HOUSE OF REPRESENTATIVES

H.B. NO.

670

TWENTY-EIGHTH LEGISLATURE, 2015

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to common interest communities.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  Section 421J-3, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§421J-3[]]  Board of directors.  (a)  Every member of the board of directors shall be a member of the association.  However, a developer may appoint or elect directors pursuant to any special voting rights or power of appointment reserved to the master developer.

     (b)  The board of directors shall be composed of the number and group of persons specified in the association documents.  There shall not be more than one representative on the board of directors from any one unit that is owned by any person other than the master developer or declarant.

     (c)  No person shall be elected as a member of a board of directors for more than two consecutive full terms; provided that this subsection shall not be construed to limit the service of a holdover member if no person seeks candidacy for the holdover member's position."

     SECTION 2.  Section 514A-82, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  In addition to the requirements of subsection (a), the bylaws shall be consistent with the following provisions:

     (1)  At any regular or special meeting of the apartment owners, any one or more members of the board of directors may be removed by the apartment owners and successors shall then and there be elected for the remainder of the term to fill the vacancies thus created.  The removal and replacement shall be by a vote of a majority of the apartment owners and, otherwise, in accordance with all applicable requirements and procedures in the bylaws for the removal and replacement of directors.  If removal and replacement is to occur at a special association meeting, the call for the meeting shall be by the president or by a petition to the secretary or managing agent signed by not less than twenty-five per cent of the apartment owners as shown in the association's record of ownership; provided that if the secretary or managing agent shall fail to send out the notices for the special meeting within fourteen days of receipt of the petition, then the petitioners shall have the authority to set the time, date, and place for the special meeting and to send out the notices for the special meeting in accordance with the requirements of the bylaws.  Except as otherwise provided in this section, the meeting for the removal and replacement from office of directors shall be scheduled, noticed, and conducted in accordance with the bylaws of the association;

     (2)  The bylaws may be amended at any time by the vote or written consent of sixty-five per cent of all apartment owners; provided that:

         (A)  Each one of the particulars set forth in this subsection shall be embodied in the bylaws always; and

         (B)  Any proposed bylaws with the rationale for the proposal may be submitted by the board of directors or by a volunteer apartment owners' committee. If submitted by that committee, the proposal shall be accompanied by a petition signed by not less than twenty-five per cent of the apartment owners as shown in the association's record of ownership.  The proposed bylaws, rationale, and ballots for voting on any proposed bylaw shall be mailed by the board of directors to the owners at the expense of the association for vote or written consent without change within thirty days of the receipt of the petition by the board of directors.  The vote or written consent required to adopt the proposed bylaw shall not be less than sixty-five per cent of all apartment owners; provided that the vote or written consent must be obtained within three hundred sixty-five days after mailing for a proposed bylaw submitted by either the board of directors or a volunteer apartment owners' committee.  If the bylaw is duly adopted, then the board shall cause the bylaw amendment to be recorded in the bureau of conveyances or filed in the land court, as the case may be.  The volunteer apartment owners' committee shall be precluded from submitting a petition for a proposed bylaw that is substantially similar to that which has been previously mailed to the owners within one year after the original petition was submitted to the board.

          This paragraph shall not preclude any apartment owner or voluntary apartment owners' committee from proposing any bylaw amendment at any annual association meeting;

     (3)  Notices of association meetings, whether annual or special, shall be sent to each member of the association of apartment owners at least fourteen days prior to the meeting and shall contain at least:

         (A)  The date, time, and place of the meeting;

         (B)  The items on the agenda for the meeting; and

         (C)  A standard proxy form authorized by the association, if any;

     (4)  No resident manager or managing agent shall solicit, for use by the manager or managing agent, any proxies from any apartment owner of the association of owners that employs the resident manager or managing agent, nor shall the resident manager or managing agent cast any proxy vote at any association meeting except for the purpose of establishing a quorum.  Any board of directors that intends to use association funds to distribute proxies, including the standard proxy form referred to in paragraph (3), shall first post notice of its intent to distribute proxies in prominent locations within the project at least thirty days prior to its distribution of proxies; provided that if the board receives within seven days of the posted notice a request by any owner for use of association funds to solicit proxies accompanied by a statement, the board shall mail to all owners either:

         (A)  A proxy form containing the names of all owners who have requested the use of association funds for soliciting proxies accompanied by their statements; or

         (B)  A proxy form containing no names, but accompanied by a list of names of all owners who have requested the use of association funds for soliciting proxies and their statements.

