect in the county in which the condominium is located;

     (2)  For any association meeting for which notice was given while a state of emergency or local state of emergency, declared pursuant to chapter 127A, was in effect for the county in which the condominium is located but is no longer in effect as of the date of the meeting; provided that the meeting is held within sixty days of the date the notice was first given;

     (3)  When approved by adoption of a special meeting rule at an association meeting that permits the board to authorize electronic meetings, electronic voting, and mail voting;

     (4)  When approved [no] not less than three months and [no] not more than eighteen months before the electronic meeting, electronic voting, and mail voting by:

          (A)  Written consent of a majority of unit owners; or

          (B)  Majority vote at an association meeting; or

     (5)  Whenever otherwise authorized in an association's declaration or bylaws.

     For any electronic meetings, electronic voting, and mail voting, the voting deadline shall be within sixty days of the date the notice was first sent.  The association shall implement reasonable measures to verify that each person permitted to vote is a member of the association [or proxy of a member].

     As used in this subsection, "mail voting" includes sending or receiving written ballots via mail, courier, or electronic transmission; provided that the transmission is a complete reproduction of the original."

     SECTION 9.  Section 514B-123, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-123  Association meetings; voting; [proxies.] ballots; notice of election.  (a)  If only one of several owners of a unit is present at a meeting of the association, that owner [is] shall be entitled to cast all the votes allocated to that unit.  If more than one of the owners is present, the votes allocated to that unit may be cast only in accordance with the agreement of a majority in interest of the owners, unless the declaration or bylaws expressly provide otherwise.  There is majority agreement if any one of the owners casts the votes allocated to that unit without protest being made by any of the other owners of the unit to the person presiding over the meeting before the polls are closed.

     (b)  [Votes allocated to a unit may be cast pursuant to a proxy duly executed by a unit owner.]  A unit owner may vote by mail or electronic transmission [through a duly executed proxy].  If a unit is owned by more than one person, each owner of the unit may vote or register protest to the casting of votes by the other owners of the unit [through a duly executed proxy].  In the absence of protest, any owner may cast the votes allocated to the unit [by proxy.  A unit owner may revoke a proxy given pursuant to this section only by actual notice of revocation to the secretary of the association or the managing agent.  A proxy is void if it purports to be revocable without notice].

     (c)  No votes allocated to a unit owned by the association may be cast for the election or reelection of directors; provided that, notwithstanding section 514B-106(b) or any provision in an association's declaration or bylaws to the contrary, in a mixed-use project containing units for residential and nonresidential use, where the board is comprised of directors elected by owners of residential units and directors elected by owners of nonresidential units, the association, acting by and through its board, may cast the vote or votes allocated to any nonresidential unit owned by the association in any election of one or more directors where those eligible to vote in the election are limited to owners of one or more nonresidential units, which includes the nonresidential unit owned by the association.

     (d)  A [proxy,] ballot, to be valid, shall:

     (1)  Be delivered to the secretary of the association or the managing agent, if any, [no] not later than 4:30 p.m. Hawaii-Aleutian Standard Time on the second business day [prior to] before the date of the meeting to which it pertains; and

     (2)  Contain at least the name of the association[,] and the date of the meeting of the association[, the printed names and signatures of the persons giving the proxy, the unit numbers for which the proxy is given, the names of persons to whom the proxy is given, and the date that the proxy is given].

     [(e)  If a proxy is a standard proxy form authorized by the association, the proxy shall comply with the following additional requirements:

     (1)  The proxy shall contain boxes wherein the owner may indicate that the proxy is given:

          (A)  For quorum purposes only;

          (B)  To the individual whose name is printed on a line next to this box;

          (C)  To the board as a whole and that the vote is to be made on the basis of the preference of the majority of the directors present at the meeting; or

          (D)  To those directors present at the meeting with the vote to be shared with each director receiving an equal percentage;

          provided that if the proxy is returned with no box or more than one of the boxes in subparagraphs (A) through (D) checked, the proxy shall be counted for quorum purposes only; and

     (2)  The proxy form shall also contain a box wherein the owner may indicate that the owner wishes to obtain a copy of the annual audit report required by section 514B‑150.

     (f)  A proxy shall only be valid for the meeting to which the proxy pertains and its adjournments, may designate any person as proxy, and may be limited as the unit owner desires and indicates; provided that no proxy shall be irrevocable unless coupled with a financial interest in the unit.]

     (e)  In the case of any election of one or more directors, to be valid, a ballot shall:

     (1)  List all eligible candidates in alphabetical order by last name, without indicating whether any candidate is an incumbent;

     (2)  Not allow for write-in candidates; and

     (3)  Not contain a space for the owner's signature.

