RELATING TO CONDOMINIUM ASSOCIATIONS.

HB2580

HOUSE OF REPRESENTATIVES

H.B. NO.

2580

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to condominium associations
.

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

����
SECTION
1.
�
The legislature finds that, with the
passing of Act 189 in 2023, the legislature recognized that Hawaii has numerous
unresolved issues related to disputes within condominium associations that
require better laws to protect the public from unwarranted assessments, fines,
legal fees, and retaliation.

����
The
legislature further finds Act 189 established a Condominium Property Regime
(CPR) Task Force to study and make recommendations on issues within Hawaii's
condominium laws, including disputes, board governance, and dispute resolution,
with reports due to the legislature.
�
The
CPR Task Force published their formal findings and recommendations to the legislature
in December of 2023, and the legislature passed on the baton to the Legislative
Reference Bureau in the 2024 session with the passing of Act 43, which provided
funding for a study and research report on condominium issues and how they are
addressed in five pre-selected States (California, Delaware, Florida,
Massachusetts, and Nevada).
�
This report,
at a cost of over $300,000, was published in November 2025 and confirmed that
some states have Ombudsman�s Offices to assist the public with disputes, and
some have additional enforcement elements. Ironically, this report did not
include a review of Hawaii.

����
The
legislature finds that it is well known from years of testimony, numerous
reports previously published, the December 2023 CPR Task Force report, and the
Legislature via Act 189 (2023) and Act 43 (2024), that the current structure in
Hawaii to address condominium issues and disputes is not working.
�
Hawaii urgently needs to shift to a better and
more consumer-friendly model, or face continuing discourse, more unnecessary
condominium related litigation, and more homeowners at risk of losing their
homes or facing unaffordable legal fees.

����
Better
consumer protections are needed to ensure that condominium associations, their
Boards, and their Managing Agents are compliant with the laws that govern
condominium associations, including governing documents and HRS 514B statutes.
�
It is time for Hawaii to establish an
Ombudsman�s Office for Condominium Owners and Associations.

����
Accordingly, the purpose of this Act
is to:

����
(1)
�
Establish within
the department of commerce and consumer affairs an ombudsman's office for
condominium associations to:

���������
(A)
�
Serve as a neutral
resource for members of condominium associations and the public;

���������
(B)
�
Provide an office
for condominium association unit owners, boards, board members, association
management, and managing agents to bring complaints for investigation and
dispute resolution;

���������
(C)
�
Ensure compliance
with existing laws and association governing documents;

���������
(D)
�
Resolve disputes
without burdensome and excessive legal expenses, which include attorneys fees,
mediation costs beyond what is subsidized, court costs, lost wages for missed
work, and other costs;

���������
(E)
�
Ensure association
members have access to association documents;

���������
(F)
�
The ombudsman
shall develop policies and procedures to assist unit owners, boards of
directors, board members, community association managers, and other affected
parties to understand their rights and responsibilities as set forth in chapter
514B, Hawaii Revised Statutes, and the condominium documents governing their
respective association; and

���������
(G)
�
Maintain data on
inquiries and complaints received, types of assistance requested, notices of
decisions, actions taken, and the disposition of matters; and

����
(2)
�
Establish funding
for the ombudsman�s office for condominium associations from the condominium
education trust fund, with no impact on the State�s general fund.

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

"
Part

OMBUDSMAN'S
OFFICE FOR CONDOMINIUM ASSOCIATIONS

����
�514B-A
�
Ombudsman's office for condominium
associations established; ombudsman; criteria for ombudsman.
�
(a)
�

There is established within the department of commerce and consumer
affairs an ombudsman's office for condominium associations.
�
The ombudsman's office for condominium
associations shall be headed by the ombudsman for condominium associations, who
shall be appointed by the director of commerce and consumer affairs with the
approval of the governor.

