THE SENATE

S.B. NO.

634

THIRTIETH LEGISLATURE, 2019

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to condominiums.

 

 

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

 


SECTION 1. Section 514B-157, Hawaii Revised Statutes, is amended to read as follows:

"(a) All costs and expenses, including reasonable attorneys' fees, incurred by or on behalf of the association for:

(1) Collecting any delinquent assessments against any owner's unit[;], delinquent amounts owed for common expense assessments, or other claims imposed by the association;

(2) Foreclosing any lien thereon; or

(3) Enforcing any provision of the declaration, bylaws, house rules, and this chapter, or the rules of the real estate commission;

against an owner, occupant, tenant, employee of an owner, or any other person who may in any manner use the property, shall be [promptly] paid [on demand] to the association by such person or persons; provided that [if] any claim for attorney's fees shall not be in excess of twenty-five per cent of the total balance owed to the association; provided further that an association shall deliver to the unit owner, occupant, or tenant a written demand for all amounts due, which shall include a billing statement or invoice reflecting the breakdown of all the amounts owed. The owner, occupant, or tenant shall have the right to dispute claims for attorney's fees in full or in part before the fees are paid. The owner, occupant, or tenant shall have sixty days to cure prior to the association taking any enforcement action. The owner, occupant, or tenant shall have the right to dispute claims related to governing document violations imposed by the association before the claims are paid.

(b) If the claims upon which the association takes any action are not substantiated, all costs and expenses, including reasonable attorneys' fees, incurred by any such person or persons as a result of the action of the association, shall be promptly paid on demand to such person or persons by the association.

[(b)] (c) If any claim by an owner is substantiated in any action against an association, any of its officers or directors, or its board to enforce any provision of the declaration, bylaws, house rules, or this chapter, then all reasonable and necessary expenses, costs, and attorneys' fees, which shall not exceed twenty-five per cent of the total balance owed, incurred by an owner shall be awarded to such owner; provided that no such award shall be made in any derivative action unless:

(1) The owner first shall have demanded and allowed reasonable time for the board to pursue such enforcement; or

(2) The owner demonstrates to the satisfaction of the court that a demand for enforcement made to the board would have been fruitless.

(d) If any claim by an owner is not substantiated in any court action against an association, any of its officers or directors, or its board to enforce any provision of the declaration, bylaws, house rules, or this chapter, then all reasonable and necessary expenses, costs, and attorneys' fees not exceeding twenty-five per cent of the total balance owed, incurred by an association shall be awarded to the association, unless before filing the action in court the owner has first submitted the claim to mediation, or to arbitration under subpart D, and made a good faith effort to resolve the dispute under any of those procedures."

SECTION 2. Section 667-19, Hawaii Revised Statutes, is amended to read as follows:

"667-19 Association foreclosures; cure of default; payment plan. If a foreclosure by action is initiated by an association pursuant to section 421J-10.5 or 514B-146:

(1) At the time of the commencement of the foreclosure by action, the association shall serve the unit owner with written contact information for approved housing counselors and approved budget and credit counselors;

(2) A unit owner may cure the default within sixty days after service of the association's complaint for foreclosure by action by paying the association the full amount of the default, including the foreclosing association's attorneys' fees [and] not to exceed twenty-five per cent of the total delinquent balance, costs, and all other fees and costs related to the default, along with any additional amounts estimated to be incurred by the foreclosing association;

(3) A unit owner may submit a payment plan within thirty days after service of the association's complaint for foreclosure by action. The unit owner shall submit the payment plan to the association or its attorney by certified mail return receipt requested or by hand delivery. The association shall not reject a reasonable payment plan. Payments made pursuant to an approved payment plan shall first be applied to delinquent assessments, then to any interest, late fees, or penalties, then to attorneys' fees not to exceed twenty-five per cent of the total balance owed. A unit owner's failure to strictly perform any agreed-upon payment plan shall entitle the association to pursue its remedies without further delay. For purposes of this paragraph, "reasonable payment plan" means a plan that provides for:

(A) Timely payment of all assessments that become due after the date that the payment plan is proposed; and

(B) Additional monthly payments of an amount sufficient to cure the default, within a reasonable period under the circumstances as determined by the board of directors in its discretion; provided that a period of up to twelve months shall be deemed reasonable; and provided further that the board of directors shall have the discretion to agree to a payment plan in excess of twelve months;

(4) From and after the date that the unit owner gives written notice to the association of the unit owner's intent to cure the default pursuant to paragraph (2) or timely submits a payment plan pursuant to paragraph (3), any foreclosure by action shall be stayed during the sixty-day period to cure the default or during the term of the payment plan or a longer period that is agreed upon by the parties;

(5) If the default is cured pursuant to paragraph (2), the association shall dismiss the foreclosure by action. If the parties have agreed on a payment plan pursuant to paragraph (3), the association shall stay the foreclosure by action. Within fourteen days of the date of the cure or an agreement on a payment plan, the association shall notify any person who was served as a result of the foreclosure by action that the action has been dismissed or stayed, as the case may be. If a notice of pendency of action for the foreclosure by action was recorded, a release of the notice of pendency of action shall be recorded if the action is dismissed; and

(6) If the default is not cured pursuant to paragraph (2), or the parties have not agreed on a payment plan pursuant to paragraph (3), the association may continue to foreclose the association's lien under foreclosure by action."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

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:

Condominiums; Associations; Attorneys' Fees; Limitation; Payment Plan

 

Description:

Limits the amount of attorney's fees that may be collected from any condominium owner, occupant, or tenant by or on behalf of an association to twenty-five per cent of the amount due after a sixty-day cure period. Outlines application of payments for payment plans.

 

 

 

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