RELATING TO MANAGING AGENTS.

HB252

HOUSE OF REPRESENTATIVES

H.B. NO.

252

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to managing agents
.

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 residential high-rise properties are held to the same
standard as commercial buildings with regard to structural conditions like
repairs, maintenance, and reserve requirements.
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However, the level of experience and expertise that volunteer
association of apartment owners (AOAO) board members possess is not comparable
to that of business organizations whose facilities are managed by professional property
management companies.
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The legislature
also finds that existing statutory requirements for managing agents are
inadequate to protect AOAO board members and unit owners from incompetence,
negligence, and lack of property management experience.
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Concerning qualifications, existing law requires
only that managing agents be licensed real estate brokers.
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The lack of requirements for commercial property
management experience may cause AOAO board members to suffer losses due to
fraud, misrepresentation, or deceit of the managing agent or its
employees.
�

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Accordingly, the purpose of this Act is to
require
managing agents for residential condominium properties over seventy-five feet
in height to have commercial property management experience.

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SECTION
2
.
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Section 514B-132, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

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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
]

before
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
]
before
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[
.
]
; and

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(7)
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For
residential condominium properties that exceed seventy-five feet in height, have
experience in commercial property management.
"

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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:

Condominiums;
Managing Agents; Requirements; Commercial Property Management Experience

Description:

Requires
managing agents for residential condominium properties over seventy-five feet
in height to have commercial property management experience.

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