����
(b)
�

The ombudsman shall have been admitted to practice law before the Hawaii
supreme court and shall have extensive experience in Hawaii real estate,
condominium association law, and conflict and alternative dispute
resolution.
�
The ombudsman shall not:

����
(1)
�
Engage or have been engaged within the past
two years in any other business or profession that directly or indirectly
relates to or conflicts with the work of the ombudsman's office;

����
(2)
�
Serve as the representative, executive,
officer, or employee of any political party, executive committee, or other
governing body of a political party;

����
(3)
�
Receive remuneration for activities on behalf
of any candidate for public office;

����
(4)
�
Engage in soliciting votes or other activities
on behalf of a candidate for public office; or

����
(5)
�
Become a candidate for election to public
office unless the ombudsman first resigns.

����
(c)
�

The ombudsman shall be exempt from chapter 76.

����
�514B-B
�
Personnel; salary; benefits.
�
(a)
�

The ombudsman shall employ professional and clerical staff as necessary
for the efficient operation of the ombudsman's office.
�
The ombudsman may appoint persons who have
been admitted to practice law before the Hawaii supreme court as staff without
regard to chapter 76.
�
All other
employees shall be appointed by the ombudsman in accordance with chapter 76.

����
(b)
�

The ombudsman shall appoint complaints and enforcement officers who have
been admitted to practice law before the Hawaii supreme court and have
extensive experience in Hawaii real estate, condominium association law, and
conflict and alternative dispute resolution.
�

The complaints and enforcement officers shall be exempt from chapter 76.

����
(c)
�

The ombudsman's office shall integrate the existing condominium
specialist positions in the department of commerce and consumer affairs into
the ombudsman's office as intake specialists for complaints submitted to the
ombudsman's office.

����
(d)
�

Personnel and administrative costs of the ombudsman's office shall be
funded by the condominium education trust fund.

����
(e)
�

The salary of the ombudsman shall be determined by the director of
commerce and consumer affairs.
�
The
ombudsman, complaints and enforcement officers, intake specialists, and other
personnel shall be included in any benefits program generally applicable to
officers and employees of the State.

����
�514B-C
�
Ombudsman; powers and duties; immunity from
liability.
�
(a)
�
The ombudsman shall:

����
(1)
�
Have the power to
establish rules pursuant to chapter 91 for the operation of the office that
shall include receiving and processing complaints and requests for dispute
intervention and resolution; conducting investigations; enforcement, including
fines and penalties; and reporting the findings of the office; provided that
the ombudsman shall levy nominal filing fees not to exceed $100 to deter
frivolous submissions or investigations of complaints or requests for dispute
intervention and resolution;

����
(2)
�
Have access to and
use of all files and records of the department of commerce and consumer
affairs;

����
(3)
�
Act as a liaison
between unit owners, boards, board members, association management, managing
agents and their employees, and other affected parties;

����
(4)
�
Act as a neutral
resource for the rights and responsibilities of unit owners, associations,
boards of directors, board members, managers, and any affected parties to
encourage and facilitate voluntary meetings with and between these entities
when meetings may assist in resolving a dispute prior to any party submitting a
formal request for dispute intervention and resolution;

����
(5)
�
Assist unit owners
in understanding their rights and the processes available to them according to
the laws and rules governing condominium associations;

����
(6)
�
Respond to general
inquiries, make recommendations, and give guidance as necessary to assist unit
owners and boards;

����
(7)
�
Make available,
either separately or through an existing website, or both, information
concerning associations and any additional information the ombudsman may deem
appropriate and non-confidential;

����
(8)
�
Receive written
requests for dispute intervention and resolution;

����
(9)
�
Investigate and
assist in resolving disputes brought by unit owners, associations, boards, and
board members, under section 514B-D;

���
(10)
�
Investigate acts
that may be:

���������
(A)
�
Contrary to law or
an association's governing rules;

���������
(B)
�
Unreasonable,
unfair, oppressive, retaliatory, or discriminatory as administered or under the
circumstances;

���������
(C)
�
Based on a mistake
of fact;

