Hawaii-2016-HB2248-Introduced

SECTION 1. Section 514A-11, Hawaii Revised Statutes, is amended to read as follows:

"§514A-11 Recordation and contents of declaration. The bureau of conveyances and the land court shall immediately set up the mechanics and method by which recordation of a master deed or lease and the declaration may be made. Provisions shall be made for the recordation of instruments affecting the individual apartments on subsequent resales, mortgages, and other encumbrances, as is done with all other real estate recordations; provided that land court certificates of title shall not be issued for apartments. The declaration to which section 514A-20 refers shall express the following particulars:

(1) Description of the land, whether leased or in fee simple, on which the building or buildings and improvements are or are to be located;

(2) Description of the building or buildings, stating the number of stories and basements, the number of apartments, and the principal materials of which it or they is or are constructed or to be constructed;

(3) The apartment number of each apartment, and a statement of its location, approximate area, number of rooms, immediate common element to which it has access, designated parking stall if considered a limited common element, and any other data necessary for its proper identification;

(4) Description of the common elements;

(5) Description of the limited common elements, if any, stating to which apartments their use is reserved;

(6) The percentage of undivided interest in the common elements appertaining to each apartment and its owner for all purposes, including voting;

(7) Statement of the purposes for which the building or buildings and each of the apartments are intended and restricted as to use;

(8) The name of a person to receive service of process in the cases hereinafter provided, together with the residence or place of business of the person which shall be within the county in which the property is located;

(9) Provision as to the percentage of votes by the apartment owners which shall be determinative of whether to rebuild, repair, or restore the property in the event of damage or destruction of all or part of the property;

(10) Any further details in connection with the property that the person executing the declaration may deem desirable to set forth consistent with this chapter;

(11) The method by which the declaration may be amended, consistent with this chapter; provided that an amendment to the declarations of all condominium projects existing as of May 22, 1991, and all condominium projects created thereafter shall require [a], after any proposed amendment, rationale, and ballots for voting are mailed by the board to the owners at the expense of the association for vote or written consent, the vote or written consent of seventy-five per cent of all apartment owners[,]; provided further that the vote or written consent, to be valid, must be obtained within three hundred sixty-five days after the mailing; provided further that voting shall cease if the required approval is obtained prior to the passage of three hundred sixty-five days after the mailing, upon which the proposed amendment shall be duly adopted, or if a sufficient percentage have voted in the negative so that passage is unobtainable; provided further that if at least seventy-five per cent approval is not obtained after the passage of three hundred sixty-five days after the mailing, then the amendment shall be duly adopted if at least seventy-five per cent of those unit owners who voted approved the amendment; except as otherwise provided in this chapter; provided further that the declarations of condominium projects having five or fewer apartments may provide for the amendment thereof by a vote or written consent of more than seventy-five per cent of all apartment owners;

(12) Description as to any additions, deletions, modifications, and reservations as to the property, including without limitation provisions concerning the merger or addition of later phases of the project. To the extent provided in the declaration, an amendment to the declaration that is made to implement those additions, deletions, modifications, reservations, or merger provisions shall require the vote or written consent of only the declarant or such percentage of apartment owners as is provided in the declaration; and

(13) A declaration subject to the penalties set forth in section 514A-49(b) that the condominium property regime is in compliance with all zoning and building ordinances and codes, and all other permitting requirements pursuant to section 514A-1.6, and specifying in the case of a property which includes one or more existing structures being converted to condominium status:

(A) Any variances which have been granted to achieve such compliance; and

(B) Whether, as the result of the adoption or amendment of any ordinances or codes, the project presently contains any legal non-conforming uses or structures;

except that a property that is registered pursuant to section 514A-31 shall instead provide this declaration pursuant to [[]section[]] 514A-40."

