Bill Text: HI SB2404 | 2024 | Regular Session | Introduced
Bill Title: Relating To Condominiums.
Spectrum: Slight Partisan Bill (Democrat 2-1)
Status: (Engrossed - Dead) 2024-03-15 - Passed Second Reading as amended in HD 1 and referred to the committee(s) on JHA with Representative(s) Hussey-Burdick voting aye with reservations; Representative(s) Kong, Pierick voting no (2) and Representative(s) Cochran, Ganaden, Gates, Martinez, Quinlan excused (5). [SB2404 Detail]
Download: Hawaii-2024-SB2404-Introduced.html
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THE SENATE |
S.B. NO. |
2404 |
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THIRTY-SECOND LEGISLATURE, 2024 |
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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 part VI, subpart B, to be appropriately designated and to read as follows:
"§514B- Use of proxies restricted; certain
practices excluded. (a)
Notwithstanding any other provision of this chapter or the declaration
or bylaws of a condominium to the contrary, the use of a proxy, proxy form, or
holder of a proxy shall be prohibited for any vote or for meeting quorum
requirements pursuant to this chapter or the declaration or bylaws of a
condominium.
(b) The following practices shall not be deemed
as the use of a proxy, proxy form, or holder of a proxy:
(1) Any vote or action described in section 514B-123(a); and
(2) The presence at a meeting, or vote cast, by an individual representative of a unit owner; provided that the unit owner is a person other than an individual."
SECTION 2. Section 514B-106, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) The board [may] shall
not act on behalf of the association to amend the declaration or bylaws
(sections 514B-32(a)(11) and 514B-108(b)(7)),
to remove the condominium from the provisions of this chapter (section 514B-47), or to elect members of the board or
determine the qualifications, powers and duties, or terms of office of board
members (subsection (e)); provided that [nothing in this subsection shall be
construed to prohibit board members from voting proxies (section 514B-123) to elect members of the board; provided
further that] notwithstanding
anything to the contrary in the declaration or bylaws, the board may only fill
vacancies in its membership to serve until the next annual or duly noticed
special association meeting. Notice of a
special association meeting to fill vacancies shall include notice of the
election. Any special association
meeting to fill vacancies shall be held on a date that allows sufficient time
for owners to declare their intention to run for election [and to solicit
proxies for that purpose]."
SECTION 3. Section 514B-121, Hawaii Revised Statutes, is amended as follows:
1. By amending subsections (b) and (c) to read:
"(b) Notwithstanding any other
provision of this chapter, [except as provided in subsection (e),] or
the declaration or bylaws of a condominium to the contrary, at any association
meeting the board may direct the use of an electronic voting device to
comply with subsection (e)(2), regardless of whether a secret ballot is
used or required. [Except as provided
in subsection (e), the] The use shall be subject to the following:
(1) The electronic voting device and all associated
equipment shall be isolated from any connection to an external network,
including the Internet, or shall use a form of encryption comparable to that
used for secured internet web browsers;
(2) The board shall establish reasonable procedures
to provide for the secrecy and integrity of the unit owners' votes, including
but not limited to procedures that ensure the availability of a printed audit
trail containing:
(A) The
reference number or internet address of the electronic voting device;
(B) Each
common interest voted; and
(C) The
vote that was tabulated;
(3) A copy of the printed audit trail shall be
available to owners after the meeting in the same manner provided by sections
514B-154 and 514B-154.5; and
(4) A copy of the procedures established pursuant to
paragraph (2) shall be available at no charge to any owner and a copy shall be
available at any meeting [at which] where the association uses an
electronic voting device.
If
any conflict arises between this subsection and subsection (e), subsection (e)
shall control.
(c)
Special meetings of the association may be called by the president, a
majority of the board, or by a petition to the secretary or managing
agent signed and dated by not less than twenty-five per cent of the unit owners
as shown in the association's record of ownership; provided that if the
secretary or managing agent fails to send out the notices for the special
meeting within fourteen days of receipt of the petition, the petitioners shall
have the authority to set the time, date, and place for the special meeting and
to send out the notices [and proxies] for the special meeting at the
association's expense in accordance with the requirements of the bylaws and of
this part; provided further that a special meeting based upon a petition to the
secretary or managing agent shall be set no later than sixty days from receipt
of the petition. The petition shall be
valid only if submitted within one hundred twenty days of the earliest
signature."
