SB 3181: Condominium Associations; Directors; Officers; Educational Requirements; Association Managers; Licensure

THE SENATE	S.B. NO.	3181
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:

 

PART I

     SECTION 1.  The legislature finds that condominium associations manage millions of dollars in common property and reserves and make decisions that directly affect the safety, financial stability, and quality of life of Hawaiʻi residents.

     The legislature further finds condominium association directors, officers, and managers exercise significant fiduciary authority over association finances, contracts, and common property.  However, existing condominium law does not require standardized education or training in fiduciary duties, financial oversight, conflicts of interest, or compliance with state law, nor does it require specialized knowledge and experience with condominium law.  This lack of education has contributed to preventable governance errors, deferred maintenance, owner disputes, and costly litigation, undermining trust and increasing financial risk.

     The legislature also finds that other states have successfully implemented programs to bolster the education and preparedness of directors, officers, and managers in managing the operations of a condominium association.  Several states have successfully implemented statutory or trust-funded director education programs — including Colorado, Florida, Maryland, Nevada, and Virginia — resulting in more informed boards, better financial oversight, and reduced disputes.  Additionally, several other states — including Alaska, Connecticut, Florida, Georgia, Illinois, Nevada, and Virginia — established regulatory frameworks for the licensure of association managers that requires a third-party certification or minimum level of management and condominium education.

     The purpose of this Act is to bolster condominium governance in the State by:

     (1)  Requiring mandatory education for condominium directors and officers to promote informed, accountable, and responsible governance; and

     (2)  Establishing a regulatory framework for the licensure of association managers.

PART II

     SECTION 2.  Section 514B-71, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  The commission shall establish a condominium education trust fund that the commission shall use for educational purposes.  Educational purposes shall include financing or promoting:

     (1)  Education and research in the field of condominium management, condominium project registration, and real estate, for the benefit of the public and those required to be registered under this chapter;

     (2)  The improvement and more efficient administration of associations;

     (3)  Expeditious and inexpensive procedures for resolving association disputes;

     (4)  Support for mediation of condominium related disputes; [and]

     (5)  Support for voluntary binding arbitration between parties in condominium related disputes, pursuant to section 514B-162.5[.]; and

     (6)  The commission-developed or commission-approved training curriculum for association directors and officers to fulfill the educational requirements under section 514B-107."

     SECTION 3.  Section 514B-107, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-107  Board; limitations.  (a)  Members of the board shall be unit owners or co-owners, vendees under an agreement of sale, a trustee of a trust which owns a unit, or an officer, partner, member, or other person authorized to act on behalf of any other legal entity which owns a unit.  There shall not be more than one representative on the board from any one unit.

     (b)  No tenant, resident manager, or employee of a condominium shall serve on its board.

     For the purposes of this subsection, "tenant" means any person who occupies a dwelling unit for dwelling purposes who is not also an owner of a dwelling unit in the same condominium.

     (c)  An owner shall not act as an officer of an association and an employee of the managing agent retained by the association.  Any owner who is a board member of an association and an employee of the managing agent retained by the association shall not participate in any discussion regarding a management contract at a board meeting and shall be excluded from any executive session of the board where the management contract or the property manager will be discussed.

     (d)  Directors shall not expend association funds for their travel, directors' fees, and per diem, unless owners are informed and a majority approve of these expenses; provided that, with the approval of the board, directors may be reimbursed for actual expenditures incurred on behalf of the association.  The board meeting minutes shall reflect in detail the items and amounts of the reimbursements.

     (e)  Associations at their own expense shall provide all board members with a current copy of the association's declaration, bylaws, house rules, and, annually, a copy of this chapter with amendments.

     (f)  The directors may expend association funds, which shall not be deemed to be compensation to the directors, to educate and train themselves in subject areas directly related to their duties and responsibilities as directors; provided that the approved annual operating budget shall include these expenses as separate line items.  These expenses may include registration fees, books, videos, tapes, other educational materials, and economy travel expenses.  Except for economy travel expenses within the State, all other travel expenses incurred under this subsection shall be subject to the requirements of subsection (d).

     (g)  Each director and officer of an association shall submit a certification that the director or officer has:

     (1)  Received and reviewed a copy of the association's articles of incorporation, bylaws, and rules and regulations;

     (2)  Completed a commission-developed or commission-approved training curriculum that, at minimum, shall include education on the requirements under this chapter concerning association governance, including conducting meetings and fiscal matters; and

     (3)  Any other educational requirement as determined by the commission by rules adopted pursuant to chapter 91.

