SB2433 HD1

SECTION 1. The legislature finds that there are nearly two hundred thousand condominium units in the State, the owners of which directly bear the financial consequences of governance decisions, including special assessments, maintenance fee increases, deferred maintenance, and reserve underfunding. Despite this, condominium unit owners are not consistently included in advisory groups, task forces, or policy discussions convened by the real estate commission or the department of commerce and consumer affairs.

Accordingly, the purpose of this Act is to:

(1) Expand the uses of the condominium education trust fund to include the financing of education resources for condominium unit owners in condominium governance; and

(2) Require that condominium unit owners' interests are recognized and represented in programs, groups, task forces, activities, and other undertakings funded by the condominium education trust fund.

SECTION 2. Section 514B-71, Hawaii Revised Statutes, is amended to read as follows:

"§514B-71 Condominium education trust fund. (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;

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

(5) Support for voluntary binding arbitration between parties in condominium related disputes, pursuant to section 514B-162.5[.]; and

(6) Education resources for unit owners in condominium governance, including programs designed to improve owner understanding of association operations, reserve requirements, financial obligations, and governance rights.

(b) The commission shall use all moneys in the condominium education trust fund for purposes consistent with subsection (a). Any law to the contrary notwithstanding, the commission may make a finding that a fee adjustment is appropriate and adjust the fees paid by associations to regulate the fund balance to an appropriate level to maintain a reasonable relation between the fees generated and the cost of services rendered by the condominium education trust fund. For the purposes of finding that a fee adjustment is appropriate in order to maintain a reasonable relation between the fees generated and the cost of services rendered by the fund, the commission's review shall include the following:

(1) Frequency and timing of anticipated revenue to the fund;

(2) Identification of a reserve amount based on unanticipated revenue reductions and historical expenditures;

(3) Anticipated expenses paid, including recovery payouts during a biennial budget cycle;

(4) Unanticipated natural disasters or catastrophic weather events that may increase fund payments; and

(5) Any statutory adjustments to fund payout amounts.

The balance of the fund shall not exceed a sum determined by the commission. The sum shall be determined by the commission biennially.

(c) The commission shall adopt rules to ensure that the rights of unit owners are recognized and safeguarded in all educational programs, consultations, advisory groups, task forces, and policy development activities funded in whole or in part by the condominium education trust fund."

SECTION 3. Section 514B-72, Hawaii Revised Statutes, is amended to read as follows:

"§514B-72 Condominium education trust fund; payments by associations and developers. (a) Each project or association with more than five units shall pay to the department of commerce and consumer affairs:

(1) A condominium education trust fund fee within one year after the recordation of the purchase of the first unit or within thirty days of the association's first meeting, and thereafter, on or before June 30 of every odd-numbered year, as prescribed by rules adopted pursuant to chapter 91; and

(2) Beginning with the July 1, 2015, biennium registration, an additional annual condominium education trust fund fee in an amount equal to the product of $1.50 times the number of condominium units included in the registered project or association to be dedicated to supporting mediation or voluntary binding arbitration of condominium related disputes. The additional condominium education trust fund fee shall total $3 per unit until the commission adopts rules pursuant to chapter 91. On June 30 of every odd-numbered year, any unexpended additional amounts paid into the condominium education trust fund and initially dedicated to supporting mediation or voluntary binding arbitration of condominium related disputes, as required by this paragraph, shall be used for educational purposes as provided in section 514B‑71(a)(1), (2), [~~and~~] (3)[.], and (6).

(b) Each developer shall pay to the department of commerce and consumer affairs the condominium education trust fund fee for each unit in the project, as prescribed by rules adopted by the director of commerce and consumer affairs pursuant to chapter 91. The project shall not be registered and no effective date for a developer's public report shall be issued until the payment has been made.

(c) Payments of any fees required under this section shall be due on or before the registration due date and shall be nonrefundable. Failure to pay the required fee by the due date shall result in a penalty assessment of ten per cent of the amount due and the association shall not have standing to bring any action to collect or to foreclose any lien for common expenses or other assessments in any court of this State until the amount due, including any penalty, is paid. Failure of an association to pay a fee required under this section shall not impair the validity of any claim of the association for common expenses or other assessments, or prevent the association from defending any action in any court of this State.

(d) The department of commerce and consumer affairs shall allocate the fees collected under this section to the condominium education trust fund established pursuant to section 514B-71. The fees collected pursuant to this section shall be administratively and fiscally managed together as one condominium education trust fund established by section 514B-71.

(e) The commission shall ensure that the interests of unit owners are represented in any advisory committee, stakeholder group, or task force convened for the purpose of condominium law review, policy development, education program design, rulemaking, dispute resolution evaluation, or any project funded in whole or in part by the condominium education trust fund."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 3000.

THE SENATE	S.B. NO.	2433
THIRTY-THIRD LEGISLATURE, 2026		S.D. 1
STATE OF HAWAII		H.D. 1