2. By amending subsection (e) to read:
"(e) All association meetings shall
be conducted in accordance with the most recent edition of Robert's Rules of
Order Newly Revised. Notwithstanding
any provision to the contrary in the association's declaration or bylaws or in
subsection (b), [electronic meetings and electronic, machine, or mail voting
may be authorized by the board in its sole discretion:
(1) During any period in which a state
of emergency or local state of emergency, declared pursuant to chapter 127A, is
in effect in the county in which the condominium is located;
(2) For any association meeting for
which notice was given while a state of emergency or local state of emergency,
declared pursuant to chapter 127A, was in effect for the county in which the
condominium is located but is no longer in effect as of the date of the
meeting; provided that the meeting is held within sixty days of the date the
notice was first given;
(3) For any electronic, machine, or mail
voting for which notice of voting has been sent; provided that the electronic,
machine, or mail voting deadline is within sixty days of the date the notice
was first sent;
(4) Whenever approved in advance by:
(A) Written consent of a majority of
unit owners; or
(B) Majority vote at an association
meeting; or
(5) Whenever otherwise authorized in an
association's declaration or bylaws.]
members
of the association shall be allowed to participate in mail voting and
participate in any association meeting by means of internet, teleconference, or
other electronic transmission technology in a manner that allows members the
opportunity to:
(1) View and hear the proceedings substantially concurrently with the occurrence of the proceedings;
(2) Vote on matters submitted to members of the association;
(3) Pose questions; and
(4) Make comments.
Each
member of the association who participates in a meeting by means of internet,
teleconference, or other electronic transmission technology shall be deemed to
be present in person at the meeting. The association shall implement reasonable
measures to verify that each person permitted to vote is a member of the
association [or proxy of a member].
As used in this
subsection, "mail voting" includes sending or receiving written
ballots via mail, courier, or electronic transmission; provided that the
transmission is a complete reproduction of the original."
SECTION 4. Section 514B-123, Hawaii Revised Statutes, is amended to read as follows:
"§514B-123 Association meetings; voting[; proxies]. (a) If only one of several owners of a unit is
present at a meeting of the association, that owner is entitled to cast all the
votes allocated to that unit. If more
than one of the owners is present, the votes allocated to that unit may be cast
only in accordance with the agreement of a majority in interest of the owners,
unless the declaration or bylaws expressly provide otherwise. There is majority agreement if any one of the
owners casts the votes allocated to that unit without protest being made by any
of the other owners of the unit to the person presiding over the meeting before
the polls are closed.
(b) [Votes allocated to a unit may be cast
pursuant to a proxy duly executed by a unit owner.] A unit owner may vote by mail or electronic
transmission [through a duly executed proxy.
[If a unit is owned by more than one person, each owner of the
unit may vote or register protest to the casting of votes by the other owners
of the unit through a duly executed proxy.
In the absence of protest, any owner may cast the votes allocated to the
unit by proxy. A unit owner may revoke a
proxy given pursuant to this section only by actual notice of revocation to the
secretary of the association or the managing agent. A proxy is void if it purports to be
revocable without notice.] The association shall mail out a paper ballot
to each unit owner no later than days before the
date of any meeting for the annual or other periodic election of board members.
(c) No votes allocated to a unit owned by the
association may be cast for the election or reelection of directors; provided
that, notwithstanding section 514B-106(b) or any provision in an association's
declaration or bylaws to the contrary, in a mixed-use project containing units
for residential and nonresidential use, where the board is comprised of
directors elected by owners of residential units and directors elected by
owners of nonresidential units, the association, acting by and through its
board, may cast the vote or votes allocated to any nonresidential unit owned by
the association in any election of one or more directors where those eligible
to vote in the election are limited to owners of one or more nonresidential
units, which includes the nonresidential unit owned by the association.
[(d) A proxy, to be valid, shall:
(1) Be
delivered to the secretary of the association or the managing agent, if any, no
later than 4:30 p.m. Hawaii-Aleutian Standard Time on the second business day
prior to the date of the meeting to which it pertains; and
(2) Contain
at least the name of the association, the date of the meeting of the
association, the printed names and signatures of the persons giving the proxy,
the unit numbers for which the proxy is given, the names of persons to whom the
proxy is given, and the date that the proxy is given.
(e) If a proxy is a standard
proxy form authorized by the association, the proxy shall comply with the
following additional requirements:
(1) The proxy shall contain boxes wherein the owner may indicate that
the proxy is given:
(A) For
quorum purposes only;
(B) To
the individual whose name is printed on a line next to this box;
(C) To
the board as a whole and that the vote is to be made on the basis of the
preference of the majority of the directors present at the meeting; or
(D) To
those directors present at the meeting with the vote to be shared with each
director receiving an equal percentage;
provided that if the proxy is returned with no box or more than one of
the boxes in subparagraphs (A) through (D) checked, the proxy shall be counted
for quorum purposes only; and
(2) The proxy form shall also contain a
box wherein the owner may indicate that the owner wishes to obtain a copy of
the annual audit report required by section 514B‑150.
(f) A proxy shall only be valid
for the meeting to which the proxy pertains and its adjournments, may designate
any person as proxy, and may be limited as the unit owner desires and
indicates; provided that no proxy shall be irrevocable unless coupled with a
financial interest in the unit.
(g) A copy, facsimile
telecommunication, or other reliable reproduction of a proxy may be used in
lieu of the original proxy for any and all purposes for which the original
proxy could be used; provided that any copy, facsimile telecommunication, or
other reproduction shall be a complete reproduction of the entire original
proxy.
