SB 801: Condominiums; Managing Agents; Requirements; Community Association Managers

A BILL FOR AN ACT

RELATING TO MANAGING AGENTS.

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

     SECTION 1.  The legislature finds that residential high‑rise properties are held to the same standard as commercial buildings with regard to structural conditions like repairs, maintenance, and reserve requirements.  However, the level of experience and expertise that volunteer board members of associations of apartment owners possess is not comparable to that of business organizations whose facilities are managed by professional property management companies.  The legislature also finds that existing statutory requirements for managing agents are inadequate to protect association board members and unit owners from incompetence, negligence, and lack of property management experience.  Furthermore, existing law requires only that managing agents be licensed real estate brokers.  The lack of requirements for commercial property management experience may cause association board members to suffer losses due to fraud, misrepresentation, or deceit of the managing agent or its employees.

     Accordingly, the purpose of this Act is to require managing agents of residential condominium properties with more than one hundred units located in a county with a population greater than five hundred thousand to be community association managers.

     SECTION 2.  Section 514B-132, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Every managing agent shall:

     (1)  Be a:

          (A)  Licensed real estate broker in compliance with chapter 467 and the rules of the commission.  With respect to any requirement for a corporate managing agent in any declaration or bylaws recorded before July 1, 2006, any managing agent organized as a limited liability company shall be deemed to be organized as a corporation for the purposes of this paragraph, unless the declaration or bylaws are expressly amended after July 1, 2006 to require that the managing agent be organized as a corporation and not as a limited liability company; or

          (B)  Corporation authorized to do business under article 8 of chapter 412;

     (2)  Register with the commission [prior to] before conducting managing agent activity through approval of a completed registration application, payment of fees, and submission of any other additional information set forth by the commission.  The registration shall be for a biennial period with termination on December 31 of an even-numbered year.  The commission shall prescribe a deadline date [prior to] before the termination date for the submission of a completed reregistration application, payment of fees, and any other additional information set forth by the commission.  Any managing agent who has not met the submission requirements by the deadline date shall be considered a new applicant for registration and subject to initial registration requirements.  The information required to be submitted with any application shall include the name, business address, phone number, and names of associations managed;

     (3)  Obtain and keep current a fidelity bond in an amount equal to $500 multiplied by the aggregate number of units of the association managed by the managing agent; provided that the amount of the fidelity bond shall not be less than $20,000 nor greater than $500,000.  Upon request by the commission, the managing agent shall provide evidence of a current fidelity bond or a certification statement from an insurance company authorized by the insurance division of the department of commerce and consumer affairs certifying that the fidelity bond is in effect and meets the requirements of this section and the rules adopted by the commission.  The managing agent shall permit only employees covered by the fidelity bond to handle or have custody or control of any association funds, except any principals of the managing agent that cannot be covered by the fidelity bond.  The fidelity bond shall protect the managing agent against the loss of any association's moneys, securities, or other properties caused by the fraudulent or dishonest acts of employees of the managing agent.  Failure to obtain or maintain a fidelity bond in compliance with this chapter and the rules adopted pursuant thereto, including failure to provide evidence of the fidelity bond coverage in a timely manner to the commission, shall result in nonregistration or the automatic termination of the registration, unless an approved exemption or a bond alternative is presently maintained.  A managing agent who is unable to obtain a fidelity bond may seek an exemption from the fidelity bond requirement from the commission;

     (4)  Act promptly and diligently to recover from the fidelity bond, if the fraud or dishonesty of the managing agent's employees causes a loss to an association, and apply the fidelity bond proceeds, if any, to reduce the association's loss.  If more than one association suffers a loss, the managing agent shall divide the proceeds among the associations in proportion to each association's loss.  An association may request a court order requiring the managing agent to act promptly and diligently to recover from the fidelity bond.  If an association cannot recover its loss from the fidelity bond proceeds of the managing agent, the association may recover by court order from the real estate recovery fund established under section 467-16, provided that:

          (A)  The loss is caused by the fraud, misrepresentation, or deceit of the managing agent or its employees;

          (B)  The managing agent is a licensed real estate broker; and

          (C)  The association fulfills the requirements of sections 467-16 and 467-18 and any applicable rules of the commission;

     (5)  Pay a nonrefundable application fee and, upon approval, an initial registration fee, and subsequently pay a reregistration fee, as prescribed by rules adopted by the director of commerce and consumer affairs pursuant to chapter 91.  A compliance resolution fee shall also be paid pursuant to section 26‑9(o) and the rules adopted pursuant thereto; [and]

     (6)  Report immediately in writing to the commission any changes to the information contained on the registration application or any other documents provided for registration.  Failure to do so may result in termination of registration and subject the managing agent to initial registration requirements[.]; and

     (7)  For residential condominium properties with more than one hundred units located in a county with a population greater than five hundred thousand, be a community association manager.