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

"(b) In addition to the requirements of subsection (a), the bylaws shall be consistent with the following provisions:

(1) At any regular or special meeting of the apartment owners, any one or more members of the board of directors may be removed by the apartment owners and successors shall then and there 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 apartment owners and, otherwise, in accordance with all applicable requirements and procedures in the bylaws for the removal and replacement of directors. If removal and replacement is to occur at a special association meeting, the call for the meeting shall be by the president or by a petition to the secretary or managing agent signed by not less than twenty-five per cent of the apartment owners as shown in the association's record of ownership; provided that if the secretary or managing agent shall fail to send out the notices for the special meeting within fourteen days of receipt of the petition, then the petitioners shall have the authority to set the time, date, and place for the special meeting and to send out the notices for the special meeting in accordance with the requirements of the bylaws. Except as otherwise provided in this section, the meeting for the removal and replacement from office of directors shall be scheduled, noticed, and conducted in accordance with the bylaws of the association;

(2) The bylaws may be amended at any time by the vote or written consent of sixty-five per cent of all apartment owners; provided that:

(A) Each one of the particulars set forth in this subsection shall be embodied in the bylaws always; [~~and~~]

(B) Any proposed bylaws with the rationale for the proposal may be submitted by the board of directors or by a volunteer apartment owners' committee. If submitted by that committee, the proposal shall be accompanied by a petition signed by not less than twenty-five per cent of the apartment owners as shown in the association's record of ownership. The proposed bylaws, rationale, and ballots for voting on any proposed bylaw shall be mailed by the board of directors to the owners at the expense of the association for vote or written consent without change within thirty days of the receipt of the petition by the board of directors[.];

(C) The vote or written consent required to adopt the proposed bylaw shall not be less than sixty-five per cent of all apartment owners; provided that if at least sixty-five per cent approval is not obtained after passage of three hundred sixty-five days after the mailing, then the proposed bylaw shall be duly adopted if at least sixty-five per cent of those unit owners who voted approved the bylaw;

(D) [~~provided that the vote~~] To be valid, the vote or written consent must be obtained within three hundred sixty-five days after mailing for a proposed bylaw submitted by either the board of directors or a volunteer apartment owners' committee[.]; provided further that voting shall cease if the required approval is obtained prior to the passage of three hundred sixty-five days after the mailing, upon which the proposed bylaw shall be duly adopted, or if a sufficient percentage have voted in the negative so that passage is unobtainable;

(E) If the bylaw is duly adopted, then the board shall cause the bylaw amendment to be recorded in the bureau of conveyances or filed in the land court, as the case may be[.]; and

(F) The volunteer apartment owners' committee shall be precluded from submitting a petition for a proposed bylaw that is substantially similar to that which has been previously mailed to the owners within one year after the original petition was submitted to the board.

This paragraph shall not preclude any apartment owner or voluntary apartment owners' committee from proposing any bylaw amendment at any annual association meeting;

(3) Notices of association meetings, whether annual or special, shall be sent to each member of the association of apartment owners at least fourteen days prior to the meeting and shall contain at least:

(A) The date, time, and place of the meeting;

(B) The items on the agenda for the meeting; and

(4) No resident manager or managing agent shall solicit, for use by the manager or managing agent, any proxies from any apartment owner of the association of owners that employs the resident manager or managing agent, nor shall the resident manager or managing agent cast any proxy vote at any association meeting except for the purpose of establishing a quorum. Any board of directors that intends to use association funds to distribute proxies, including the standard proxy form referred to in paragraph (3), shall first post notice of its intent to distribute proxies in prominent locations within the project at least thirty days prior to its distribution of proxies; provided that 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 shall not exceed one hundred words, indicating the owner's qualifications to serve on the board and reasons for wanting to receive proxies;

(5) A director who has a conflict of interest on any issue before the board shall disclose the nature of the conflict of interest prior to a vote on that issue at the board meeting, and the minutes of the meeting shall record the fact that a disclosure was made;