���������
(D)
�
Based on improper
or irrelevant grounds;

���������
(E)
�
Unaccompanied by
an adequate statement of reasons; or

���������
(F)
�
Otherwise
erroneous;

���
(11)
�
Subject to the
privileges that witnesses have in the courts of the State, have the authority
to:

���������
(A)
�
Compel at a
specified time and place, by a subpoena, the appearance and sworn testimony of
any person whom the ombudsman reasonably believes may have information relating
to a matter under investigation; and

���������
(B)
�
Compel any person
to produce documents, records, and information the ombudsman reasonably
believes may relate to a matter under investigation;

���
(12)
�
Be authorized to
bring suit in an appropriate state court to enforce the powers in paragraph
(11);

���
(13)
�
Provide advisory
opinions upon request from unit owners or other affected parties;

���
(14)
�
Provide
recommendations to the director of commerce and consumer affairs if the
ombudsman finds that:

���������
(A)
�
The matter should
be further considered by the department of commerce and consumer affairs;

���������
(B)
�
A statute or rule
should be amended or repealed; and

���������
(C)
�
Other action
should be taken by the department of commerce and consumer affairs;

���
(15)
�
Within a
reasonable time after providing recommendations to the director of commerce and
consumer affairs pursuant to paragraph (14), the ombudsman may submit a report
to the governor or the legislature or publish the report, including any reply
by the department of commerce and consumer affairs, and notify the complainant
of the actions taken by the ombudsman and the department;

���
(16)
�
Ensure that
association members have access to the services provided through the
ombudsman's office and that association members receive responses from the
ombudsman's office within thirty days of the member's inquiry;

���
(17)
�
Maintain publicly
available data on inquiries and complaints received, types of assistance
requested, notices of final decisions and actions taken, and disposition of
matters;

���
(18)
�
Monitor changes in
federal and state laws relating to associations;

���
(19)
�
Have the authority
to remove from the board any board member of an association who is found to
have committed wilful misconduct in violation of any laws or the condominium's
governing documents;

���
(20)
�
Provide to the
governor and the public an annual report that includes the number and types of
requests for dispute intervention and resolution submitted to the ombudsman's
office and their disposition, and any suggestions for policy or legislation the
ombudsman's office deems necessary to more quickly and efficiently resolve
condominium disputes; and

���
(21)
�
Adopt rules
pursuant to chapter 91 necessary to carry out the purposes of this part.

����
(b)
�

The ombudsman shall have the same immunities from civil and criminal
liability as a judge of the State.
�
The
ombudsman and the staff of the ombudsman's office shall not testify in any
court concerning matters coming to their attention in the exercise of their
official duties except as may be necessary to enforce this chapter.

����
�514B-D
�
Request for dispute intervention and
resolution.
�
(a)
�
Except as otherwise provided in this section,
a unit owner or association, by its board members, who is a party to a dispute
involving the interpretation or enforcement of an association's governing
documents, including the condominium's declaration, bylaws, and house rules,
this chapter, or any other law the association is obligated to follow, may
submit to the ombudsman's office a written request for dispute intervention and
resolution setting forth the facts forming the basis of the dispute.

����
(b)
�
Simultaneous with the submission of a dispute
intervention and resolution request, the requesting party or parties shall
provide the board, association management or managing agent, and the other
party or parties in the dispute, a copy of the request for dispute intervention
and resolution.
�
The notice shall be sent
to the addressee by certified mail, return receipt requested, or by hand
delivery with confirmation of delivery.
�

The notice shall specify in reasonable detail:

����
(1)
�
The nature of the
dispute;

����
(2)
�
Any violations of
this chapter, the association governing documents, or any other law or
regulation the association is obligated to follow;

����
(3)
�
Any alleged
damages that resulted from the dispute; and

����
(4)
�
Any proposed
corrective action to resolve the dispute.

