RELATING TO CONDOMINIUMS.

HB1824

HOUSE OF REPRESENTATIVES

H.B. NO.

1824

THIRTY-THIRD LEGISLATURE, 2026

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 Hawaii's
condominium and homeowners' association reserve requirements are intended to
promote financial transparency, long-term planning, and the protection of unit
owners from unexpected special assessments.

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The legislature further finds that
while third-party reserve study reviews can be an effective tool for larger and
more complex associations, the cost of obtaining such reviews may impose a
disproportionate financial burden on very small associations with simple
infrastructure, limited shared components, and active owner oversight.
�
For these associations, the expense of a
mandatory third-party reserve study review may exceed other essential annual
operating costs and reduce funds available for actual maintenance and repair of
common elements.

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The legislature notes that existing
law already recognizes the distinction between large and small associations by
permitting associations comprised of fewer than twenty units to waive certain
audit and financial verification requirements by a vote of unit owners.
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The legislature finds that a similar,
narrowly tailored approach is appropriate with respect to the triennial
third-party reserve study review requirement.

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The purpose of this Act is to
provide limited flexibility for small associations, while preserving
transparency and owner protections, by allowing associations with fewer than
twenty units to waive the requirement for a third-party reserve study review upon
a majority vote of unit owners; provided that annual reserve disclosures are
maintained and the waiver decision is clearly documented and available to unit
owners.

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SECTION
2
.
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Section
514B-148, Hawaii Revised Statutes, is amended by amending subsection (a) to
read as follows:

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"
(
a)
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The budget required under section 514B-144(a)
shall include a summary with at least the following details:

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(1)
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The estimated revenues and operating expenses of the association;

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(2)
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Disclosure as to whether the budget has been prepared on a cash or
accrual basis;

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(3)
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The estimated
costs of fire safety equipment or installations that meet the requirements of a
building fire and life safety evaluation required by the applicable county for
any building located in a county with a population greater than five hundred
thousand; provided that the reserve study may forecast a loan or special
assessment to fund building fire and life safety components or installation;

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(4)
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The balance of the total
replacement reserves fund of the association as of the date of the budget;

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(5)
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The estimated
replacement reserves assessments that the association will require to maintain
the property based on a reserve study performed by or on behalf of the
association
; provided that [
the
]
:

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(A)
�
The

reserve study, if not prepared by an independent reserve study preparer, shall
be reviewed by an independent reserve study preparer no less than every three
years; provided further that [
a
]
an association comprising fewer than
twenty units may, by the affirmative vote of a majority of the unit owners
present or represented at a duly noticed association meeting, elect to waive
the requirement for a review by an independent reserve study preparer every
three years; provided that:

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(i)
�
The association continues to prepare and
disclose annual reserve information to unit owners in accordance with this
chapter; and

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(ii)
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The vote to waive the review by an
independent reserve study preparer is recorded in the association's records and
made available to unit owners upon request.

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Nothing in this subparagraph
shall be construed to prohibit an association from obtaining a review by an
independent reserve study preparer at any time; and

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(B)
�
A

managing agent with industry reserve study designations shall not be considered
as having a conflict of interest for purposes of this paragraph;

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(6)
�
A general explanation of
how the estimated replacement reserves assessments are computed and detailing:

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(A)
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The
identity, qualifications, and potential conflicts of interest of the person or
entity performing the reserve study, update, or any review thereof;

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(B)
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Disclosure of any component of association
property omitted from the reserve study and the basis for the omission;

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(C)
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Planned increases in the estimated replacement
reserve assessments over the thirty-year plan; and

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(D)
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Whether the actual estimated replacement reserves
assessments for the prior year as defined in the study were less than the
assessments provided for in the reserve study, and, if so, by how much, and
explaining the impact of the lesser assessments on future estimated replacement
reserves assessments;

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(7)
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The amount the
association must collect for the fiscal year to fund the estimated replacement
reserves assessments; and

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(8)
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Information
as to whether the amount the association must collect for the fiscal year to
fund the estimated replacement reserves
assessments

was calculated using a per cent funded or cash flow plan.
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The method or plan shall not circumvent the
estimated replacement reserves
assessments

amount determined by the reserve study pursuant to
paragraph (5).

The budget summary shall contain all required
information without referring the reader to other portions of the budget."

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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; Reserve Study; Waiver; Small Associations

Description:

Allows
small condominium associations to waive the requirement for the reserve study
to be reviewed by an independent reserve study preparer every three years if a
majority of unit owners at a meeting approve the waiver and complies with other
requirements.

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