(h) Nothing in this section shall
affect the holder of any proxy under a first mortgage of record encumbering a
unit or under an agreement of sale affecting a unit.
(i) With respect to the use of
association funds to distribute proxies:
(1) Any
board that intends to use association funds to distribute proxies, including
the standard proxy form referred to in subsection (e), shall first post notice
of its intent to distribute proxies in prominent locations within the project
at least twenty-one days before its distribution of proxies. 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, which shall be limited to black text on white paper, shall
not exceed one single-sided 8‑1/2" x 11" page, indicating
the owner's qualifications to serve on the board or reasons for wanting to
receive proxies; and
(2) A board or member of the board may
use association funds to solicit proxies as part of the distribution of
proxies. If a member of the board, as an
individual, seeks to solicit proxies using association funds, the board member
shall proceed as a unit owner under paragraph (1).
(j) No managing agent or resident manager, or
their employees, shall solicit, for use by the managing agent or resident
manager, any proxies from any unit owner of the association that retains the
managing agent or employs the resident manager, nor shall the managing agent or
resident manager cast any proxy vote at any association meeting except for the
purpose of establishing a quorum.
(k)] (d) No board shall adopt any rule prohibiting the
[solicitation of proxies or] distribution of materials relating to
association matters on the common elements by unit owners; provided that a
board may adopt rules regulating reasonable time, place, and manner of [the
solicitations or distributions, or both.] distribution."
SECTION 5. Section 514B-124.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) If the bylaws provide for cumulative voting
for an election at a meeting, each unit owner present in person [or
represented by proxy] shall have a number of votes equal to the unit
owner's voting percentage multiplied by the number of positions to be filled at
the election."
SECTION 6. Section 514B-125, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:
"(f) A director shall not vote by proxy [at
board meetings]."
SECTION 7. Section 514B-150, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) The board shall make available a copy of the
annual audit to each unit owner at least thirty days [prior to] before
the annual meeting [which] that follows the end of the fiscal
year. [The board shall not be
required to submit a copy of the annual audit report to an owner if the proxy
form issued pursuant to section 514B‑123(e) is not marked to indicate
that the owner wishes to obtain a copy of the report.] If the annual audit has not been completed by
that date, the board shall make available:
(1) An unaudited year end financial statement for the
fiscal year to each unit owner at least thirty days [prior to] before
the annual meeting; and
(2) The annual audit to all owners at the annual
meeting, or as soon as the audit is completed, but not later than six months
after the annual meeting."
SECTION 8. Section 514B-153, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:
"(e) The managing
agent, resident manager, or board shall keep an accurate and current list of
members of the association and their current addresses, and the names and
addresses of the vendees under an agreement of sale, if any. The list shall be maintained at a place
designated by the board, and a copy shall be available, at cost, to any member
of the association as provided in the declaration or bylaws or rules and
regulations or, in any case, to any member who furnishes to the managing agent
or resident manager or the board a duly executed and acknowledged affidavit
stating that the list:
(1) Will be used by the owner personally and only
for the purpose of soliciting votes [or proxies] or providing
information to other owners with respect to association matters; and
(2) Shall not be used by the owner or furnished to
anyone else for any other purpose.
A board may
prohibit commercial solicitations.
Where
the condominium project or any units within the project are subject to a time
share plan under chapter 514E, the association shall only be required to
maintain in its records the name and address of the time share association as
the representative agent for the individual time share owners unless the
association receives a request by a time share owner to maintain in its records
the name and address of the time share owner."
SECTION 9. Section 514B-154, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) After any association meeting, and not
earlier, unit owners shall be permitted to examine [proxies,] tally
sheets, ballots, owners' check-in lists, and the certificate of election;
provided that:
(1) Owners shall make a request to examine the
documents within thirty days after the association meeting;
(2) The board may require owners 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 interest of the
association or its members or both; and
(3) Owners shall pay for administrative costs in
excess of eight hours per year.
The documents
may be destroyed ninety days after the association meeting; provided that [in
the event of] if a contested election[,] occurs, the
documents shall be retained until the contested election is resolved. Copies of tally sheets, owners' check-in
lists, and the certificates of election from the most recent association
meeting shall be provided to any owner upon the owner's request; provided that
the owner pays a reasonable fee for duplicating, postage, stationery, and other
administrative costs associated with handling the request."
SECTION 10. 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] 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."
SECTION 11. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
SECTION 12. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 13. This Act shall take effect on July 1, 2024.
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INTRODUCED BY: |
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Report Title:
Condominiums; Meetings; Members; Proxies; Internet; Voting
Description:
Prohibits the use of proxies in condominium association voting. Requires associations to allow members to vote by mail and attend and cast votes in association meetings through internet, teleconference, or other electronic transmission technology. Requires associations to mail out paper ballots before any annual or other periodic election of board members.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