����
(c)
�

A dispute intervention request submitted to the ombudsman's office
pursuant to this section shall be on a form prescribed by the ombudsman's
office and accompanied by evidence that:

����
(1)
�
The respondent has
been given a reasonable opportunity to correct the dispute; and

����
(2)
�
Reasonable efforts
to resolve the dispute have failed.

����
(d)
�

The ombudsman may impose a minimum fine of $250 against any person who
knowingly submits a false or fraudulent dispute intervention and resolution
request with the ombudsman's office.

����
(e)
�

Legal representation shall not be required for dispute intervention by
the ombudsman's office.
�
Unit owners
shall not be assessed any legal fees incurred by the association, board, board
members, managing agent, or other parties as a result of a dispute intervention
and resolution request submitted to the ombudsman's office.

����
�514B-E
�
Enforcement by complaints and enforcement
officers; dispute resolution assistance.
�

(a)
�
Upon receipt of a dispute
intervention and resolution request pursuant to section 514B-D, the complaints
and enforcement officer shall open an investigation into the dispute.

����
(b)
�

The complaints and enforcement officer may interview parties and
witnesses involved in the dispute and request the production of documents,
records, and information pursuant to section 514B-154.5, or other evidence or
documents that would be reasonably helpful in resolving the dispute.
�
Participation by the disputing parties,
including unit owners, boards, board members, and association management shall
be mandatory.
�
Any party to the dispute
who refuses to participate shall be subject to penalties and fines to be
predetermined and published by the ombudsman.
�

If the board determines not to participate, each board member voting not
to participate shall be considered in violation of this Act, shall be
personally assessed a monetary fine, and shall be removed from the board.

����
(c)
�

The complaints and enforcement officer shall make recommendations, give
guidance, or issue an advisory opinion or decision to the disputing parties as
the complaints and enforcement officer deems necessary.

����
(d)
�

If the complaints and enforcement officer determines that an association
or board is at fault in a dispute, the association or board shall be
responsible for any legal fees, costs, expenses, interest, or fines levied
against the unit owner involved in the dispute.

����
(e)
�

The complaints and enforcement officer may impose a fine in the amount
of not less than $250 against any person who knowingly submits false or
fraudulent information to the ombudsman's office, willingly hinders the lawful
actions of the ombudsman or the staff of the ombudsman's office, or willingly
refuses to comply with the lawful demands of the ombudsman or the staff of the
ombudsman's office.

����
(f)
�

If the parties are unable to reach an agreement under this section or if
a party does not agree with the decision of the complaints and enforcement
officer, a party may request a contested case hearing with the ombudsman's
office that shall be presided over by the ombudsman.
�
Participation in a contested case hearing
shall be mandatory for all parties in the dispute.

����
(g)
�

Any party who wishes to request a contested case hearing shall submit a
written request with the ombudsman's office within thirty days after receipt of
a copy of the complaints and enforcement officer's decision.

����
�514B-F
�
Contested case hearing.
�
(a)
�
A
contested case hearing shall be conducted by the ombudsman pursuant to
chapter 91 and any rules adopted by the ombudsman's office; provided that
if there is no dispute as to the facts involved in a particular matter, the
ombudsman may permit the parties to proceed by memoranda of law in lieu of a
hearing, unless the procedure would unduly burden any party or would otherwise
not serve the ends of justice.

����
(b)
�

The ombudsman shall not be bound by the rules of evidence when
conducting a hearing to determine whether a violation of this part has
occurred.
�
The standard of proof required
shall be a preponderance of the evidence.

����
(c)
�

A record shall be made of the proceeding.

����
(d)
�

All parties shall be afforded a full opportunity to engage in discovery
and present evidence and argument on the issues involved.

����
(e)
�

If a hearing is held or a review by memoranda of law is conducted, a
decision shall be rendered by the ombudsman's office and promptly delivered to
each party by certified mail.
�
Any party
adversely affected by the decision may submit written exceptions to the
ombudsman's office within thirty days after receipt of the decision.

