Allows condominium associations to deposit funds in mainland
banks, and restricts their investments to demand deposits,
investment certificates, certificates of deposit, government
obligations, or mutual funds.

THE SENATE                              S.B. NO.           642
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  Section 514A-97, Hawaii Revised Statutes, is
 2 amended by amending subsection (c) to read as follows:
 3      "(c)  All funds collected by an association, or by a
 4 managing agent for any association, shall be:
 5      (1)  Deposited in a financial institution [located in the
 6           State] whose deposits are insured by an agency of the
 7           United States government;
 8      (2)  Held by a corporation authorized to do business under
 9           article 8 of chapter 412; [or]
10      (3)  [Invested in the obligations of the United States
11           government.] Held by the United States Treasury; or
12      (4)  Held by a securities broker which is registered with
13           the Securities and Exchange Commission, has an office
14           in Hawaii, and the accounts of which are held by member
15           firms of the New York Stock Exchange or National
16           Association of Securities Dealers and insured by the
17           Securities Insurance Protection Corporation.
18      All funds collected by an association, or by a managing
19 agent for any association, shall be invested only in demand

Page 2                                                     
                                     S.B. NO.           642

 1 deposits, investment certificates, and certificates of deposit;
 2 obligations of the United States government, the State of Hawaii,
 3 and their respective agencies; provided that those obligations
 4 shall have stated maturities of no more than ten years after the
 5 purchase date; or mutual funds comprised solely of investments in
 6 the obligations of the United States government of the State of
 7 Hawaii.
 8      Records of the deposits and disbursements shall be disclosed
 9 to the commission upon request.  All funds collected by an
10 association shall only be disbursed by employees of the
11 association under the supervision of the association's board of
12 directors.  All funds collected by a managing agent from an
13 association shall be held in a client trust fund account and
14 shall be disbursed only by the managing agent or the managing
15 agent's employees under the supervision of the association's
16 board of directors.  The commission may draft rules governing the
17 handling and disbursement of condominium association funds."
18      SECTION 2.  Statutory material to be repealed is bracketed.
19 New statutory material is underscored.
20      SECTION 3.  This Act shall take effect upon its approval.
22 INTRODUCED BY:  ______________________   ________________________