STAND. COM. REP. NO. 3158

 

Honolulu, Hawaii

                  

 

RE:    H.B. No. 2492

       H.D. 1

       S.D. 1

 

 

 

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

 

Madam:

 

     Your Committee on Commerce, Consumer Protection, and Affordable Housing, to which was referred H.B. No. 2492, H.D. 1, entitled:

 

"A BILL FOR AN ACT RELATING TO PLANNED COMMUNITY ASSOCIATIONS,"

 

begs leave to report as follows:

 

     The purpose of this measure is to provide further clarity and procedural guidance with respect to planned community associations in the State by requiring the votes of each board member of a planned community association to be recorded in the minutes of the board of directors meetings, and requiring the inclusion of property restrictions or conditions of use in a seller's disclosure statement.

 

     Specifically, this measure:

 

     (1)  Requires the minutes of board of directors' meetings for a planned community association to include the recorded vote of each board member present on all motions except motions voted upon in executive session;

 

     (2)  Requires sellers of residential real property to disclose all restrictions or conditions on use relating to the property and contained in a recorded document, including any unrecorded rules or guidelines issued by entities responsible for enforcing the restrictions or conditions; and

 

     (3)  Specifies the types of planned communities for which seller disclosure statements must include the planned community declaration and association documents.

 

     Testimony in support of this measure was submitted by the Hawaii Association of Realtors and the Hawaii Chapter of the Community Associations Institute.

 

     There is a lack of disclosure that commonly affects the sale of properties in projects that are not condominiums or residential cooperatives, but are nonetheless subject to restrictive covenants or controlled by a homeowners' association.  The parties to the purchase and sale of these types of properties frequently overlook the fact that the purchaser is subject to restrictions on the purchaser's ability to use the property being purchased.  This omission often leads to disputes and misunderstandings when the purchaser subsequently discovers that the purchaser is required to comply with those restrictions.

 

     Your Committee finds that requiring the inclusion of property restrictions or conditions of use in a seller's disclosure statement will ensure that a purchaser of property is fully aware of the restrictions imposed on the property.  Your Committee further finds that requiring the votes of each board member to be recorded in the minutes of meetings of the board of directors for a planned community association will provide further clarity on procedures relating to planned community association board of director meetings.

 

     Your Committee has amended this measure by:

 

     (1)  Changing the effective date of this measure from January 1, 2050, to effective upon its approval; and

 

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and style.

 

     Your Committee believes that this measure, as amended, fulfills its intent, which is to provide further clarity and procedural guidance with respect to planned community associations in the State.

 

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Affordable Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2492, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2492, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.

 

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

 

 

 

____________________________

RUSSELL S. KOKUBUN, Chair