����
(f)
�

As expeditiously as possible after the close of the hearing but not
before any party adversely affected has had the opportunity to submit a written
exception, the ombudsman shall issue a final decision together with separate
findings of fact and conclusions of law regarding whether a violation of this
part has occurred.

����
�514B-G
�
Fines; fees.
�
Any fine or fee collected pursuant to this
part shall be deposited into the condominium education trust fund."

����
SECTION
3
.
�
Section 28-8.3, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

����
"
(a)
�

No department of the State other than the attorney general may employ or
retain any attorney, by contract or otherwise, for the purpose of representing
the State or the department in any litigation, rendering legal counsel to the
department, or drafting legal documents for the department; provided that the
foregoing provision shall not apply to the employment or retention of
attorneys:

����
(1)
�
By the public utilities commission, the labor
and industrial relations appeals board, and the Hawaii labor relations board;

����
(2)
�
By any court or judicial or legislative office
of the State; provided that if the attorney general is requested to provide
representation to a court or judicial office by the chief justice or the chief
justice's designee, or to a legislative office by the speaker of the house of
representatives and the president of the senate jointly, and the attorney
general declines to provide such representation on the grounds of conflict of
interest, the attorney general shall retain an attorney for the court, judicial,
or legislative office, subject to approval by the court, judicial, or
legislative office;

����
(3)
�
By the legislative reference bureau;

����
(4)
�
By any compilation commission that may be
constituted from time to time;

����
(5)
�
By the real estate commission for any action
involving the real estate recovery fund;

����
(6)
�
By the contractors license board for any
action involving the contractors recovery fund;

����
(7)
�
By the office of Hawaiian affairs;

����
(8)
�
By the department of commerce and consumer
affairs for the enforcement of violations of chapters 480 and 485A;

����
(9)
�
As grand jury counsel;

���
(10)
�
By the Hawaii health systems corporation, or
its regional system boards, or any of their facilities;

���
(11)
�
By the auditor;

���
(12)
�
By the office of ombudsman;

���
(13)
�
By the insurance division;

���
(14)
�
By the University of Hawaii;

���
(15)
�
By the Kahoolawe island reserve commission;

���
(16)
�
By the division of consumer advocacy;

���
(17)
�
By the office of elections;

���
(18)
�
By the campaign spending commission;

���
(19)
�
By the Hawaii tourism authority, as provided
in section 201B-2.5;

���
(20)
�
By the division of financial institutions;

���
(21)
�
By the office of information practices;

���
(22)
�
By the school facilities authority;

���
(23)
�
By
the Mauna Kea
stewardship and oversight authority
; [
or
]

���
(24)
�
By
a department, if the attorney general, for reasons deemed by the attorney
general to be good and sufficient, declines to employ or retain an attorney for
a department; provided that the governor waives the provision of this section[
.
]
;
or

���
(25)
�
By the ombudsman's office for condominium
associations.
"

����
SECTION 4.
�
Section 514B-3, Hawaii Revised Statutes, is
amended by adding four new definitions to be appropriately inserted and to read
as follows:

����
"
"Complaints and
enforcement officer" means the complaints and enforcement officer
established pursuant to section 514B-B.

����
"Intake specialist"
means the intake specialist established pursuant to section 514B-B.

����
"Ombudsman" means the
ombudsman for condominium associations under �514B-A.

����
"Ombudsman's office"
means the ombudsman's office for condominium associations established under
section 514B-A.
"

����
SECTION
5
.
�
Section
514B-65, Hawaii Revised Statutes, is amended to read as follows:

����
"
�514B-65
�
Investigative powers.
�
If the commission
or ombudsman's office

has reason to believe that any person is violating or has violated this part,
part V,
part
��
,
section 514B‑103,
514B‑132, 514B‑134, 514B‑149, sections 514B‑152 to 514B‑154,
section 514B‑154.5, [
or
] the rules of the commission [
adopted
pursuant thereto
],
or
the rules of the
ombudsman's office,

the commission
or ombudsman's office
may conduct an investigation of the
matter and examine the books, accounts, contracts, records, and files of all
relevant parties.
�
For purposes of this
examination, the developer and the real estate broker shall keep and maintain
records of all sales transactions and of the funds received by the developer
and the real estate broker in accordance with chapter 467 and the rules of the
commission, and shall make the records accessible to the commission upon
reasonable notice and demand."

