RELATING TO CONDOMINIUMS.

HB106

HOUSE OF REPRESENTATIVES

H.B. NO.

106

THIRTY-THIRD LEGISLATURE, 2025

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 under existing law,
unit owners, tenants, and other persons who use condominium property are
subject to the declarations and bylaws adopted by their condominium's
association and must strictly comply with the covenants, conditions, and
restrictions set forth in the condominium's declaration, bylaws, and house
rules.
�
The legislature further finds
that while condominium associations must have adequate remedies to enforce
compliance, individuals subject to an enforcement action must also receive due
process.

����
Therefore, the purpose of this Act
is to clarify the process for unit owners and tenants to dispute assessments levied
by condominium associations and ensure that there is due process when fines are
imposed on individuals subject to condominium association enforcement actions.

����
SECTION 2.
�
Chapter 514B, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately designated and to read as
follows:

����
"
�514B-
�
Fines;
imposition; appeals; collection.
�
(a)
�
An
association may levy reasonable fines against a unit owner or tenant of a unit
owner for a violation of declaration, bylaws, house rules, or regulations
adopted by the association.
�
A
unit owner or tenant shall be entitled to appeal the imposition of a fine
levied pursuant to this section.
�
The
board shall adopt a resolution that establishes an appeals process that
includes notice and an opportunity for the unit owner or tenant to be heard and
dispute the fine.

����
(b)
�
Prior to the imposition of a fine, the
association shall provide notice to the unit owner or tenant, as
applicable.
�
The notice shall include:

����
(1)
�
For each act or
omission that constitutes a violation and is subject to the fine:

���������
(A)
�
A
reference to the applicable provision or provisions of the declaration, bylaws,
house rules, or regulation that serves as the basis for the fine; and

���������
(B)
�
A
general description of the violation; and

����
(2)
�
A copy of the
appeals process adopted pursuant to subsection (a).

����
(c)
�
A unit owner or tenant may request a hearing
before the board within thirty days of receipt of the notice under subsection
(b).

����
(d)
�
A unit owner or tenant aggrieved by the
decision of the board may file an appeal in the small claims division of the
district court in which the condominium is located within thirty days of
receipt of notice of the decision from the board regarding the fine.

����
(e)
�
A fine imposed
for a violation of declaration, bylaws, house rules, or regulations
adopted by the association
shall be enforceable and collectible if:

����
(1)
�
The time to
initiate an appeal has expired and no appeal has been initiated;

����
(2)
�
The fine has
been upheld by the board following a timely appeal and a small claims court
case has not been initiated in accordance with subsection (d); or

����
(3)
�
The fine has
not been denied by a small claims court within ninety days of the timely
initiation of an appeal pursuant to subsection (d).

����
(f)
�
An association shall not charge a unit owner
or tenant any attorneys' fees incurred by the association related to a fine
imposed
for a violation of declaration,
bylaws, house rules, or regulations adopted by the association unless the fine
is enforceable and collectible under subsection (e).

����
(g)
�
Nothing in this section shall be deemed to
limit the remedies of the association otherwise available under this chapter.
"

����
SECTION
3
.
�
Section
514B-104, Hawaii Revised Statutes, is amended by amending subsections (a) and
(b) to read as follows:

����
"(a)
�
Except as provided in section 514B‑105,
and subject to the provisions of the declaration and bylaws, the association,
even if unincorporated, may:

����
(1)
�
Adopt and amend
the declaration, bylaws, and rules and regulations;

����
(2)
�
Adopt and amend
budgets for revenues, expenditures, and reserves and collect assessments for
common expenses from unit owners, subject to section 514B‑148;

����
(3)
�
Hire and discharge
managing agents and other independent contractors, agents, and employees;

����
(4)
�
Institute, defend,
or intervene in litigation or administrative proceedings in its own name on
behalf of itself or two or more unit owners on matters affecting the
condominium.
�
For the purposes of actions
under chapter 480, associations shall be deemed to be "consumers";

����
(5)
�
Make contracts and
incur liabilities;