          The statement shall not exceed one hundred words, indicating the owner's qualifications to serve on the board and reasons for wanting to receive proxies;

     (5)  A director who has a conflict of interest on any issue before the board shall disclose the nature of the conflict of interest prior to a vote on that issue at the board meeting, and the minutes of the meeting shall record the fact that a disclosure was made;

     (6)  The apartment owners shall have the irrevocable right, to be exercised by the board of directors, to have access to each apartment from time to time during reasonable hours as may be necessary for the operation of the property or for making emergency repairs therein necessary to prevent damage to the common elements or to another apartment or apartments;

     (7)  An owner shall not act as an officer of an association and an employee of the managing agent employed by the association;

     (8)  An association's employees shall not engage in selling or renting apartments in the condominium in which they are employed except association-owned units, unless such activity is approved by an affirmative vote of sixty-five per cent of the membership;

     (9)  The board of directors shall meet at least once a year.  Whenever practicable, notice of all board meetings shall be posted by the resident manager or a member of the board in prominent locations within the project seventy-two hours prior to the meeting or simultaneously with notice to the board of directors;

    (10)  Directors shall not expend association funds for their travel, directors' fees, and per diem, unless owners are informed and a majority approve of these expenses;

    (11)  Associations at their own expense shall provide all board members with a current copy of the association's declaration, bylaws, house rules, and, annually, a copy of this chapter with amendments;

    (12)  The directors may expend association funds, which shall not be deemed to be compensation to the directors, to educate and train themselves in subject areas directly related to their duties and responsibilities as directors; provided that the approved annual operating budget shall include these expenses as separate line items.  These expenses may include registration fees, books, videos, tapes, other educational materials, and economy travel expenses.  Except for economy travel expenses within the State, all other travel expenses incurred under this subsection shall be subject to the requirements of paragraph (10);

    (13)  A lien created pursuant to section 514A-90 may be enforced by the association in any manner permitted by law, including nonjudicial or power of sale foreclosure procedures authorized by chapter 667; [and]

    (14)  If the bylaws provide for cumulative voting by the owners, the owners may so vote if an owner gives notice of the owner’s intent to cumulatively vote before voting commences[.]; and

    (15)  No person shall be elected as a member of a board of directors of a condominium for more than two consecutive full terms; provided that this paragraph shall not be construed to limit the service of a holdover member if no person seeks candidacy for the holdover member's position.

The provisions of this subsection shall be deemed incorporated into the bylaws of all condominium projects existing as of January 1, 1988, and all condominium projects created after that date."

     SECTION 3.  Section 514B-107, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-107  Board; limitations.  (a)  Members of the board shall be unit owners or co-owners, vendees under an agreement of sale, a trustee of a trust which owns a unit, or an officer, partner, member, or other person authorized to act on behalf of any other legal entity which owns a unit.  There shall not be more than one representative on the board from any one unit.

     (b)  No resident manager or employee of a condominium shall serve on its board.

     (c)  An owner shall not act as an officer of an association and an employee of the managing agent retained by the association.  Any owner who is a board member of an association and an employee of the managing agent retained by the association shall not participate in any discussion regarding a management contract at a board meeting and shall be excluded from any executive session of the board where the management contract or the property manager will be discussed.

     (d)  Directors shall not expend association funds for their travel, directors' fees, and per diem, unless owners are informed and a majority approve of these expenses; provided that, with the approval of the board, directors may be reimbursed for actual expenditures incurred on behalf of the association.  The minutes shall reflect in detail the items and amounts of the reimbursements.

     (e)  Associations at their own expense shall provide all board members with a current copy of the association's declaration, bylaws, house rules, and, annually, a copy of this chapter with amendments.

     (f)  The directors may expend association funds, which shall not be deemed to be compensation to the directors, to educate and train themselves in subject areas directly related to their duties and responsibilities as directors; provided that the approved annual operating budget shall include these expenses as separate line items.  These expenses may include registration fees, books, videos, tapes, other educational materials, and economy travel expenses.  Except for economy travel expenses within the State, all other travel expenses incurred under this subsection shall be subject to the requirements of subsection (d).

     (g)  No person shall be elected as a member of a board of an association for more than two consecutive full terms; provided that this subsection shall not be construed to limit the service of a holdover member if no person seeks candidacy for the holdover member's position."

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

     SECTION 5.  This Act shall take effect upon its approval; provided that members of a board of directors subject to this Act who have served for more than two consecutive full terms may continue to serve until the next regularly scheduled election of directors.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Condominium Property Regimes; Board of Directors; Term Limits

 

Description:

Establishes term limits on board of director members for planned community associations and condominiums.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.