����
SECTION
6
.
�
Section
514B-68, Hawaii Revised Statutes, is amended to read as follows:

����
"
�514B-68
�
Power to enjoin.
�
Whenever the commission
or ombudsman's
office
believes from satisfactory evidence that any person has violated
this part, part V,
part
��
,
section
514B‑103, 514B‑132, 514B‑134, 514B‑149, sections 514B‑152
to 514B‑154, section 514B‑154.5, [
or
] the rules of the
commission [
adopted pursuant thereto, it
]
, or the rules of the
ombudsman's office, the commission or ombudsman's office
may conduct [
an
]

a civil or criminal
investigation of the matter and bring an action
against the person in any court of competent jurisdiction on behalf of the
State to enjoin the person from continuing the violation or doing any acts in
furtherance thereof."

����
SECTION 7
.
�
Section 514B-71,
Hawaii Revised Statutes, is amended by amending subsection (a) to read as
follows:

����
"(a)
�
The commission shall establish a condominium
education trust fund that the commission shall use for educational
purposes.
�
Educational purposes shall
include financing or promoting:

����
(1)
�
Education and
research in the field of condominium management, condominium project
registration, and real estate, for the benefit of the public and those required
to be registered under this chapter;

����
(2)
�
The improvement
and more efficient administration of associations;

����
(3)
�
Expeditious and
inexpensive procedures for resolving association disputes;

����
(4)
�
The ombudsman's
office;

����
(5)
�
Support
for mediation of condominium related disputes; and

���
[
(5)
]

(6)
�
Support for voluntary binding
arbitration between parties in condominium related disputes, pursuant to
section 514B-162.5."

����
SECTION 8.
�
Section 514B-72, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

����
"(a)
�
Each project or
association with more than five units shall pay to the department of commerce
and consumer affairs:

����
(1)
�
A condominium education trust fund fee within
one year after the recordation of the purchase of the first unit or within
thirty days of the association's first meeting, and thereafter, on or before
June 30 of every odd-numbered year, as prescribed by rules adopted pursuant to
chapter 91; and

����
(2)
�
Beginning with the July 1, [
2015,
]
2027,

biennium registration, an additional annual condominium education trust fund
fee in an amount equal to the product of [
$1.50
]
$12.50
times the
number of condominium units included in the registered project or association
to be dedicated to supporting
the ombudsman's office,
mediation [
or
]
,
and
voluntary binding arbitration of condominium related disputes.
�
The additional condominium education trust
fund fee shall total [
$3
]
$25
per unit until the commission
adopts rules pursuant to chapter 91.
�
On
June 30 of every odd-numbered year, any unexpended additional amounts paid into
the condominium education trust fund [
and initially dedicated to supporting
mediation or voluntary binding arbitration of condominium related disputes
],
as required by this paragraph, shall be used for educational purposes as
provided in section [
514B-71(a)(1), (2), and (3).
]
514B-71(a).
"

����
SECTION
9
.
�
Section
514B-73, Hawaii Revised Statutes, is amended to read as follows:

����
"
�514B-73
�
Condominium education
trust fund; management.
�
(a)
�
The sums received by the commission for
deposit in the condominium education trust fund pursuant to section 514B-72
shall be held by the commission in trust for carrying out the purpose of the
fund.

����
(b)
�

The commission and the director of commerce and consumer affairs may use
moneys in the condominium education trust fund collected pursuant to section
514B-72, and the rules of the commission to employ necessary personnel not
subject to chapter 76 for additional staff support, to provide office space,
and to purchase equipment, furniture, and supplies required by the commission
to carry out its responsibilities under this part.