����
(6)
�
Regulate the use,
maintenance, repair, replacement, and modification of common elements;

����
(7)
�
Cause additional
improvements to be made as a part of the common elements;

����
(8)
�
Acquire, hold,
encumber, and convey in its own name any right, title, or interest to real or
personal property;
provided
that:

���������
(A)
�
Designation
of additional areas to be common elements or subject to common expenses after
the initial filing of the declaration or bylaws shall require the approval of
at least sixty-seven per cent of the unit owners;

���������
(B)
�
If the
developer discloses to the initial buyer in writing that additional areas will
be designated as common elements whether pursuant to an incremental or phased
project or otherwise, the requirements of this paragraph shall not apply as to
those additional areas; and

���������
(C)
�
The
requirements of this paragraph shall not apply to the purchase of a unit for a
resident manager, which may be purchased with the approval of the board;

����
(9)
�
Subject to section
514B‑38, grant easements, leases, licenses, and concessions through or
over the common elements and permit encroachments on the common elements;

���
(10)
�
Impose and receive
any payments, fees, or charges for the use, rental, or operation of the common
elements, other than limited common elements described in section 514B‑35(2)
and (4), and for services provided to unit owners;

���
(11)
�
Impose charges and
penalties, including late fees and interest[
,
] for late payment of
assessments
,
and levy reasonable fines for violations of the
declaration, bylaws, rules, and regulations of the association, [
either
]
in accordance with [
the bylaws or, if the bylaws are silent, pursuant to a
resolution adopted by the board

that establishes a fining procedure that states the basis for the fine and
allows an appeal to the board of the fine with notice and an opportunity to be
heard and providing that if the fine is paid, the unit owner shall have the
right to initiate a dispute resolution process as provided by sections
514B-161, 514B-162, or by filing a request for an administrative hearing under
a pilot program administered by the department of commerce and consumer affairs
;
]

section 514B- ;

���
(12)
�
Impose reasonable
charges for the preparation and recordation of amendments to the declaration,
documents requested for resale of units, or statements of unpaid assessments;

���
(13)
�
Provide for
cumulative voting through a provision in the bylaws;

���
(14)
�
Provide for the
indemnification of its officers, board, committee members, and agents, and
maintain directors' and officers' liability insurance;

���
(15)
�
Assign its right
to future income, including the right to receive common expense assessments,
but only to the extent section 514B‑105(e) expressly so provides;

���
(16)
�
Exercise any other
powers conferred by the declaration or bylaws;

���
(17)
�
Exercise all other
powers that may be exercised in this State by legal entities of the same type
as the association, except to the extent inconsistent with this chapter;

���
(18)
�
Exercise any other
powers necessary and proper for the governance and operation of the
association; and

���
(19)
�
By regulation,
subject to sections 514B‑146, 514B‑161, and 514B‑162, require
that disputes between the board and unit owners or between two or more unit
owners regarding the condominium be submitted to nonbinding alternative dispute
resolution in the manner described in the regulation as a prerequisite to
commencement of a judicial proceeding.

����
(b)
�

If a tenant of a unit owner violates the declaration, bylaws, [
or
]
rules [
and
]
, or
regulations of the association, in addition to
exercising any of its powers against the unit owner, the association may:

����
(1)
�
Exercise directly
against the tenant the powers described in subsection (a)(11);

����
(2)
�
After giving
notice to the tenant and the unit owner and an opportunity to be heard, levy
reasonable fines against the tenant for the violation[
,
]
in
accordance with section 514B- ;
provided that a unit owner
shall be responsible for the conduct of the owner's tenant and for any fines
levied against the tenant or any legal fees incurred in enforcing the
declaration, bylaws, [
or
] rules [
and
]
, or
regulations of
the association against the tenant; and

����
(3)
�
Enforce any other
rights against the tenant for the violation which the unit owner as landlord
could lawfully have exercised under the lease, including eviction, or which the
association could lawfully have exercised directly against the unit owner, or both."

