Bill Text: HI SB2164 | 2010 | Regular Session | Amended
Bill Title: Condominiums; Estimated Replacement Reserve Fund; Notice
Spectrum: Partisan Bill (Democrat 7-0)
Status: (Engrossed - Dead) 2010-03-24 - (H) The committee(s) recommends that the measure be deferred. [SB2164 Detail]
Download: Hawaii-2010-SB2164-Amended.html
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THE SENATE |
S.B. NO. |
2164 |
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TWENTY-FIFTH LEGISLATURE, 2010 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO CONDOMINIUMS.
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 be appropriately designated and to read as follows:
"§514B- Notice of amendments to governing instruments. (a) The declaration, bylaws, condominium map, public report, or designation of residential units of any condominium created after July 1, 2006 may be amended pursuant to law; provided that the developer provides notice of all changes authorized by this subsection to:
(1) Affected condominium owners by means of notice to the association of apartment owners of the condominium and by posting in common areas of the condominium project;
(2) Purchasers by means of amendments to the developer's public report submitted to the commission pursuant to section 514B-56; and
(3) Prospective purchasers by means of a statement in an announcement or advertisement published pursuant to section 514B-95.5 that amendments have been made to the developer's public report.
(b) Any amendment to the declaration, bylaws, condominium map, public report, or designation of residential units of any condominium created after July 1, 2006 that effects a material change in the project shall trigger a purchaser's right of rescission pursuant to section 514B-87."
SECTION 2. Section 514B-3, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:
""Capital equipment" means an asset with a life of greater than one year or that extends the life of an existing asset for a period greater than one year that is installed by the developer as an integral part of the project and is necessary for the day to day function of the project as it is marketed to owners and prospective owners. Capital equipment shall include but shall not be limited to elevator equipment, energy generation or efficiency equipment, irrigation systems, mail boxes, recreational equipment, safety alarms, sprinkler or fire resistance systems, and surveillance or security systems located in common areas or limited common areas and intended for use by the project as a whole or by appurtenant units."
SECTION 3. Section 514B-41, Hawaii Revised Statutes, is amended to read as follows:
"[[]§514B-41[]] Common
profits and expenses. (a) The common profits of the property shall be
distributed among[,] and the common expenses shall be charged to[,]
the unit owners, including the developer, in proportion to the common interest
appurtenant to [their] each respective [units,] unit
except as otherwise provided in the declaration or bylaws. In a mixed-use
project containing units for both residential and nonresidential use, the
charges and distributions may be apportioned in a fair and equitable manner as
set forth in the declaration. Except as otherwise provided in subsection (c)
or the declaration or bylaws, all limited common element costs and expenses[,]
including but not limited to maintenance, repair, replacement, additions, and
improvements, shall be charged to the owner or owners of the unit or units to
which the limited common element is appurtenant in an equitable manner as set
forth in the declaration.
(b) A unit owner, including the developer,
shall become obligated for the payment of the share of the common expenses
allocated to the owner's unit at the time the certificate of occupancy relating
to the owner's unit is issued by the appropriate county agency; provided that a
developer may assume all the actual common expenses in a project by stating in
the developer's public report required by section 514B‑54 that the unit
owner shall not be obligated for the payment of the owner's share of the common
expenses until [such time as] the developer sends the [owners] owner
written notice that, after a specified date, [the] each unit [owners]
owner shall be obligated to pay for the portion of common expenses that
is allocated to [their] the owner's respective [units.] unit.
The developer shall mail the written notice to [the owners,] each
owner, the association, and the managing agent, if any, at least thirty
days before the specified date.
(c) Unless otherwise provided in the declaration or bylaws, if the board reasonably determines that the extra cost incurred to separately account for and charge for the costs of maintenance, repair, or replacement of limited common elements is not justified, the board may adopt a resolution determining that certain limited common element expenses will be assessed in accordance with the undivided common interest appurtenant to each unit. In reaching its determination, the board shall consider:
(1) The amount at issue;
(2) The difficulty of segregating the costs;
(3) The number of units to which similar limited common elements are appurtenant;
(4) The apparent difference between separate assessment and assessment based on the undivided common interest; and
(5) Any other relevant factors, as determined by the board.
The resolution shall be final and binding in the absence of a determination that the board abused its discretion.