     (f)  With respect to any election of one or more directors:

     (1)  The first notice of election shall:

          (A)  Be mailed or electronically submitted to each unit owner at least sixty days before the election;

          (B)  Contain the correct name and mailing address of the association; and

          (C)  Contain language reminding unit owners of the notice of intent requirements under subsection (g); and

     (2)  The second notice of election shall:

          (A)  Be mailed to unit owners between twenty-one and thirty-four days before the election;

          (B)  Be accompanied by:

               (i)  The written annual meeting notice and agenda;

              (ii)  A printed ballot for each unit owned by that owner; and

             (iii)  An envelope that meets the requirements of subsection (j); and

          (C)  Be posted conspicuously and continuously on the condominium property at least twenty-one days before the annual meeting and election.

     (g)  A unit owner who wishes to serve on the board shall submit written notice of intent to the board or managing agent not later than forty days before the election, accompanied by a written statement to the board of the unit owner's qualifications to serve on the board or reasons for wanting to receive votes.  The statement shall be limited to black text on one side of white paper, which shall not exceed the size of eight and one-half inches by eleven inches.

     (h)  The written notice of intent under subsection (g) shall be deemed effective upon receipt by the association when submitted by one or more of the following methods:

     (1)  Certified mail, return receipt requested;

     (2)  Personal delivery;

     (3)  Regular mail; or

     (4)  Facsimile.

     Upon receipt of a timely written notice by personal delivery, regular mail, or facsimile, the association shall issue a written acknowledgement of receipt to the unit owner.

     (i)  If a member of the board, in the member's individual capacity, seeks to solicit votes using association funds, the board member shall submit written notice of intent to the board not later than forty days before the election, accompanied by a written statement to the board indicating the member's reason for wanting to receive votes.

     (j)  A ballot envelope that accompanies the second notice of election under subsection (f)(2) shall contain:

     (1)  An unmarked, smaller inner envelope to ensure secrecy in voting for each completed ballot;

     (2)  A larger, outer envelope to return each completed ballot, preaddressed to the person or entity authorized to receive ballots on behalf of the association, with space on the outside of the envelope for:

          (A)  The name of the eligible unit owner, unit number, and unit owner's signature; and

          (B)  A box to indicate whether the unit owner wishes to receive a copy of the annual audit report required by section 514B-150;

     (3)  A copy of any written statements received by the board under subsection (g); and

     (4)  Instructions directing a unit owner, upon completion of the ballot, to place the ballot in the inner envelope, place the sealed inner envelope in the outer envelope, and seal the outer envelope.

     [(g)] (k)  A copy, facsimile telecommunication, or other reliable reproduction of a [proxy] ballot may be used in lieu of the original [proxy] ballot for any and all purposes for which the original [proxy] ballot could be used; provided that any copy, facsimile telecommunication, or other reproduction shall be a complete reproduction of the entire original [proxy.] ballot.

     [(h)  Nothing in this section shall affect the holder of any proxy under a first mortgage of record encumbering a unit or under an agreement of sale affecting a unit.

     (i)  With respect to the use of association funds to distribute proxies:

     (1)  Any board that intends to use association funds to distribute proxies, including the standard proxy form referred to in subsection (e), shall first post notice of its intent to distribute proxies in prominent locations within the project at least twenty-one days before its distribution of proxies.  If the board receives within seven days of the posted notice a request by any owner for use of association funds to solicit proxies accompanied by a statement, the board shall mail to all owners either:

          (A)  A proxy form containing the names of all owners who have requested the use of association funds for soliciting proxies accompanied by their statements; or

          (B)  A proxy form containing no names, but accompanied by a list of names of all owners who have requested the use of association funds for soliciting proxies and their statements.

          The statement, which shall be limited to black text on white paper, shall not exceed one single-sided 8‑1/2" x 11" page, indicating the owner's qualifications to serve on the board or reasons for wanting to receive proxies; and

     (2)  A board or member of the board may use association funds to solicit proxies as part of the distribution of proxies.  If a member of the board, as an individual, seeks to solicit proxies using association funds, the board member shall proceed as a unit owner under paragraph (1).

     (j)  No managing agent or resident manager, or their employees, shall solicit, for use by the managing agent or resident manager, any proxies from any unit owner of the association that retains the managing agent or employs the resident manager, nor shall the managing agent or resident manager cast any proxy vote at any association meeting except for the purpose of establishing a quorum.

     (k)] (l)  No board shall adopt any rule prohibiting the solicitation of [proxies] votes or distribution of materials relating to association matters on the common elements by unit owners; provided that a board may adopt rules regulating reasonable time, place, and manner of the solicitations or distributions, or both."

     SECTION 10.  Section 514B-124.5, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§514B-124.5[]]  Voting for elections; cumulative voting[.]; runoff elections; penalties.  (a)  If the bylaws provide for cumulative voting for an election at a meeting, each unit owner [present in person or represented by proxy] shall have a number of votes equal to the unit owner's voting percentage multiplied by the number of positions to be filled at the election.

