STAND. COM. REP. NO. 2275

 

Honolulu, Hawaii

                  

 

RE:    S.B. No. 2054

 

 

 

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

 

Sir:

 

     Your Committee on Commerce, Consumer Protection, and Health, to which was referred S.B. No. 2054 entitled:

 

"A BILL FOR AN ACT RELATING TO CONDOMINIUMS,"

 

begs leave to report as follows:

 

     The purpose and intent of this measure is to:

 

     (1)  Clarify the process, including payment obligations, mediation requirements, and triggers for further default, where a condominium unit owner and association reach a payment plan to resolve a nonjudicial foreclosure; and

 

     (2)  Establish procedures that provide condominium owners with the right to submit disputed legal fees, penalties or fines, late fees, lien filing fees, or other charges, except for common expense assessments, to the mediation process prior to payment.

 

     Your Committee received testimony in support of this measure from the Hawaii Council of Associations of Apartment Owners; Hawaiian Affairs Caucus, Democratic Party of Hawaii; Community Associations Institute, Hawaii Chapter; Hui Oiaio; and five individuals.  Your Committee received testimony in opposition to this measure from five individuals.

 

     Your Committee finds that under existing law, if an association of apartment owners starts a nonjudicial foreclosure against a condominium owner and the owner pays off the delinquency or proposes a payment plan that the association accepts, the association must rescind the notice of foreclosure and not proceed.  However, proposing a payment plan is not sufficient on its own to cure a default.  Accordingly, this measure clarifies the process once a condominium owner and association agree on a payment plan to resolve a nonjudicial foreclosure on a condominium.

 

     Your Committee further finds that this measure also amends Hawaii's existing pay first, dispute later requirement, which specifies that owners are not permitted to withhold any assessment claimed by their association, but must first pay the disputed amounts and then exercise their right to mediation, arbitration, or small claims court.  Your Committee understands that condominium associations in Hawaii would be unable to function if owners were able to withhold payments of common expense assessments.  Accordingly, this measure makes a narrowly-tailored exception to the pay first, dispute later requirement by clarifying that common expense assessments are the only fees that must be paid prior to initiating a dispute.  If the unit owner contests any penalties or fines, late fees, lien filing fees, or other charges in an assessment, then the unit owner may, under certain circumstances, proceed to mediation prior to paying those charges.

 

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2054 and recommends that it pass Second Reading and be referred to your Committee on Judiciary.

 

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Health,

 

 

 

________________________________

ROSALYN H. BAKER, Chair