BillCam

HOUSE OF REPRESENTATIVES

H.B. NO.

406

TWENTY-NINTH LEGISLATURE, 2017

STATE OF HAWAII

A BILL FOR AN ACT

relating to condominium property regimes.

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

SECTION 1. Chapter 514B, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

"§514B- Condominium education trust fund; ethics training course; board of directors. (a) The real estate commission shall establish, design, supervise, and administer an online ethics training course and examination that is designed specifically for the members of the board of directors of a residential project or association of twenty or more residential units, including any residential project or association of twenty or more residential units that is subject to chapter 514A.

(b) The ethics training course shall include:

(1) Explanations and discussions of applicable ethics laws;

(2) Specific technical and legal requirements;

(3) The underlying purposes and principles of ethics laws;

(4) Examples of practical application of the laws and principles; and

(5) A question-and-answer participatory segment regarding common problems and situations.

The real estate commission shall be responsible for developing the methods and preparing any materials necessary to implement the course; provided that any online videos used shall include codes or questions to be randomly inserted in order to maintain the viewer's ongoing attention.

(1) Procure the services of a third party provider, through the procurement code, to administer the ethics training course and examination;

(2) Reimburse the third party provider through funds in the condominium education trust fund; and

(3) Obtain from each resident manager or managing agent, the names and addresses, including e-mail addresses, of the members of a board of directors to whom this chapter applies and notify the members, through the Internet and regular mail, that they are required to take the online course and pass its examination.

(d) Each member of the board of directors of a residential project or association of twenty or more residential units, including any residential project or association of twenty or more residential units that is subject to chapter 514A, shall be required to take and satisfactorily complete the online ethics course as a condition of eligibility to serve on the board of directors."

SECTION 2. Section 514A-82, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The bylaws shall provide for at least the following:

(1) Board of directors:

(A) The election of a board of directors;

(B) The number of persons constituting the board; provided that condominiums with more than one hundred individual apartment units shall have an elected board of not less than nine members unless not less than sixty-five per cent of all apartment owners vote by mail ballot, or at a special or annual meeting, to reduce the minimum number of directors;

(C) That for the initial term of office, directors shall serve for a term of three years or the term as specified by the bylaws or until their successors have been elected or appointed;

(D) The powers and duties of the board;

(E) The compensation, if any, of the directors; [and]

(F) Whether or not the board may engage the services of a manager or managing agent, or both, and specifying which of the powers and duties granted to the board by this chapter or otherwise may be delegated by the board to either or both of them; and

(G) For a residential condominium of twenty or more residential dwelling units, explanation of the requirement under section 514B- (d) that each member of the board of directors of that residential condominium take and satisfactorily complete the online ethics course offered by the real estate commission;

(2) Method of calling meetings of the apartment owners; what percentage, if other than a majority of apartment owners, constitutes a quorum; what percentage, consistent with this chapter, is necessary to adopt decisions binding on all apartment owners and that votes allocated to any area that constitutes a common element under section 514A-13(h) shall not be cast at any association meeting, regardless of whether it is so designated in the declaration;

(3) Election of a president from among the board of directors who shall preside over the meetings of the board of directors and of the association of apartment owners;

(4) Election of a secretary who shall keep the minute book wherein resolutions shall be recorded;

(5) Election of a treasurer who shall keep the financial records and books of account;

(6) Operation of the property, payment of the common expenses, and determination and collection of the common charges;

(7) Manner of collecting common expenses, expenses, costs, and fees recoverable by the association under section 514A-94, and any penalties and late charges;

(8) Designation and removal of personnel necessary for the maintenance, repair, and replacement of the common elements;

(9) Method of adopting and amending administrative rules governing the details of the operation and use of the common elements;

(10) The restrictions on and requirements respecting the use and maintenance of the apartments and the use of the common elements, not set forth in the declaration, as are designed to prevent unreasonable interference with the use of their respective apartments and of the common elements by the several apartment owners;

(11) The first meeting of the association of apartment owners shall be held not later than one hundred eighty days after recordation of the first apartment conveyance; provided forty per cent or more of the project has been sold and recorded. If forty per cent of the project is not sold and recorded at the end of one year, an annual meeting shall be called; provided ten per cent of the apartment owners so request;

(12) All members of the board of directors shall be owners, co-owners, vendees under an agreement of sale, or an officer of any corporate owner of an apartment. The partners in a general partnership and the general partners of a limited partnership shall be deemed to be the owners of an apartment for this purpose. There shall not be more than one representative on the board of directors from any one apartment;

(13) A director shall not cast any proxy vote at any board meeting, nor shall a director vote at any board meeting on any issue in which the director has a conflict of interest;

(14) No resident manager of a condominium shall serve on its board of directors;

(15) The board of directors shall meet at least once a year;

(16) All association and board of directors meetings shall be conducted in accordance with the most current edition of Robert's Rules of Order;

(17) All meetings of the association of apartment owners shall be held at the address of the condominium project or elsewhere within the State as determined by the board of directors; and

(18) Penalties chargeable against persons for violation of the covenants, conditions, or restrictions set forth in the declaration, or of the bylaws and administrative rules adopted pursuant thereto, method of determination of violations, and manner of enforcing penalties, if any."

SECTION 3. 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; [and]

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

(5) Ethics training courses for members of the boards of directors of residential condominiums of twenty or more residential units."

SECTION 4. Section 514B-108, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The bylaws shall provide for at least the following:

(1) The number of members of the board and the titles of the officers of the association;

(2) Election by the board of a president, treasurer, secretary, and any other officers of the association the bylaws specify;

(3) The qualifications, powers and duties, terms of office, and manner of electing and removing directors and officers and the filling of vacancies; provided that for a residential condominium of twenty or more residential dwelling units, an explanation of the requirement under section 514B- (d) that each member of the board of directors of that residential condominium take and satisfactorily complete the online ethics course offered by the real estate commission;

(4) Designation of the powers the board or officers may delegate to other persons or to a managing agent;

(5) Designation of the officers who may prepare, execute, certify, and record amendments to the declaration on behalf of the association;

(6) The compensation, if any, of the directors;

(7) Subject to subsection (e), a method for amending the bylaws; and

(8) The percentage, consistent with this chapter, that is required to adopt decisions binding on all unit owners; provided that votes allocated to lobby areas, swimming pools, recreation areas, saunas, storage areas, hallways, trash chutes, laundry chutes, and other similar common areas not located inside units shall not be cast at any association meeting, regardless of their designation in the declaration."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval and shall apply to all new or reelected board members of residential projects or associations that are subject to this Act and who are elected or reelected to their respective board of directors after December 31, 2017.

INTRODUCED BY:

_____________________________

Report Title:

Condominium Property Regimes; Board of Directors; Ethics Course

Description:

Requires the board of directors of residential condominiums of twenty or more residential dwelling units to take and satisfactorily complete an online ethics course offered through the Real Estate Commission.

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