(6) The apartment owners shall have the irrevocable right, to be exercised by the board of directors, to have access to each apartment from time to time during reasonable hours as may be necessary for the operation of the property or for making emergency repairs therein necessary to prevent damage to the common elements or to another apartment or apartments;

(7) An owner shall not act as an officer of an association and an employee of the managing agent employed by the association;

(8) An association's employees shall not engage in selling or renting apartments in the condominium in which they are employed except association-owned units, unless such activity is approved by an affirmative vote of sixty-five per cent of the membership;

(9) The board of directors shall meet at least once a year. Whenever practicable, notice of all board meetings shall be posted by the resident manager or a member of the board in prominent locations within the project seventy-two hours prior to the meeting or simultaneously with notice to the board of directors;

(10) 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;

(11) 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;

(12) 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 paragraph (10);

(13) A lien created pursuant to section 514A-90 may be enforced by the association in any manner permitted by law, including nonjudicial or power of sale foreclosure procedures authorized by chapter 667; and

(14) If the bylaws provide for cumulative voting by the owners, the owners may so vote if an owner gives notice of the owner�s intent to cumulatively vote before voting commences.

The provisions of this subsection shall be deemed incorporated into the bylaws of all condominium projects existing as of January 1, 1988, and all condominium projects created after that date."

SECTION 3. Section 514B-23, Hawaii Revised Statutes, is amended to read as follows:

"§514B-23 Amendments to governing instruments. (a) The declaration, bylaws, condominium map, or other constituent documents of any condominium created before July 1, 2006 may be amended to achieve any result permitted by this chapter, regardless of what applicable law provided before July 1, 2006.

(b) An amendment to the declaration, bylaws, condominium map or other constituent documents authorized by this section may be adopted by the vote or written consent of a majority of the unit owners; provided that if majority approval is not obtained after passage of three hundred sixty-five days after the mailing required by this subsection, then the proposed amendment shall be duly adopted if at least a majority of the unit owners who voted approved the amendment. Any proposed amendments, rationale, and ballots for voting shall be mailed by the board to the owners at the expense of the association for vote or written consent. The vote or written consent, to be valid, must be obtained within three hundred sixty-five days after mailing. Voting shall cease if the required approval is obtained prior to the passage of three hundred sixty-five days, upon which the proposed bylaw shall be duly adopted, or if a sufficient percentage have voted in the negative so that passage is unobtainable; provided that any amendment adopted pursuant to this section shall not invalidate the reserved rights of a developer. If an amendment grants to any person any rights, powers, or privileges permitted by this chapter, all correlative obligations, liabilities, and restrictions in this chapter also apply to that person."

SECTION 4. Section 514B-32, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) A declaration shall describe or include the following:

(1) The land submitted to the condominium property regime;

(2) The number of the condominium map filed concurrently with the declaration;

(3) The number of units in the condominium property regime;

(4) The unit number of each unit and common interest appurtenant to each unit;

(5) The number of buildings and projects in the condominium property regime, and the number of stories and units in each building;

(6) The permitted and prohibited uses of each unit;

(7) To the extent not shown on the condominium map, a description of the location and dimensions of the horizontal and vertical boundaries of any unit. Unit boundaries may be defined by physical structures or, if a unit boundary is not defined by a physical structure, by spatial coordinates;

(8) The condominium property regime's common elements;

(9) The condominium property regime's limited common elements, if any, and the unit or units to which each limited common element is appurtenant;

(10) The total percentage of the common interest that is required to approve rebuilding, repairing, or restoring the condominium property regime if it is damaged or destroyed;