����
SECTION
4
.
�
Section
514B-105, Hawaii Revised Statutes, is amended by amending subsection (c) to
read as follows:

����
"
(
c)
�
Any
payments made by or on behalf of a unit owner shall first be applied to
outstanding common expenses that are assessed to all unit owners in proportion
to the common interest appurtenant to their respective units.
�
Only after said outstanding common expenses
have been paid in full may the payments be applied to other charges owed to the
association, including assessed charges to the unit such as ground lease rent,
utility sub-metering, storage lockers, parking stalls, boat slips, insurance
deductibles, and cable.
�
After these
charges are paid, other charges, including unpaid late fees, legal fees,
collectible

fines, and interest, may be assessed in accordance with an application of
payment policy adopted by the board; provided that if a unit owner has
designated that any payment is for a specific charge that is not a common
expense as described in this subsection, the payment may be applied in
accordance with the unit owner's designation even if common expenses remain
outstanding."

����
SECTION
5
.
�
Section
514B-146, Hawaii Revised Statutes, is amended to read as follows:

����
"
�514B-146
�
Association fiscal matters; lien for
assessments[
.
]
; dispute of assessments.
�
(a)
�
All sums assessed by the association but
unpaid for the share of the common expenses chargeable to any unit shall
constitute a lien on the unit with priority over all other liens, except:

����
(1)
�
Liens for real property taxes and assessments lawfully imposed by
governmental authority against the unit; and

����
(2)
�
Except as provided in subsection [
(j),
]
(k),
all sums
unpaid on any mortgage of record that was recorded prior to the recordation of
a notice of a lien by the association, and costs and expenses including
attorneys' fees provided in such mortgages;

provided that a
lien recorded by an association for unpaid assessments shall expire
six
years from the date of recordation
unless proceedings to enforce the lien are instituted prior to
the expiration of the lien; provided further that the expiration of a recorded
lien shall in no way affect the association's automatic lien that arises
pursuant to this subsection or the declaration or bylaws.
�
Any proceedings to enforce an association's
lien for any assessment shall be instituted within six years after the assessment
became due; provided that if the owner of a unit subject to a lien of the
association files a petition for relief under the United States Bankruptcy Code
(11 U.S.C. �101
et seq.)
, the
period of time for instituting proceedings to enforce the association's lien
shall be tolled until thirty days after the automatic stay of proceedings under
section 362 of the United States Bankruptcy Code (11 U.S.C. �362) is lifted.

����
The lien of the association may be foreclosed by
action or by nonjudicial or power of sale foreclosure,
regardless
of the presence or absence of power of sale language in an association's
governing documents,
by the managing
agent or board, acting on behalf of the association and in the name of the
association
;
provided
that no association may exercise the
nonjudicial or power of sale remedies provided in chapter 667 to foreclose a
lien against any unit that arises solely from fines, penalties, legal fees, or
late fees, and the foreclosure of any such lien shall be filed in court
pursuant to part IA of chapter 667.

����
In any such foreclosure, the unit owner shall be
required to pay a reasonable rental for the unit, if so provided in the bylaws
or the law, and the plaintiff in the foreclosure shall be entitled to the
appointment of a receiver to collect the rental owed by the unit owner or any
tenant of the unit.
�
If the association
is the plaintiff, it may request that its managing agent be appointed as
receiver to collect the rent from the tenant.
�

The managing agent or board, acting on behalf of the association and in the
name of the association, unless prohibited by the declaration, may bid on the
unit at foreclosure sale, and acquire and hold, lease, mortgage, and convey the
unit.
�
Action to recover a money judgment
for unpaid common expenses shall be maintainable without foreclosing or waiving
the lien securing the unpaid common expenses owed.

