RELATING TO CONDOMINIUMS.

HB1447

HOUSE OF REPRESENTATIVES

H.B. NO.

1447

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:

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SECTION
1.
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The legislature finds that
condominium managing agents are third-party licensed real estate brokers or
authorized trust corporations contracted by a condominium association to
perform certain tasks for the association.
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These tasks can range from simple accounting to complete management
depending on the contract.
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Typical
responsibilities often include overseeing repairs and projects, finances and
accounting, and insurance and registration renewals.

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The
legislature further finds that existing law does not require these persons to
be familiar with condominium governance laws or the governing documents of an
association.
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This lack of knowledge
allows managing agents to act contrary to any of those documents to the
detriment of the association and its member unit owners.

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Accordingly,
the purpose of this Act is to require individual managing agents and employees
of entity managing agents to be licensed to reduce the corrupt behavior of
unscrupulous managing agents.

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SECTION
2
.
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Section 514B-132, Hawaii Revised Statutes, is
amended to read as follows:

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"
�514B-132
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Managing agents.
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(a)
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Every managing agent shall:

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(1)
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Be a:

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(A)
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Licensed
real estate broker in compliance with chapter 467 and the rules of the
commission.
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With respect to any
requirement for a corporate managing agent in any declaration or bylaws
recorded before July 1, 2006, any managing agent organized as a limited
liability company shall be deemed to be organized as a corporation for the
purposes of this paragraph, unless the declaration or bylaws are expressly
amended after July 1, 2006
,
to require that the managing agent be
organized as a corporation and not as a limited liability company; or

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(B)
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Corporation
authorized to do business under article 8 of chapter 412;

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(
2)
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Register
with the commission prior to conducting managing agent activity through
approval of a completed registration application, payment of fees, and
submission of any other additional information set forth by the commission.
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The registration shall be for a biennial
period with termination on December 31 of an even-numbered year.
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The commission shall prescribe a deadline
date prior to the termination date for the submission of a completed
reregistration application, payment of fees, and any other additional
information set forth by the commission.
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Any managing agent who has not met the submission requirements by the
deadline date shall be considered a new applicant for registration and subject
to initial registration requirements.
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The information required to be submitted with any application shall
include the name, business address, phone number, and names of associations
managed;

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(
3)
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Obtain
and keep current a fidelity bond in an amount equal to $500 multiplied by the
aggregate number of units of the association managed by the managing agent;
provided that the amount of the fidelity bond shall not be less than $20,000
nor greater than $500,000.
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Upon request
by the commission, the managing agent shall provide evidence of a current
fidelity bond or a certification statement from an insurance company authorized
by the insurance division of the department of commerce and consumer affairs
certifying that the fidelity bond is in effect and meets the requirements of
this section and the rules adopted by the commission.
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The managing agent shall permit only
employees covered by the fidelity bond to handle or have custody or control of
any association funds, except any principals of the managing agent that cannot
be covered by the fidelity bond.
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The
fidelity bond shall protect the managing agent against the loss of any
association's moneys, securities, or other properties caused by the fraudulent
or dishonest acts of employees of the managing agent.
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Failure to obtain or maintain a fidelity bond
in compliance with this chapter and the rules adopted pursuant thereto,
including failure to provide evidence of the fidelity bond coverage in a timely
manner to the commission, shall result in nonregistration or the automatic
termination of the registration, unless an approved exemption or a bond
alternative is presently maintained.
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A
managing agent who is unable to obtain a fidelity bond may seek an exemption
from the fidelity bond requirement from the commission;

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(
4)
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Act
promptly and diligently to recover from the fidelity bond, if the fraud or
dishonesty of the managing agent's employees causes a loss to an association,
and apply the fidelity bond proceeds, if any, to reduce the association's loss.
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If more than one association suffers a loss,
the managing agent shall divide the proceeds among the associations in
proportion to each association's loss.
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An association may request a court order requiring the managing agent to
act promptly and diligently to recover from the fidelity bond.
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If an association cannot recover its loss
from the fidelity bond proceeds of the managing agent, the association may
recover by court order from the real estate recovery fund established under section
467-16, provided that:

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(A)
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The
loss is caused by the fraud, misrepresentation, or deceit of the managing agent
or its employees;

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(B)
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The
managing agent is a licensed real estate broker; and

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(C)
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The
association fulfills the requirements of sections 467-16 and 467-18 and any
applicable rules of the commission;

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(5)
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Pay a nonrefundable
application fee and, upon approval, an initial registration fee, and
subsequently pay a reregistration fee, as prescribed by rules adopted by the
director of commerce and consumer affairs pursuant to chapter 91.
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A compliance resolution fee shall also be
paid pursuant to section 26‑9(o) and the rules adopted pursuant thereto;
and

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(
6)
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Report
immediately in writing to the commission any changes to the information
contained on the registration application or any other documents provided for
registration.
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Failure to do so may
result in termination of registration and subject the managing agent to initial
registration requirements.

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(b)
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The commission may deny any registration or reregistration application
or terminate a registration without hearing if the fidelity bond and supporting
documents fail to meet the requirements of this chapter and the rules adopted
pursuant thereto.

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(c)
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Every managing agent shall be considered a fiduciary with respect to any
property managed by that managing agent.

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(d)
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The registration requirements of [
this
section
]
subsection (a)
shall not apply to active real estate
brokers in compliance with and licensed under chapter 467.

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(e)
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If a managing agent receives a request from
the commission to distribute any commission-generated information, printed
material, or documents to the association, its board, or unit owners, the
managing agent shall make the distribution at the cost of the association
within a reasonable period of time after receiving the request.
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The requirements of this subsection
shall

apply to all managing agents, including unregistered managing agents.

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(f)
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Beginning
, no individual
shall provide services to an association in the capacity of an individual
managing agent or employee of a managing agent unless that individual holds a
license issued by the commission under this subsection.
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To obtain a license under this subsection, an
individual shall provide:

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(1)
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An application for licensure;

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(2)
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A fee as determined by the commission by
rule; and

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(3)
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Proof of a current, unencumbered
certification as a:

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(A)
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Certified Manager of Community Associations
by the Community Association Managers International Certification Board;

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(B)
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Association Management Specialist by the
Community Associations Institute; or

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(C)
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Professional Community Association Manager
by the Community Associations Institute.

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(g)
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All individuals licensed under subsection (f)
shall:

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(1)
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Act in accordance with the declaration,
bylaws, and rules and regulations of the association to which they serve;

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(2)
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Act in accordance with state laws,
including this chapter, and ordinances and rules of the county in which the
project is located; and

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(3)
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Intervene with respect to any misconduct by
board members or unit owners as soon as reasonably practicable.
"

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SECTION
3.
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Statutory material to be repealed is
bracketed and stricken.
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New statutory
material is underscored.

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SECTION 4.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Condominium
Associations; Managing Agents; Employees; Licensure

Description:

Requires
individual managing agents and employees of entity managing agents to be
licensed and imposes certain duties on these individuals.

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