              For purposes of this paragraph, "community association manager" means an individual who possesses a manager credential issued by a nationwide community association management industry trade group."

     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; Managing Agents; Requirements; Community Association Managers

Description:

Requires managing agents for residential condominium properties with more than one hundred units located in a county with a population greater than 500,000 to possess a community association manager credential from a recognized nationwide community association management industry trade group.  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.

A BILL FOR AN ACT

RELATING TO MANAGING AGENTS.

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

     SECTION 1.  The legislature finds that residential high‑rise properties are held to the same standard as commercial buildings with regard to structural conditions like repairs, maintenance, and reserve requirements.  However, the level of experience and expertise that volunteer board members of associations of apartment owners (AOAO) possess is not comparable to that of business organizations whose facilities are managed by professional property management companies.  The legislature also finds that existing statutory requirements for managing agents are inadequate to protect AOAO board members and unit owners from incompetence, negligence, and lack of property management experience.  Concerning qualifications, existing law requires only that managing agents be licensed real estate brokers.  The lack of requirements for property management experience may cause AOAO board members to suffer losses due to fraud, misrepresentation, or deceit of the managing agent or its employees.

     Accordingly, the purpose of this Act is to require managing agents of residential condominium properties with more than one hundred units located in a county with a population greater than five hundred thousand, to be community association managers.

     SECTION 2.  Section 514B-3, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

     ""Community association manager" means an individual who possesses a manager credential issued by a nationwide community association management industry trade group."

     SECTION 3.  Section 514B-132, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Every managing agent shall:

     (1)  Be a:

          (A)  Licensed real estate broker in compliance with chapter 467 and the rules of the commission.  With respect to any requirement for a corporate managing agent in any declaration or bylaws recorded before July 1, 2006, any managing agent organized as a limited liability company shall be deemed to be organized as a corporation for the purposes of this paragraph, unless the declaration or bylaws are expressly amended after July 1, 2006 to require that the managing agent be organized as a corporation and not as a limited liability company; or

          (B)  Corporation authorized to do business under article 8 of chapter 412;

     (2)  Register with the commission [prior to] before conducting managing agent activity through approval of a completed registration application, payment of fees, and submission of any other additional information set forth by the commission.  The registration shall be for a biennial period with termination on December 31 of an even-numbered year.  The commission shall prescribe a deadline date [prior to] before the termination date for the submission of a completed reregistration application, payment of fees, and any other additional information set forth by the commission.  Any managing agent who has not met the submission requirements by the deadline date shall be considered a new applicant for registration and subject to initial registration requirements.  The information required to be submitted with any application shall include the name, business address, phone number, and names of associations managed;

     (3)  Obtain and keep current a fidelity bond in an amount equal to $500 multiplied by the aggregate number of units of the association managed by the managing agent; provided that the amount of the fidelity bond shall not be less than $20,000 nor greater than $500,000.  Upon request by the commission, the managing agent shall provide evidence of a current fidelity bond or a certification statement from an insurance company authorized by the insurance division of the department of commerce and consumer affairs certifying that the fidelity bond is in effect and meets the requirements of this section and the rules adopted by the commission.  The managing agent shall permit only employees covered by the fidelity bond to handle or have custody or control of any association funds, except any principals of the managing agent that cannot be covered by the fidelity bond.  The fidelity bond shall protect the managing agent against the loss of any association's moneys, securities, or other properties caused by the fraudulent or dishonest acts of employees of the managing agent.  Failure to obtain or maintain a fidelity bond in compliance with this chapter and the rules adopted pursuant thereto, including failure to provide evidence of the fidelity bond coverage in a timely manner to the commission, shall result in nonregistration or the automatic termination of the registration, unless an approved exemption or a bond alternative is presently maintained.  A managing agent who is unable to obtain a fidelity bond may seek an exemption from the fidelity bond requirement from the commission;

     (4)  Act promptly and diligently to recover from the fidelity bond, if the fraud or dishonesty of the managing agent's employees causes a loss to an association, and apply the fidelity bond proceeds, if any, to reduce the association's loss.  If more than one association suffers a loss, the managing agent shall divide the proceeds among the associations in proportion to each association's loss.  An association may request a court order requiring the managing agent to act promptly and diligently to recover from the fidelity bond.  If an association cannot recover its loss from the fidelity bond proceeds of the managing agent, the association may recover by court order from the real estate recovery fund established under section 467-16, provided that:

          (A)  The loss is caused by the fraud, misrepresentation, or deceit of the managing agent or its employees;

          (B)  The managing agent is a licensed real estate broker; and

          (C)  The association fulfills the requirements of sections 467-16 and 467-18 and any applicable rules of the commission;