����
(b)
�
Except
as provided in subsection [
(j),
]
(k),
when the mortgagee of a
mortgage of record or other purchaser of a unit obtains title to the unit as a
result of foreclosure of the mortgage, the acquirer of title and the acquirer's
successors and assigns shall not be liable for the share of the common expenses
or assessments by the association chargeable to the unit that became due prior
to the acquisition of title to the unit by the acquirer.
�
The unpaid share of common expenses or
assessments shall be deemed to be common expenses collectible from all of the
unit owners, including the acquirer and the acquirer's successors and
assigns.
�
The mortgagee of record or
other purchaser of the unit shall be deemed to acquire title and shall be
required to pay the unit's share of common expenses and assessments beginning:

����
(1)
�
Thirty-six days after the order confirming the sale to the purchaser has
been filed with the court;

����
(2)
�
Sixty days after the hearing at which the court grants the motion to
confirm the sale to the purchaser;

����
(3)
�
Thirty days after the
public sale in a nonjudicial power of sale foreclosure conducted pursuant to
chapter 667; or

����
(4)
�
Upon the recording of the instrument of conveyance;

whichever occurs
first; provided that the mortgagee of record or other purchaser of the unit
shall not be deemed to acquire title under paragraph (1), (2), or (3), if
transfer of title is delayed past the thirty-six days specified in paragraph
(1), the sixty days specified in paragraph (2), or the thirty days specified in
paragraph (3), when a person who appears at the hearing on the motion or a
party to the foreclosure action requests reconsideration of the motion or order
to confirm sale, objects to the form of the proposed order to confirm sale,
appeals the decision of the court to grant the motion to confirm sale, or the
debtor or mortgagor declares bankruptcy or is involuntarily placed into
bankruptcy.
�
In any such case, the
mortgagee of record or other purchaser of the unit shall be deemed to acquire
title upon recordation of the instrument of conveyance.

����
(c)
�
No
unit owner shall withhold any common expense assessment claimed by the
association for any reason, except that a unit owner may dispute the common
expenses claimed by the association after the common expense assessment has
been paid in full.

����
(d)
�
A unit
owner may dispute assessments, other than common expense assessments, prior to
payment.
�
A unit owner who receives a demand for
payment from an association and disputes the amount of an assessment
, other
than a common expense assessment,
may request a written statement clearly
indicating:

����
(1)
�
The amount of common expenses included in the assessment, including the
due date of each amount
of common expenses
claimed;

����
(2)
�
The amount of any [
penalty or fine, late fee, lien filing fee, and any
other
] charge included in the assessment that is not imposed on all unit
owners as a common expense[
; and
]
, such as a penalty or fine, late
fee, or lien filing fee; and

����
(3)
�
The amount of attorneys' fees and costs, if any, included in the
assessment.

����
[
(d) A
]
(e)
�
An association who
receives a request from a
unit owner [
who disputes the information in
the written statement received from the association
] pursuant to subsection
[
(c) may request a subsequent
]
(d) shall include the following in the

written statement [
that additionally informs the unit owner that
]:

����
(1)
�
Under Hawaii law, a unit owner has no right to withhold common expense
assessments for any reason;

���
[
(2)
�
A unit owner has a right to demand mediation or
arbitration to resolve disputes about the amount or validity of an
association's common expense assessment; provided that the unit owner
immediately pays the common expense assessment in full and keeps common expense
assessments current;

����
(3)
�
Payment in full of the common expense assessment
shall not prevent the owner from contesting the common expense assessment or
receiving a refund of amounts not owed; and

����
(4)
�
If the unit owner contests any penalty or fine,
late fee, lien filing fee, or other charges included in the assessment, except
common expense assessments, the unit owner may demand mediation as provided in
subsection (g) prior to paying those charges.

����
(e)
�
No
unit owner shall withhold any common expense assessment claimed by the
association.
�
Nothing in this section
shall limit the rights of an owner to the protection of all fair debt
collection procedures mandated under federal and state law.