     (b)  Each unit owner shall be entitled to cumulate the votes of the unit owner and give all of the votes to one nominee or distribute the votes among any or all of the nominees.

     (c)  The nominee or nominees receiving the highest number of votes under this section, up to the total number of positions to be filled, shall be deemed elected and shall be given the longest term.

     (d)  This section shall not prevent the filling of vacancies on the board of directors in accordance with this chapter and the association's governing documents.

     (e)  A quorum shall not be required to hold an election; provided that the election shall not be valid unless at least twenty per cent of the eligible unit owners cast ballots.  The association shall have blank ballots available at the election for distribution to eligible unit owners who have not yet voted.  The ballots shall be handled in the same manner as ballots submitted with the second notice of election under subsection 514B-123(f)."

     (f)  No unit owner shall authorize any other person to vote on the owner's behalf; provided that a unit owner who requires assistance casting a ballot may obtain assistance.

     (g)  The regular election of directors shall occur at the annual meeting.  The first order of business at the annual meeting shall be the collection of ballots not yet cast.

     (h)  An election shall not be required unless the number of candidates who file notices of intent pursuant to subsection 514B-123(g), or the number of candidates who are nominated, exceed the number of board vacancies, or the board vacancies are for unequal terms of office.

     (i)  The association shall conduct a runoff election for candidates who tie unless the bylaws provide for a different method for deciding tied votes.  If a runoff election is required, the runoff election shall be held between twenty-one days and thirty days after the date of the election at which the tied vote occurred.  Within seven days of the election at which the tied vote occurred, the board shall mail or personally deliver to the unit owners a notice of runoff election and meet the requirements for ballot envelopes specified under section 514B-123(j).

     (j)  Any challenge to the election process shall be commenced within sixty days after the election results are announced.

     (k)  A ballot that is not cast in accordance with this chapter shall be deemed invalid.

     (l)  Any person who knowingly votes when the person is not entitled to vote under this chapter shall be guilty of a class C felony.

     (m)  Forgery of a ballot envelope used in an election under this chapter or certificate of election shall be punishable as forgery in the third degree pursuant to section 708-853."

     SECTION 11.  Section 514B-150, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The board shall make available a copy of the annual audit to each unit owner at least thirty days [prior to] before the annual meeting [which] that follows the end of the fiscal year.  The board shall not be required to submit a copy of the annual audit report to an owner if the [proxy form] ballot envelope issued pursuant to section [514B‑123(e)] 514B-123(j) is not marked to indicate that the owner wishes to obtain a copy of the report.  If the annual audit has not been completed by that date, the board shall make available:

     (1)  An unaudited [year end] year-end financial statement for the fiscal year to each unit owner at least thirty days [prior to] before the annual meeting; and

     (2)  The annual audit to all owners at the annual meeting, or as soon as the audit is completed, but not later than six months after the annual meeting."

     SECTION 12.  Section 514B-153, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e)  The managing agent, resident manager, or board shall keep an accurate and current list of members of the association and their current addresses, and the names and addresses of the vendees under an agreement of sale, if any.  The list shall be maintained at a place designated by the board, and a copy shall be available, at cost, to any member of the association as provided in the declaration or bylaws or rules and regulations or, in any case, to any member who furnishes to the managing agent or resident manager or the board a [duly executed and acknowledged affidavit] written certification stating that the list:

     (1)  Will be used by the owner personally and only for the purpose of soliciting votes [or proxies] or providing information to other owners with respect to association matters; and

     (2)  Shall not be used by the owner or furnished to anyone else for any other purpose.

     A board may prohibit commercial solicitations.

     Where the condominium project or any units within the project are subject to a time share plan under chapter 514E, the association shall only be required to maintain in its records the name and address of the time share association as the representative agent for the individual time share owners unless the association receives a request by a time share owner to maintain in its records the name and address of the time share owner."

     SECTION 13.  Section 514B-154, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(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."

     SECTION 14.  Section 514B-154.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(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-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;

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

    (12)  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)  A copy of the management contract from the entity that manages the operation of the property before the organization of an association;

    (14)  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 calendar days of receipt of a request for documents pursuant to this paragraph; and

    (15)  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."

     SECTION 15.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 16.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 17.  This Act shall take effect upon its approval.

Report Title:

Real Estate Commission; Condominiums; Associations; Boards; Elections; Proxies; Repeal

Description:

Modifies quorum requirements and repeals condominium association board election proxy voting.  Authorizes the Real Estate Commission to take certain actions in response to alleged or actual violations of rules or laws relating to condominium association board elections.  Imposes certain duties and obligations on condominium association directors concerning election processes.  Clarifies the conditions for a valid condominium association board election.  Substitutes certain requirements for written affidavits with requirements for written certification in relation to access to association documents.

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