     (5)  Pay a nonrefundable application fee and, upon approval, an initial registration fee, and subsequently pay a reregistration fee, as prescribed by rules adopted by the director of commerce and consumer affairs pursuant to chapter 91.  A compliance resolution fee shall also be paid pursuant to section 26‑9(o) and the rules adopted pursuant thereto; [and]

     (6)  Report immediately in writing to the commission any changes to the information contained on the registration application or any other documents provided for registration.  Failure to do so may result in termination of registration and subject the managing agent to initial registration requirements[.]; and

     (7)  For residential condominium properties with more than one hundred units located in a county with a population greater than five hundred thousand, be a community association manager."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 2050.

Report Title:

Condominiums; Managing Agents; Requirements; Community Association Managers

Description:

Requires managing agents for residential condominium properties with more than one hundred units located in a county with a population greater than 500,000 to possess a community association manager credential from a recognized nationwide community association management industry trade group.  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.

A BILL FOR AN ACT

relating to managing agents.

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

     SECTION 1.  The legislature finds that residential high-rise properties are held to the same standard as commercial buildings with regard to structural conditions like repairs, maintenance, and reserve requirements.  However, the level of experience and expertise that volunteer association of apartment owners (AOAO) board members possess is not comparable to that of business organizations whose facilities are managed by professional property management companies.  The legislature also finds that existing statutory requirements for managing agents are inadequate to protect AOAO board members and unit owners from incompetence, negligence, and lack of property management experience.  Concerning qualifications, existing law requires only that managing agents be licensed real estate brokers.  The lack of requirements for commercial property management experience may cause AOAO board members to suffer losses due to fraud, misrepresentation, or deceit of the managing agent or its employees. 

     Accordingly, the purpose of this Act is to require managing agents for residential condominium properties over seventy-five feet in height to have commercial property management experience.

     SECTION 2.  Section 514B-132, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Every managing agent shall:

     (1)  Be a:

          (A)  Licensed real estate broker in compliance with chapter 467 and the rules of the commission.  With respect to any requirement for a corporate managing agent in any declaration or bylaws recorded before July 1, 2006, any managing agent organized as a limited liability company shall be deemed to be organized as a corporation for the purposes of this paragraph, unless the declaration or bylaws are expressly amended after July 1, 2006 to require that the managing agent be organized as a corporation and not as a limited liability company; or

          (B)  Corporation authorized to do business under article 8 of chapter 412;

     (2)  Register with the commission [prior to] before conducting managing agent activity through approval of a completed registration application, payment of fees, and submission of any other additional information set forth by the commission.  The registration shall be for a biennial period with termination on December 31 of an even-numbered year.  The commission shall prescribe a deadline date [prior to] before the termination date for the submission of a completed reregistration application, payment of fees, and any other additional information set forth by the commission.  Any managing agent who has not met the submission requirements by the deadline date shall be considered a new applicant for registration and subject to initial registration requirements.  The information required to be submitted with any application shall include the name, business address, phone number, and names of associations managed;

     (3)  Obtain and keep current a fidelity bond in an amount equal to $500 multiplied by the aggregate number of units of the association managed by the managing agent; provided that the amount of the fidelity bond shall not be less than $20,000 nor greater than $500,000.  Upon request by the commission, the managing agent shall provide evidence of a current fidelity bond or a certification statement from an insurance company authorized by the insurance division of the department of commerce and consumer affairs certifying that the fidelity bond is in effect and meets the requirements of this section and the rules adopted by the commission.  The managing agent shall permit only employees covered by the fidelity bond to handle or have custody or control of any association funds, except any principals of the managing agent that cannot be covered by the fidelity bond.  The fidelity bond shall protect the managing agent against the loss of any association's moneys, securities, or other properties caused by the fraudulent or dishonest acts of employees of the managing agent.  Failure to obtain or maintain a fidelity bond in compliance with this chapter and the rules adopted pursuant thereto, including failure to provide evidence of the fidelity bond coverage in a timely manner to the commission, shall result in nonregistration or the automatic termination of the registration, unless an approved exemption or a bond alternative is presently maintained.  A managing agent who is unable to obtain a fidelity bond may seek an exemption from the fidelity bond requirement from the commission;

     (4)  Act promptly and diligently to recover from the fidelity bond, if the fraud or dishonesty of the managing agent's employees causes a loss to an association, and apply the fidelity bond proceeds, if any, to reduce the association's loss.  If more than one association suffers a loss, the managing agent shall divide the proceeds among the associations in proportion to each association's loss.  An association may request a court order requiring the managing agent to act promptly and diligently to recover from the fidelity bond.  If an association cannot recover its loss from the fidelity bond proceeds of the managing agent, the association may recover by court order from the real estate recovery fund established under section 467-16, provided that:

