RELATING TO CONDOMINIUM ASSOCIATIONS.

HB1209

HOUSE OF REPRESENTATIVES

H.B. NO.

1209

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to condominium associations
.

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

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SECTION 1.
�
The legislature finds that when boards of
directors of condominium associations seek legal assistance to protect the
collective interests of their associations, it is the board, not the individual
unit owners, who are the clients of the attorneys.
�
Accordingly, compensation for the legal
services and costs should be paid in full entirely with the associations' funds
and reserves, as the exclusive sources of payment, provided that the matters
are not for collection of delinquent common expense dues owners are responsible
for.
�
The legislature finds that the
absence of these clearly defined legal fee responsibilities has resulted in
inequitable fee payments by owners.

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The legislature further finds that
these fees should be limited in proportion to the costs of the matter being
resolved.
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The costs of an association
are shared by all its unit owners.
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As
such, excessive fees have a negative impact on all unit owners in an
association.

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The purpose of this Act is to:

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(1)
�
Require that the
fees for attorneys retained by a condominium association be paid from an
association's funds or reserves, provided the matter is a not a delinquent debt
collection matter;

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(2)
�
Require attorneys
hired by a condominium association for collection purposes to abide by all
terms of the federal Fair Debt Collection Practices Act, including limiting
collection fees to twenty-five per cent of the original debt amount;

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(3)
�
Require attorneys
retained by a condominium association to confine their communications to the
condominium board, except when the attorneys must request and require materials
and responses directly from owners for each matter;

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(4)
�
Prohibit attorneys
retained by a condominium association from billing unit owners directly;

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(5)
�
Require that each
bill statement attorneys submit to a condominium association clearly indicate
hourly service fees applicable to the statement, the date and explanation of
each separate task performed, the number of hours expended for each separate
specific task covered by the statement, the amount charged for each task, the
final total amount due for each statement, and a reasonable due date for
payment of the bill; and

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(6)
�
Require
that a notice of default and intention to foreclose served on a unit owner
affords the unit owner the opportunity to respond within thirty days after
service of the notice.

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

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"
�514B-
�
Attorneys'
fees.
�
(a)
�

Notwithstanding section 514B-144(d), all costs for attorneys' fees
incurred by or on behalf of the association shall be paid from association
funds or reserves.
�
The association shall
not assess, demand, or seek reimbursement of the costs for attorneys' fees
against a unit owner unless:

����
(1)
�
The association
assesses, demands, or seeks reimbursement of the costs of attorneys' fees
against all the units in accordance with the allocations under section 514B-41;

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(2)
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The purpose of
the collection activity is debt collection of delinquent common expense assessments
from the unit owner; or

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(3)
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The association
prevailed in the matter that did not pertain to collection of delinquent common
expense assessments, and was a result of binding arbitration or litigation
occurring after the legal fees were initially paid with association funds.

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(b)
�

The association shall not assess, demand, or seek reimbursement for its
total and final legal fees in any matter in excess of twenty-five per cent of
the original debt amount sought by the association.

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(c)
�
Attorneys retained by the association shall
only communicate with the board; provided that attorneys retained by the
association may communicate with unit owners for purposes of requests and
responses for essential requirements of each matter; provided further that
attorneys retained by the association shall not bill or demand payment of
attorneys' fees directly from any unit owner.

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(d)
�
Attorneys retained by the association shall
provide a bill statement to the association that clearly indicates hourly
service fees applicable to the statement, the date and explanation of each
separate task performed, the number of hours expended for each separate
specific task covered by the statement, the amount charged for each task, the
final total amount due for each statement, and a reasonable due date for
payment of the bill.
"

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SECTION
3
.
�
Section 514B-157, Hawaii Revised Statutes, is
amended by amending its title and subsection (a) to read as follows:

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"
�514B-157
�
[
Attorneys' fees, delinquent assessments,
]

Costs
and expenses of enforcement.
�
(a)
�
All costs and expenses, [
including
]
except
for
reasonable attorneys' fees, incurred by or on behalf of the association
for:

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(1)
�
Collecting any delinquent assessments
,
including commercial property assessed financing assessments imposed pursuant
to section 196-64.5,
against any owner's
unit;

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(2)
�
Foreclosing any lien thereon;
provided that the
association's formal notice of default and intention to foreclose the lien affords
the unit owner the opportunity to respond within thirty days after service of
the notice on the unit owner;
or

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(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 the person or persons;
provided that if the
claims upon which the association takes any action are not substantiated, all
costs and expenses, [
including
]
except for
reasonable attorneys'
fees, incurred by any applicable person or persons as a result of the action of
the association, shall be promptly paid on demand to the person or persons by
the association."

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SECTION
4.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.

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SECTION 5.
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This Act shall take effect on July 1, 2025.

INTRODUCED BY:

_____________________________

Report Title:

Condominium
Associations; Attorneys' Fees; Communications; Billing Statements; Notice of
Default and Intention to Foreclosure

Description:

Requires
that the fees for attorneys retained by a condominium association be paid from
an association's funds or reserves, except for collection of delinquent common
dues payments from owners.
�
Limits the
total and final legal fees to twenty-five per cent of the original debt amount.
�
Requires attorneys retained by a condominium
association to confine their communications to the condominium board, except
when the attorneys must request and require materials and responses directly
from owners for each matter.
�
Prohibits
attorneys retained by a condominium association from billing unit owners
directly.
�
Specifies the contents of an
attorney's billing statement.
�
Requires
that a notice of default and intention to foreclose served on a unit owner
affords the unit owner the opportunity to respond within thirty days after
service of the notice.

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