HOUSE OF REPRESENTATIVES

H.B. NO.

236

TWENTY-NINTH LEGISLATURE, 2017

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to planned community associations.

 

 

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

 


     SECTION 1.  The legislature finds that excessive assessment increases, which go far beyond what was reasonably contemplated in an association's annual budget, can negatively impact members of a planned community association, particularly if such an assessment increase is the result of a board's decision that is not in line with the wishes of a majority of association members.

     The legislature further finds that state law does contain certain protections against excess assessment increases for Hawaii condominium owners.  However, current Hawaii law does not contain similar protections for property owners who reside in planned community associations.

     Accordingly, the purpose of this Act is to:

     (1)  Allow portions of the common areas of a planned community association to be conveyed, subject to a security interest, or dedicated to the appropriate county or to the State, if at least eighty per cent of the members of an association agree in writing to that action; and

     (2)  Limit the ability of the board of directors to impose excessive regular assessments or special assessments, except in emergency situations, without the approval of a majority of the members of an association.

     SECTION 2.  Chapter 421J, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§421J-    Conveyance, encumbrance, or dedication of common areas.  (a)  Portions of the common areas of an association may be conveyed, subject to a security interest, or dedicated to the appropriate county or to the State, if at least eighty per cent of the members of an association agree in writing to that action.  Proceeds of the sale or financing of a common element shall be an asset of the association.

     (b)  The association, on behalf of members, may contract to convey common areas or subject common areas to a security interest, or agree to dedicate common areas to the appropriate county or the State; provided that the contract or the dedication shall not be enforceable against the association until approved pursuant to subsection (a), at which time the association shall have all powers necessary and appropriate to effect the conveyance, encumbrance, or dedication, free and clear of any interest of any member or the association in or to the common element conveyed, encumbered, or dedicated, including the power to execute deeds or other instruments.

     (c)  Any purported conveyance, encumbrance, or other voluntary transfer of common elements, unless made pursuant to this section, is void.

     (d)  No conveyance or encumbrance of common elements pursuant to this section may deprive any unit of its rights of access and support."

     SECTION 3.  Section 421J-9, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§421J-9[]]  Notification of assessment increases[.]; assessment limitation; emergency situations.  (a)  The board of directors shall notify members in writing of any increase in regular assessments at least thirty days prior to the increase.

     (b)  Except in emergency situations, the board of directors shall not impose a regular assessment that is more than twenty per cent greater than the immediately preceding fiscal year's assessment without the approval of a majority of the members.  For a regular assessment that exceeds twenty per cent of the immediately preceding fiscal year's assessment, the board shall obtain the approval of a majority of the members at a duly convened regular annual meeting or special meeting of the association or by the written consent of the majority of members without a meeting.

     (c)  Except in emergency situations, the board of directors shall not impose a special assessment for any fiscal year for capital expenditures or major maintenance, which in the aggregate exceeds five per cent of the budgeted gross expenses of the association for the current fiscal year without the approval of a majority of the members.  For a special assessment that exceeds five per cent of the current fiscal year's budgeted gross reserves, the board shall obtain the approval of a majority of the members at a duly convened regular annual meeting or special meeting of the association or by the written consent of the majority of members without a meeting.

     (d)  In emergency situations, prior to imposing or collecting an assessment under this section, the board shall adopt a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process, and the resolution shall be distributed to the members with the notice of assessment.

     (e)  As used in this section:

     "Budgeted gross expenses" means all expenses in the budget adopted pursuant to the association documents, including operational expenses and reserve contributions.

     "Capital expenditure" means an expense that results from the purchase or replacement of an asset whose life is greater than one year, or the addition of an asset that extends the life of an existing asset for a period greater than one year.

     "Emergency situation" means any extraordinary expenses:

     (1)  Required by an order of a court;

     (2)  Necessary to repair or maintain any part of the property for which the association is responsible where a threat to personal safety on the property is discovered;

     (3)  Necessary to repair any part of the property for which the association is responsible that could not have been reasonably foreseen by the board as part of a budget adopted pursuant to the association documents;

     (4)  Necessary to respond to any legal or administrative proceeding brought against the association that could not have been reasonably foreseen by the board as part of a budget adopted pursuant to the association documents; or

     (5)  Necessary for the association to obtain adequate insurance for the property which the association must insure.

     "Major maintenance" means an expenditure for maintenance or repair that will result in extending the life of an asset for a period greater than one year."

     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.

 

INTRODUCED BY:

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Report Title:

Planned Community Associations; Common Interest Communities; Common Areas; Assessments

 

Description:

Permits portions of the common areas of a planned community association to be conveyed, subjected to a security interest, or dedicated to the appropriate county or to the State, if at least eighty per cent of the members of an association agree in writing to that action.  Limits the ability of the board of directors to impose excessive regular assessments or special assessments, except in emergency situations, without the approval of a majority of the members of an association.

 

 

 

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