          (A)  The loss is caused by the fraud, misrepresentation, or deceit of the managing agent or its employees;

          (B)  The managing agent is a licensed real estate broker; and

          (C)  The association fulfills the requirements of sections 467-16 and 467-18 and any applicable rules of the commission;

     (5)  Pay a nonrefundable application fee and, upon approval, an initial registration fee, and subsequently pay a reregistration fee, as prescribed by rules adopted by the director of commerce and consumer affairs pursuant to chapter 91.  A compliance resolution fee shall also be paid pursuant to section 26‑9(o) and the rules adopted pursuant thereto; [and]

     (6)  Report immediately in writing to the commission any changes to the information contained on the registration application or any other documents provided for registration.  Failure to do so may result in termination of registration and subject the managing agent to initial registration requirements[.]; and

     (7)  For residential condominium properties that exceed seventy-five feet in height, have experience in commercial property management."

     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.

Report Title:

Condominiums; Managing Agents; Requirements; Commercial Property Management Experience

Description:

Requires managing agents for residential condominium properties over seventy-five feet in height to have commercial property management experience.

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

STAND. COM. REP. NO.  1353

Honolulu, Hawaii

                , 2025

RE:   S.B. No. 801

      S.D. 1

      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 Housing, to which was referred S.B. No. 801, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO MANAGING AGENTS,"

begs leave to report as follows:

     The purpose of this measure is to require managing agents of residential condominium properties with more than one hundred units located in a county with a population greater than five hundred thousand, to possess a community association manager credential form from a recognized nationwide community association management industry trade group.

     Your Committee received testimony in support of this measure from the Hawaiʻi Association of REALTORS; Hawaii First Realty; and six individuals.  Your Committee received testimony in opposition to this measure from the Real Estate Commission; Hawaiiana Management Company, Ltd.; and one individual.  Your Committee received comments on this measure from the Community Associations Institute, Hawaii Chapter, Legislative Action Committee.

     Your Committee finds that the existing qualifications for managing agents of residential properties, particularly in larger condominium buildings, are insufficient to protect associations of apartment owners from the risks associated with inadequate property management expertise.  This measure requires that managing agents of residential properties with more than one hundred units in certain counties be certified community association managers, ensuring that these individuals possess the necessary qualifications and experience to effectively manage complex properties and protect the interests of unit owners.

     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 Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 801, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 801, S.D. 1, H.D. 1, and be referred to your Committee on Consumer Protection & Commerce.

Respectfully submitted on behalf of the members of the Committee on Housing,

STAND. COM. REP. NO. 719

Honolulu, Hawaii

RE:    S.B. No. 801

       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. 801 entitled:

"A BILL FOR AN ACT RELATING TO MANAGING AGENTS,"

begs leave to report as follows:

     The purpose and intent of this measure is to require managing agents of residential condominium properties over seventy-five feet in height to have commercial property management experience.

     Your Committee received testimony in support of this measure from the Hawaiʻi Association of REALTORS and four individuals.

     Your Committee received testimony in opposition to this measure from Hawaii First Realty, Community Associations Institute, and one individual.

     Your Committee received comments on this measure from the Hawaiʻi Real Estate Commission and two individuals.

     Your Committee finds that high-rise condominium properties have complex operational, safety, and financial management needs similar to those of commercial buildings, and some buildings may also lease available space to commercial businesses.  Volunteer board members of condominium associations often do not possess the experience necessary to manage these challenges effectively, resulting in many associations relying on managing agents.  This measure would therefore require managing agents to have commercial property management experience to help ensure these properties are managed effectively and responsibly.

     Your Committee has heard the concerns raised in testimony that this measure, in its current form, does not acknowledge the differences in commercial property management and residential property management.  Additionally, rather than requiring commercial property management experience or simply a real estate broker license, a better solution may be implementing certain credentials and education requirements for managing agents that are specific to the health and safety issues of Hawaii's common interest community associations, especially for the State's most densely populated areas.  Amendments to this measure are therefore necessary to address these concerns.

     Accordingly, your Committee has amended this measure by:

     (1)  Deleting language that would have required managing agents of residential condominium properties exceeding seventy-five feet in height to have experience in commercial property management;

     (2)  Inserting language requiring managing agents for residential condominium properties with more than one hundred units located in a county with a population of more than five hundred thousand to be credentialed community association managers;

     (3)  Inserting a definition of "community association manager" to mean an individual who possesses a manager credential issued by a nationwide community association management industry trade group;

     (4)  Amending section 1 to reflect its amended purpose;

     (5)  Inserting an effective date of July 1, 2050, to encourage further discussion; and

     (6)  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. 801, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 801, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,