The certification shall be submitted to the board no later than ninety days after election or appointment.

     A director's or officer's failure to comply with the requirements under this subsection shall disqualify the director or officer from serving in that role."

     SECTION 4.  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 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 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 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[.]; and

    (16)  A director's or officer's certification submitted to the board pursuant to section 514B-107(g)."

     SECTION 5.  Each person serving as a director or officer of a condominium association who is actively serving on June 30, 2026, shall certify in writing to the board that the person has duly completed the requirements of section 514B-107(g), Hawaii Revised Statutes, as amended by section 2 of this Act, no later than October 1, 2026.

PART III

     SECTION 6.  Chapter 514B, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part    .  community association managers

     §514B-     Definitions.  As used in this part, unless the context otherwise requires:

     "Association management" means the performance for compensation of services relating to the operation, administration, or governance of a community association, including but not limited to:

     (1)  Financial and budgetary administration;

     (2)  Reserve study coordination and long-term maintenance planning;

     (3)  Procurement and contract administration;

     (4)  Maintenance and repair coordination;

     (5)  Recordkeeping and statutory compliance assistance; and

     (6)  Advising boards on governance procedures and legal obligations.

     "Association management firm" means a sole proprietorship, partnership, corporation, or other business entity that provides association management services through one or more licensed association managers.

     "Association manager" means an individual licensed pursuant to this part to provide association management services.

     §514B-     License required.  (a)  No person shall engage in association management for compensation or act as a managing agent or resident manager unless the person is licensed as an association manager under this part.

     (b)  No association management firm shall operate in this State unless the association management firm designates at least one association manager responsible for compliance with this chapter.

     (c)  A license issued under this part shall be specific to association management and shall not constitute, require, or replace a real estate broker license under chapter 467.

     §514B-     Exemption.  This part shall not apply to:

     (1)  Board members who are volunteers acting without compensation;

     (2)  Employees of an association acting under the direct supervision of an association manager; or

     (3)  Attorneys, certified public accountants, or engineers licensed under the laws of the State and acting within the scope of their professional licensure.

     §514B-     Rules.  The commission shall adopt rules pursuant to chapter 91 necessary to implement this part, including rules governing:

     (1)  License applications and renewals;

     (2)  Fees;

     (3)  Examinations;

     (4)  Education requirements; and

     (5)  Disciplinary proceedings.

     §514B-     Qualifications for licensure.  An applicant for licensure as an association manager shall:

     (1)  Be at least eighteen years of age;

     (2)  Possess a high school diploma or equivalent;

     (3)  Complete a commission-approved pre-licensing education program in:

          (A)  This chapter;

          (B)  Fiduciary duties and ethics;

          (C)  Association budgeting, reserves, and financial controls;

          (D)  Procurement and contract administration;

          (E)  Maintenance planning and life-cycle analysis; and

          (F)  Recordkeeping and owner disclosure requirements;

     (4)  Pass a written examination demonstrating competency in association management; and

     (5)  Submit to a criminal history record check as determined by rule.

     §514B-     Continuing education.  (a)  Each association manager shall complete continuing education requirements as a condition of license renewal.

     (b)  Continuing education shall include instruction in:

     (1)  Legislative acts that change any of the provisions of this chapter;

     (2)  Ethics and fiduciary responsibilities;

     (3)  Reserve funding and long-term planning; and

     (4)  Risk management.

     §514B-     Standards of conduct.  An association manager shall:

     (1)  Act in the best interests of the association;

     (2)  Exercise reasonable care, diligence, and professional judgment;

     (3)  Disclose and avoid conflicts of interest;

     (4)  Comply with this chapter, rules adopted thereunder, and applicable governing documents; and

     (5)  Maintain complete and accurate association records.

     §514B-     Discipline; enforcement.  (a)  The commission may deny, suspend, revoke, or place conditions upon a license and may impose administrative fines for violations of this part or rules adopted thereunder.

     (b)  Grounds for discipline shall include:

     (1)  Fraud or misrepresentation;

     (2)  Gross negligence or incompetence

     (3)  Misappropriation of association funds;

     (4)  Failure to disclose conflicts of interest; or

     (5)  Repeated violations of any provision of this chapter."

PART IV

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect upon its approval.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Condominium Associations; Directors; Officers; Educational Requirements; Association Managers; Licensure

 

Description:

Requires condominium association directors and officers to complete certain educational requirements within ninety days of election or appointment.  Establishes a regulatory framework for the licensure of condominium association managers.

 

 

 

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