����
(f)
�
A unit owner who pays an association the full amount of
the common expenses claimed by the association may file in small claims court
or require the association to mediate to resolve any disputes concerning the
amount or validity of the association's common expense claim.
�
If the unit owner and the association are
unable to resolve the dispute through mediation, either party may file for
arbitration under section 514B‑162; provided that a unit owner may only
file for arbitration if all amounts claimed by the association as common
expenses are paid in full on or before the date of filing.
�
If the unit owner fails to keep all
association common expense assessments current during the arbitration, the
association may ask the arbitrator to temporarily suspend the arbitration
proceedings.
�
If the unit owner pays all
association common expense assessments within thirty days of the date of
suspension, the unit owner may ask the arbitrator to recommence the arbitration
proceedings.
�
If the unit owner fails to
pay all association common expense assessments by the end of the thirty-day
period, the association may ask the arbitrator to dismiss the arbitration
proceedings.
�
The unit owner shall be
entitled to a refund of any amounts paid as common expenses to the association
that are not owed.

����
(g)
�
A unit
owner who contests the amount of any attorneys' fees and costs, penalties or
fines, late fees, lien filing fees, or any other charges, except common expense
assessments,
may make a demand in writing for
mediation
on the validity of those
charges.
�
The unit owner has thirty days
from the date of the written statement
requested pursuant
to subsection (d)
to file demand for
mediation on the disputed charges, other than common expense assessments.
�
If the unit owner fails to file for mediation
within thirty days of the date of the written statement
requested
pursuant to subsection (d)
, the
association may proceed with collection of the charges.
�
If the unit owner makes a request for
mediation within thirty days, the association shall be prohibited from
attempting to collect any of the disputed charges until the association has
participated in the mediation.
�
The
mediation shall be completed within sixty days of the unit owner's request for
mediation; provided that if the mediation is not completed within sixty days or
the parties are unable to resolve the dispute by mediation, the association may
proceed with collection of all amounts due from the unit owner for attorneys'
fees and costs, penalties or fines, late fees, lien filing fees, or any other charge
that is not imposed on all unit owners as a common expense.
]

����
(2)
�
The
obligation to pay a common expense assessment may be disputed after the common
expense assessment is paid in full; and

����
(3)
�
A
unit owner may dispute other assessments, apart from a common expense
assessment, before making payment, as provided by this section and section
514B- .

����
(f)
�
A unit owner may file an
action in any court of competent jurisdiction, or may request mediation, to
contest:

����
(1)
�
A
paid in full assessment; or

����
(2)
�
An
unpaid assessment, other than a common expense assessment, or a fine; provided
that a unit owner may contest a fine as provided under section
514B- .

A unit owner who elects to request mediation
shall do so within thirty days after receipt of the written statement provided
by the association pursuant to subsection (d).
�

A timely demand for mediation shall stay an association's efforts to
collect the contested assessment for sixty days.

����
(g)
�
If any amount paid by a unit
owner is found to be unsubstantiated, the unit owner shall be entitled to a
refund.

����
(h)
�
An association may defend an
assessment in court or in mediation and may proceed to collect an unpaid
assessment by any legal means, except when collection efforts are stayed
pursuant to subsection (f).

����
[
(h)
]
(i)

�
In conjunction with or as an alternative to
foreclosure proceedings under subsection (a), where a unit is owner-occupied,
the association may authorize its managing agent or board to, after sixty days'
written notice to the unit owner and to the unit's first mortgagee of the
nonpayment of the unit's share of the common expenses, terminate the delinquent
unit's access to the common elements and cease supplying a delinquent unit with
any and all services normally supplied or paid for by the association.
�
Any terminated services and privileges shall
be restored upon payment of all delinquent assessments
but need not be
restored until payment in full is received
.

����
[
(i)
]
(j)

�
Before the board or managing agent may take
the actions permitted under subsection [
(h),
]
(i),
the board
shall adopt a written policy providing for such actions and have the policy
approved by a majority vote of the unit owners at an annual or special meeting
of the association or by the written consent of a majority of the unit owners.