(11) The total percentage of the common interest, and any other approvals or consents, that are required to amend the declaration. Except as otherwise specifically provided in this chapter, and except for any amendments made pursuant to reservations set forth in paragraph (12), [~~the approval of the owners of at least sixty-seven per cent of the common interest shall be required for~~] all amendments to the declaration[;] shall require, after any proposed amendment, rationale, and ballots for voting are mailed by the board to the owners at the expense of the association for vote or written consent, the vote or written consent of sixty-seven per cent of all apartment owners; provided that the vote or written consent, to be valid, must be obtained within three hundred sixty-five days after the mailing; provided further that voting shall cease if the required approval is obtained prior to the passage of three hundred sixty-five days after the mailing, upon which the proposed amendment shall be duly adopted, or if a sufficient percentage have voted in the negative so that passage is unobtainable; provided further that if at least sixty-seven per cent approval is not obtained after the passage of three hundred sixty-five days after the mailing, then the amendment shall be duly adopted if at least sixty-seven per cent of those unit owners who voted approved the amendment;

(12) Any rights that the developer or others reserve regarding the condominium property regime, including, without limitation, any development rights, and any reservations to modify the declaration or condominium map. An amendment to the declaration made pursuant to the exercise of those reserved rights shall require only the consent or approval, if any, specified in the reservation; and

(13) A declaration, subject to the penalties set forth in section 514B‑69(b), that the condominium property regime is in compliance with all zoning and building ordinances and codes, and all other permitting requirements pursuant to section 514B‑5 and chapter 205, including section 205-4.6 where applicable. In the case of a project in the agricultural district classified pursuant to chapter 205, the declaration, subject to the penalties set forth in section 514B-69(b), shall include an additional statement that there are no private restrictions limiting or prohibiting agricultural uses or activities in compliance with section 205-4.6. In the case of a property that includes one or more existing structures being converted to condominium property regime status, the declaration required by this section shall specify:

(A) Any variances that have been granted to achieve the compliance; and

(B) Whether, as the result of the adoption or amendment of any ordinances or codes, the project presently contains any legal nonconforming conditions, uses, or structures.

A property that is registered pursuant to section 514B‑51 shall instead provide the required declaration pursuant to section 514B‑54. If a developer is converting a structure to condominium property regime status and the structure is not in compliance with all zoning and building ordinances and codes, and all other permitting requirements pursuant to section 514B‑5, and the developer intends to use purchaser's funds pursuant to the requirements of section 514B‑92 or 514B‑93 to cure the violation or violations, then the declaration required by this paragraph may be qualified to identify with specificity each violation and the requirement to cure the violation by a date certain."

SECTION 5. Section 514B-108, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) The bylaws may be amended at any time by the vote or written consent of at least sixty-seven per cent of all unit owners[.]; provided that if at least sixty-seven per cent approval is not obtained after passage of three hundred sixty-five days after the mailing required by this subsection, then the proposed bylaw shall be duly adopted if at least sixty-seven per cent of those unit owners who voted approved the bylaw.

Any proposed bylaws together with the detailed rationale for the proposal may be submitted by the board or by a volunteer unit owners group. If submitted by that group, the proposal shall be accompanied by a petition signed by not less than twenty-five per cent of the unit owners as shown in the association's record of ownership. The proposed bylaws, rationale, and ballots for voting on any proposed bylaw shall be mailed by the board to the owners at the expense of the association for vote or written consent without change within thirty days of the receipt of the petition by the board. The vote or written consent, to be valid, must be obtained within three hundred sixty-five days after mailing for a proposed bylaw submitted by either the board or a volunteer unit owners group. Voting shall cease if the required approval is obtained prior to the passage of three hundred sixty-five days, upon which the proposed bylaw shall be duly adopted, or if a sufficient percentage have voted in the negative so that passage is unobtainable. If the bylaw is duly adopted, the board shall cause the bylaw amendment to be recorded. The volunteer unit owners group shall be precluded from submitting a petition for a proposed bylaw that is substantially similar to that which has been previously mailed to the owners within three hundred sixty-five days after the original petition was submitted to the board.

This subsection shall not preclude any unit owner or volunteer unit owners group from proposing any bylaw amendment at any annual association meeting."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2248
TWENTY-EIGHTH LEGISLATURE, 2016
STATE OF HAWAII