TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO CONDOMINIUMS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that the board of directors of each association of apartment owners has broad powers that impact its members, such as adopting and amending budgets for revenues, expenditures, and reserves; hiring and discharging management agents and other independent contractors, agents, and employees; instituting, defending, or intervening in litigation or administrative proceedings affecting the condominium; regulating the use, maintenance, repair, replacement, and modification of common elements; imposing and receiving payments, fees, or charges for the use, rental, or operation of the common elements; imposing charges and penalties, including late fees and interest, for late payment of assessments; and levying fines for violations of the association's declaration, bylaws, and rules and regulations.
The legislature further finds that the boards of directors of associations of apartment owners represent the homeowners in managing a condominium, but the homeowners are vested with the ultimate decision-making power. Clarifying board member responsibilities regarding board meetings and the nature and process of an owner's participation in deliberations or discussions of a board will help foster accountability and transparency for owners and board members in a condominium association.
The purpose of this Act is to:
(1) Clarify that any violation of a mandatory provision of the State's condominium law by a condominium board of directors or its officers and members is a per se violation of the board's fiduciary duty, but providing a safe harbor provision for a board member who votes for compliance during a board meeting;
(2) Balance the right of association members to speak and participate in deliberations and discussions of a board, while ensuring that a board is able to complete its agenda in a timely manner;
(3) Require the notice for board meetings to include a list of items expected to be on the meeting agenda; and
(4) Require unapproved final drafts of the minutes of a board meeting to be available within fourteen days after the meeting.
SECTION 2. Section 514B-106, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) Except as provided in the declaration, the bylaws, subsection (b), or other provisions of this chapter, the board may act in all instances on behalf of the association. In the performance of their duties, officers and members of the board shall owe the association a fiduciary duty and exercise the degree of care and loyalty required of an officer or director of a corporation organized under chapter 414D. Any violation of any mandatory provision of this chapter by a board or its officers and members shall be deemed a per se violation of the fiduciary duty owed pursuant to this subsection; provided that a board member may avoid liability under this subsection by voting against, or otherwise creating a written record of disagreement with, a board action that is in violation of a mandatory provision of this chapter and having that board member's vote recorded in the minutes of a regular or special meeting of the board within forty-five days of the occurrence of the violation."
SECTION 3. Section 514B-125, Hawaii Revised Statutes, is amended to read as follows:
§514B-125[ ]] Board meetings. (a) All meetings of the
board, other than executive sessions, shall be open to all members of the
association, and association members who are not on the board [ may] shall
be permitted to participate in any deliberation or discussion, other than
executive sessions, [ unless a majority of a quorum of the board votes
otherwise.] pursuant to owner participation rules adopted by the board.
(b) Following any election of board members by the association, the board may, at the board's next regular meeting or at a duly noticed special meeting, establish rules for owner participation in any deliberation or discussion at board meetings, other than executive sessions. A board that establishes such rules pursuant to this subsection:
(1) Shall notify all owners of these rules; and
(2) May amend these rules at any regular or duly noticed special meeting of the association; provided that all owners shall be notified of any adopted amendments.
(b)] (c) The board, [ with
the approval of a majority of a quorum of its members,] by majority
vote, may adjourn a meeting and reconvene in executive session to discuss
and vote upon matters:
(1) Concerning personnel;
(2) Concerning litigation in which the association is or may become involved;
(3) Necessary to protect the attorney-client privilege of the association; or
(4) Necessary to protect the interests of the association while negotiating contracts, leases, and other commercial transactions.
The general nature of any business to be considered in executive session shall first be announced in open session.
(c)] (d) All board meetings
shall be conducted in accordance with the most recent edition of Robert's Rules of Order Newly Revised. Unless otherwise provided in
the declaration or bylaws, a board may permit any meeting to be conducted by
any means of communication through which all directors participating may
simultaneously hear each other during the meeting. A director participating in
a meeting by this means is deemed to be present in person at the meeting. If permitted by the board, any
unit owner may participate in a meeting conducted by a means of communication
through which all participants may simultaneously hear each other during the
meeting, provided that the board may require that the unit owner pay for the
costs associated with the participation.
(d)] (e) The board shall meet
at least once a year. Notice of all board meetings shall be posted by the
managing agent, 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. The notice shall include a list of
business items expected to be on the meeting agenda.
(e)] (f) A director shall not
vote by proxy at board meetings.
(f)] (g) A director shall not
vote at any board meeting on any issue in which the director has a conflict of
interest. 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.
"Conflict of interest", as used in this subsection, means an issue in which a director has a direct personal or pecuniary interest not common to other members of the association."
SECTION 4. Section 514B-126, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) Minutes of all meetings of the board
shall be available within seven calendar days after approval, and unapproved
final drafts of the minutes of a meeting shall be available within [
fourteen days after the meeting; provided that the minutes of any
executive session may be withheld if their publication would defeat the lawful
purpose of the executive session."
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect upon its approval.
Condominiums; Condominium Association Members; Board Members; Board Meetings; Notice
Clarifies that any violation of a mandatory provision of the State's condominium law by a condominium board of directors or its officers and members is a per se violation of the board's fiduciary duty, but providing a safe harbor provision for a board member who votes for compliance during a board meeting. Balances the right of association members to speak and participate in deliberations and discussions of a board, while ensuring that a board is able to complete its agenda in a timely manner. Requires the notice for board meetings to include a list of items expected to be on the meeting agenda. Requires unapproved final drafts of the minutes of a board meeting to be available within fourteen days after the meeting. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.