����
[
(j)
]
(k)

�
Subject to this subsection, and subsections [
(k)
and
] (l)[
,
]
and (m),
the board may specially assess the
amount of the unpaid regular monthly common assessments for common expenses
against a mortgagee or other purchaser who, in a judicial or nonjudicial power
of sale foreclosure, purchases a delinquent unit; provided that t
he mortgagee or other purchaser may require the
association to provide at no charge a notice of the association's intent to
claim lien against the delinquent unit for the amount of the special
assessment, prior to the subsequent purchaser's acquisition of title to the
delinquent unit.
�
The notice shall state
the amount of the special assessment, how that amount was calculated, and the
legal description of the unit.

����
[
(k)
]
(l)

�
The amount of the special assessment assessed
under subsection [
(j)
]
(k)
shall not exceed the total amount of
unpaid regular monthly common assessments that were assessed during the six
months immediately preceding the completion of the judicial or nonjudicial
power of sale foreclosure.

����
[
(l)
]

(m)

�
For purposes of subsections [
(j)
and
] (k)[
,
]
and (m),
the following definitions shall apply,
unless the context requires otherwise:

����
"Completion" means:

����
(1)
�
In a nonjudicial power of sale foreclosure, when the affidavit after
public sale is recorded pursuant to section 667-33; and

����
(2)
�
In a judicial foreclosure, when a purchaser is deemed to acquire title
pursuant to subsection (b).

����
"Regular monthly common assessments"
does not include:

����
(1)
�
Any other special assessment, except for a special assessment imposed on
all units as part of a budget adopted pursuant to section 514B‑148;

����
(2)
�
Late charges, fines, or penalties;

����
(3)
�
Interest assessed by the association;

����
(4)
�
Any lien arising out of the assessment; or

����
(5)
�
Any fees or costs related to the collection or enforcement of the assessment,
including attorneys' fees and court costs.

����
[
(m)
]

(n)

�
T
he cost of a release
of any lien filed pursuant to this section shall be paid by the party
requesting the release
.

����
[
(n)
]

(o)

�
After any judicial or nonjudicial foreclosure proceeding in which the
association acquires title to the unit, any excess rental income received by
the association from the unit shall be paid to existing lien holders based on
the priority of lien, and not on a pro rata basis, and shall be applied to the
benefit of the unit owner.
�
For purposes
of this subsection, excess rental income shall be any net income received by
the association after a court has issued a final judgment determining the
priority of a senior mortgagee and after paying, crediting, or reimbursing the
association or a third party for:

����
(1)
�
The lien for delinquent assessments pursuant to subsections (a) and (b);

����
(2)
�
Any maintenance fee delinquency against the unit;

����
(3)
�
Attorney's fees and other collection costs related to the association's
foreclosure of the unit; or

����
(4)
�
Any costs incurred by the association for the rental, repair,
maintenance, or rehabilitation of the unit while the association is in
possession of the unit including monthly association maintenance fees,
management fees, real estate commissions, cleaning and repair expenses for the
unit, and general excise taxes paid on rental income;

provided that
the lien for delinquent assessments
under paragraph (1) shall be paid,
credited, or reimbursed first.

����
(p)
�
Nothing
in this section shall limit the rights of an owner to the protection of all
fair debt collection procedures mandated under federal and state law.
"

����
SECTION
6
.
�
Section
514B-157, Hawaii Revised Statutes, is amended by amending subsection (a) 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;

����
(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[
;
]
, except as otherwise
provided in section 514B- ;
provided that 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."

����
SECTION 7.
�
This Act does not affect rights and duties
that matured, penalties that were incurred, and proceedings that were begun
before its effective date.

����
SECTION 8.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.

����
SECTION 9.
�
This Act shall take effect on July 1, 2025.

INTRODUCED BY:

_____________________________

Report Title:

Condominium
Associations; Fines; Assessments; Common Expense Assessments; Appeals

Description:

Clarifies
the authority of condominium associations to impose fines for violations of the
declaration, bylaws, house rules, or regulations adopted by the condominium
association.
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Establishes a process for
the unit owner or tenant of the unit owner to appeal the imposition of a
fine.
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Clarifies the responsibilities of
unit owners to pay common expense assessments.
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Clarifies the rights and process for unit owners to appeal assessments
other than common expense assessments.

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