Hawaii Condo Law
In July 2006, the Hawaii Legislature passed a major amendment to Chapter 514A, Hawaii's condominium statutes. The Legislature added clarity and focus to bills 1132 and 2210, updating the state's condominium laws. A six-year-long, controversial case between a homeowner and his community spurred the amendments, which strengthened condo associations' enforcement powers and added transparency to the association's financial activities.
Other People Are Reading
-
Trigger Event
-
One of the triggers for the major revision in Hawaii's condominium laws was the six-year legal battle between neighbors residing in Pacific Palisades, a condominium community in Pearl City. The case was brought about when one of the residents in the area built a three-story home despite the area's restriction to two-story buildings. The community eventually sued for the removal of the third story and initially won the case against the homeowner. The homeowner, however, filed an appeal with the Supreme Court of Hawaii, arguing that the language of the association's restriction was vague in that it did not define the size of a single story when it mandated that buildings should be no more than "two stories in height." The three-story home's owner won his appeal, as the Supreme Court agreed that the association's restriction was indeed vague.
Rule Change
-
With the Supreme Court's ruling in mind, the Legislature created new Senate bills to remove ambiguity from the existing Chapter 514A law. The updates to Chapter 514A, however, focused only on condominiums, ignoring other types of structures included in the original law. Thus, while condominium laws have been updated, homeowners of other types of structures such as townhouses and row houses were not affected. This then means that these homeowners are vulnerable to builders who may bypass the restrictions of their community by citing vagueness and ambiguity in the rules. The new rules, however, significantly increased condominium associations' ability to enforce their own rules and restrictions, which are now backed by law.
-
Change Impacts
-
The new laws were intended to increase the effectiveness and efficiency of condominium communities. One such rule change empowers associations to apply fines against violators of their bylaws, declarations or house rules. The law also empowers the condominium communities to protect themselves from disasters by allowing the condo association to designate which components are high-risk. They may impose fines on equipment and appliances that are not well maintained and pose risk of fire. Because the new powers are backed by law, the cost of enforcing association rules, such as legal fees, are less expensive. Condominium owners also benefit from the amendment as condominium associations are now required to disclose financial statements, which pertain to allocation of association dues to their members.
Insurance Requirement
-
Under Hawaii state law section 514B-0143, a condominium association is required to purchase general property insurance for the building's common fixtures as well as certain fixtures that are not common but essential such as walls and ceilings. This is applicable unless the condominium's bylaws provide for the insurance. This insurance, however, does not cover incidents in each individual unit. The board of directors can require that an owner purchase insurance that the general insurance would not cover. They may also purchase the insurance for the owner and charge the owner for the premium. Conversely, the board may also opt not to purchase insurance for the owner and is free from any encumbrances should any problems arise if the owner chooses not to insure for noncovered items.
-
