REPORT TITLE:
Condominiums


DESCRIPTION:
Allows condominium associations to collect from the tenant
overdue maintenance fees the apartment owner owes to the
association; allows an association of apartment owners to
terminate common privileges, e.g., utilities for nonpayment of
maintenance fees; provides title transfer for foreclosure under
three circumstances. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           36
TWENTIETH LEGISLATURE, 1999                                
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:

 1      SECTION 1.  The legislature finds that condominium
 
 2 associations are unable to collect maintenance fees that remain
 
 3 unpaid prior to and during foreclosure proceedings.  The
 
 4 legislature further finds that financial institutions refuse to
 
 5 pay for any outstanding maintenance fees even though secondary
 
 6 mortgage market lenders will reimburse financial institutions for
 
 7 up to six months of owners' delinquent maintenance fees.
 
 8      The purpose of this Act is to enable condominium
 
 9 associations to recover up to six months of maintenance fees,
 
10 terminate common privileges, and collect rent from a tenant up to
 
11 the amount of delinquency. 
 
12      SECTION 2.  Chapter 514A, Hawaii Revised Statutes, is
 
13 amended by adding a new section to part V to be appropriately
 
14 designated and to read as follows:
 
15      "§514A-     Termination of utilities.  Notwithstanding any
 
16 law, rule, or provision of the condominium declaration, bylaws,
 
17 or house rules to the contrary, the association of apartment
 
18 owners may authorize its board of directors, after thirty days'
 
19 prior written notice to the apartment owner's first mortgagee of
 

 
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 1 nonpayment of common assessments, to terminate the delinquent
 
 2 apartment's common privileges and cease supplying the delinquent
 
 3 apartment with any and all services normally supplied or paid for
 
 4 by the association.  Any terminated services and privileges shall
 
 5 be restored upon payment of all assessments.  Notwithstanding any
 
 6 other provision of this chapter, a vote of a majority of those
 
 7 attending an annual or special meeting of the association, in
 
 8 person or by proxy, shall be necessary to permit the board to
 
 9 take the actions authorized by this section."
 
10      SECTION 3.  Section 514A-90, Hawaii Revised Statutes, is
 
11 amended by amending subsection (b) to read as follows:
 
12      "(b)  Where the mortgagee of a mortgage of record or other
 
13 purchaser of an apartment obtains title to the apartment as a
 
14 result of foreclosure of the mortgage, the acquirer of title and
 
15 the acquirer's successors and assigns shall not be liable for the
 
16 share of the common expenses or assessments by the association of
 
17 apartment owners chargeable to the apartment which became due
 
18 prior to the acquisition of title to the apartment by the
 
19 acquirer.  The unpaid share of common expenses or assessments
 
20 shall be deemed to be common expenses collectible from all of the
 
21 apartment owners, including the acquirer and the acquirer's
 
22 successors and assigns.  
 
23      The mortgagee of record or other purchaser of the apartment
 

 
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 1 shall be deemed to acquire title and shall be required to pay the
 
 2 apartment's share of common expenses and assessments beginning:
 
 3      (1)  Thirty-six days after the order confirming the sale to
 
 4           the acquirer has been filed with the court;
 
 5      (2)  Sixty days after the hearing at which the court grants
 
 6           the motion to confirm the sale to the acquirer; or
 
 7      (3)  Upon the recording of the deed;
 
 8 whichever occurs first."
 
 9      SECTION 4.  Section 514A-94, Hawaii Revised Statutes, is
 
10 amended to read as follows:
 
11      "§514A-94  Attorneys' fees, delinquent assessments, [and]
 
12 expenses of enforcement[.], and fee collection from tenants.
 
13 (a)  All costs and expenses, including reasonable attorneys'
 
14 fees, incurred by or on behalf of the association for:
 
15      (1)  Collecting any delinquent assessments against any
 
16           owner's apartment;
 
17      (2)  Foreclosing any lien thereon; or
 
18      (3)  Enforcing any provision of the declaration, bylaws,
 
19           house rules, and the Condominium Property Act; or the
 
20           rules of the real estate commission;
 
21 against an owner, occupant, tenant, employee of an owner, or any
 
22 other person who may in any manner use the property shall be
 
23 promptly paid on demand to the association by such person or
 

 
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                                     S.B. NO.           36
                                                        
                                                        

 
 1 persons; provided that if the claims upon which the association
 
 2 takes any action are not substantiated, all costs and expenses,
 
 3 including reasonable attorneys' fees, incurred by any such person
 
 4 or persons as a result of the action of the association, shall be
 
 5 promptly paid on demand to such person or persons by the
 
 6 association.
 
 7      (b)  If any claim by an owner is substantiated in any action
 
 8 against an association, any of its officers or directors, or its
 
 9 board of directors to enforce any provision of the declaration,
 
10 bylaws, house rules, or this chapter, then all reasonable and
 
11 necessary expenses, costs, and attorneys' fees incurred by an
 
12 owner shall be awarded to such owner; provided that no such award
 
13 shall be made in any derivative action unless:
 
14      (1)  The owner first shall have demanded and allowed
 
15           reasonable time for the board of directors to pursue
 
16           such enforcement; or
 
17      (2)  The owner demonstrates to the satisfaction of the court
 
18           that a demand for enforcement made to the board of
 
19           directors would have been fruitless.
 
20      If any claim by an owner is not substantiated in any court
 
21 action against an association, any of its officers or directors,
 
22 or its board of directors to enforce any provision of the
 
23 declaration, bylaws, house rules, or this chapter, then all
 

 
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                                     S.B. NO.           36
                                                        
                                                        

 
 1 reasonable and necessary expenses, costs, and attorneys' fees
 
 2 incurred by an association shall be awarded to the association,
 
 3 unless the action was filed in small claims court or prior to
 
 4 filing the action in a higher court the owner has first submitted
 
 5 the claim to mediation, or to arbitration under part VII of this
 
 6 chapter, and made a good faith effort to resolve the dispute
 
 7 under any of those procedures.
 
 8      (c)  Anyone contracted by the association of apartment
 
 9 owners to collect delinquent assessments against any owner's
 
10 apartment shall not share in any portion of any penalties or late
 
11 charges collected. 
 
12      (d)  If the owner of an apartment rents or leases the
 
13 apartment and defaults for thirty days or more in the payment of
 
14 the apartment's share of the common expenses, the board, for as
 
15 long as the default continues, may demand and receive from any
 
16 tenant occupying the apartment, the rent due or becoming due from
 
17 the tenant to the apartment owner.  The board may demand from the
 
18 tenant an amount sufficient to pay all sums due from the
 
19 apartment owner to the association, including interest, if any.
 
20 The tenant's payment of rent to the board shall discharge the
 
21 tenant from paying rent to the apartment owner, to the extent of
 
22 the amount paid to the board.  If the board makes a demand upon
 
23 the tenant pursuant to this section, the tenant may not question
 

 
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                                     S.B. NO.           36
                                                        
                                                        

 
 1 the right of the board to make the demand.  Instead, the tenant
 
 2 shall make the payments demanded by the board; provided that the
 
 3 board may not exercise this right if a commissioner or receiver
 
 4 has been appointed to take charge of the premises pending a
 
 5 mortgage foreclosure or if a mortgagee is in possession pending a
 
 6 mortgage foreclosure."
 
 7      SECTION 5.  Statutory material to be repealed is bracketed.
 
 8 New statutory material is underscored.
 
 9      SECTION 6.  This Act shall take effect upon its approval.
 
10 
 
11                           INTRODUCED BY:  _______________________