(d) Unless made pursuant to rights reserved in
the declaration and disclosed in the developer's public report, if an
association amends its declaration or bylaws to change the use of the
condominium property regime from residential to nonresidential, all direct and
indirect costs attributable to the newly permitted nonresidential use shall be
charged only to the unit owners using or directly benefiting from the new
nonresidential use[,] in a fair and equitable manner as set forth in the
amendment to the declaration or bylaws.
(e) At the time of the initial date of sale of at least one-half of the total number of apartments in a condominium project, the developer shall collect an amount equal to one per cent of the total sales price of each residential apartment in the condominium project to be set aside for deposit into the estimated replacement reserves required by section 514B-148. This amount shall be held in escrow until it is conveyed to the association of apartment owners on the date of the first meeting of the association as provided by section 514B-102. After that date, the association of apartment owners shall collect the amount designated for deposit into the estimated replacement reserve fund when any remaining apartments are sold and shall deposit the amount in accordance with the applicable bylaws of the association.
(f) The developer shall deposit into escrow an amount equal to one hundred eighty days of operating capital based on the calculation of annual maintenance fees and monthly estimated cost for each unit pursuant to section 514B-83(a)(3). This amount shall be held in escrow until it is conveyed to the association of apartment owners on the date of the first meeting of the association as provided by section 514B-102."
SECTION 4. Section 514B-83, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) A developer's public report shall contain:
(1) The name and address of the project, and the name, address, telephone number, and electronic mail address, if any, of the developer or the developer's agent;
(2) A statement of the deadline, pursuant to section 514B‑89, for completion of construction or, in the case of a conversion, for the completion of any repairs required to comply with section 514B‑5, and the remedies available to the purchaser, including but not limited to cancellation of the sales contract, if the completion of construction or repairs does not occur on or before the completion deadline;
(3) A breakdown of the annual maintenance fees and the monthly estimated cost for each unit, certified to have been based on generally accepted accounting principles, and a statement regarding when a purchaser shall become obligated to start paying the fees pursuant to section 514B‑41(b);
(4) A description of all warranties for the
individual units and the common elements, including the date of initiation and
expiration of any [such] warranties, or a statement that no warranties
exist;
(5) A summary of the permitted uses of the units and,
if applicable, the number of units planned to be devoted to [a] each
particular use;
(6) A description of any development rights reserved to the developer or others;
(7) A declaration, subject to the penalties set forth
in section 514B‑69(b), that the project is in compliance with all county
zoning and building ordinances and codes, and all other county permitting
requirements applicable to the project, pursuant to sections 514B‑5 and
514B‑32(a)(13); [and]
(8) The amount of the purchase price for each unit that is designated for deposit into the estimated replacement reserve fund;
(9) A list of all capital equipment installed by the developer that includes the cost, date of installation, and manufacturer's estimated life-span for each piece of capital equipment or for each system of capital equipment in the case of equipment that is functional only in context of a larger system; and
[(8)] (10) Any other facts, documents,
or information that would have a material impact on the use or value of a unit
or any appurtenant limited common elements or amenities of the project
available for an owner's use, or that may be required by the commission."
SECTION 5. Section 514B-91, Hawaii Revised Statutes, is amended to read as follows:
"§514B-91 Escrow of deposits. All moneys paid by purchasers shall be deposited in trust under a written escrow agreement with an escrow depository licensed pursuant to chapter 449. An escrow depository shall not disburse purchaser deposits to or on behalf of the developer prior to closing except:
(1) As provided in [sections] section 514B-41,
514B‑92 [and], or 514B‑93; or
(2) As provided in the purchaser's sales contract in the event the sales contract is canceled.
An escrow depository shall not disburse a purchaser's deposits at closing unless the escrow depository has received satisfactory assurances that all blanket mortgages and liens have been released from the purchaser's unit in accordance with section 514B‑45. Satisfactory assurances shall include a commitment by a title insurer licensed under chapter 431 to issue the purchaser a title insurance policy ensuring the purchaser that the unit has been conveyed free and clear of the liens."
SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 8. This Act shall take effect on July 1, 2010.
Report Title:
Condominiums; Estimated Replacement Reserve Fund; Notice
Description:
Requires that the developer set aside a percentage of the initial sales price of each residential apartment in a condominium project to be used to fund the project's estimated replacement reserve fund. Requires disclosure of the cost of capital equipment installed in the project. Requires that notice of amendments to project documents be provided to owners, purchasers, and potential purchasers and that amendments that effect a material change trigger a purchaser's right of rescission. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