����
(c)
�

The moneys in the condominium education trust fund collected pursuant to
section 514B-72[
,
] and the rules of the commission may be invested and
reinvested together with the real estate education fund established under
section 467-19 in the same manner as are the funds of the employees' retirement
system of the State.
�
The interest and
earnings from these investments shall be deposited to the credit of the
condominium education trust fund.

����
(d)
�

The commission shall annually submit to the legislature, no later than
twenty days prior to the convening of each regular session:

����
(1)
�
A summary of the
programs funded during the prior fiscal year and the amount of money in the
fund, including a statement of which programs were directed specifically at the
education of condominium owners; and

����
(2)
�
A copy of the
budget for the current fiscal year, including summary information on programs
that were funded or are to be funded and the target audience for each
program.
�
The budget shall include a line
item reflecting the total amount collected from condominium associations.

����
(e)
�
The ombudsman's office shall submit an annual
report to the legislature no later than twenty days prior to the convening of
each regular session on the activities of the ombudsman's office during the
prior fiscal year, including:

����
(1)
�
The number and
types of requests for dispute intervention submitted to the ombudsman's office
and their disposition; and

����
(2)
�
Any recommendations
for legislation or policies that the ombudsman's office deems would help to resolve
condominium disputes more quickly or efficiently.
"

����
SECTION 10.
�
Section 514B-104, Hawaii Revised Statutes, is
amended by amending subsection (a) 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;
]

that is made in accordance with the bylaws;

����
(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
;
]
by
requesting dispute resolution assistance from the ombudsman's office under
sections 514B-D, 514B-E, and 514B-F;

���
(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,

514B‑D, 514B-E, and 514B-F,
require that disputes between the
board and unit owners or between two or more unit owners regarding the
condominium be submitted to
the ombudsman's office or
nonbinding
alternative dispute resolution in the manner described in the regulation as a
prerequisite to commencement of a judicial proceeding."

����
SECTION
11
.
�
Section
514B-105, Hawaii Revised Statutes, is amended to read as follows:

����
"
�514B-105
�
Association; limitations on powers.
�

(a)
�
The declaration and
bylaws shall not impose limitations on the power of the association to deal
with the developer that are more restrictive than the limitations imposed on
the power of the association to deal with other persons.

����
(b)
�

Unless otherwise permitted by the declaration, bylaws, or this chapter,
an association may adopt rules and regulations that affect the use of or
behavior in units that may be used for residential purposes only to:

����
(1)
�
Prevent any use of
a unit that violates the declaration or bylaws;

����
(2)
�
Regulate any
behavior in or occupancy of a unit that violates the declaration or bylaws or
unreasonably interferes with the use and enjoyment of other units or the common
elements by other unit owners; or

����
(3)
�
Restrict the
leasing of residential units to the extent those rules are reasonably designed
to meet underwriting requirements of institutional lenders who regularly lend
money secured by first mortgages on units in condominiums or regularly purchase
those mortgages.

Otherwise, the association shall not regulate any
use of or behavior in units by means of the rules and regulations.

����
(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,
including commercial property assessed financing assessment expenses incurred
for improvements financed pursuant to section 196-64.5.
�
Only after the 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, 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.

����
(d)
�

No unit owner who requests legal or other information from the
association, the board, the managing agent, or their employees or agents, shall
be charged for the reasonable cost of providing the information unless the
association notifies the unit owner that it intends to charge the unit owner
for the reasonable cost.
�
The association
shall notify the unit owner in writing at least ten days prior to incurring the
reasonable cost of providing the information, except that no prior notice shall
be required to assess the reasonable cost of providing information on
delinquent assessments or in connection with proceedings to enforce the law or
the association's governing documents.

����
After being notified of the
reasonable cost of providing the information, the unit owner may withdraw the
request, in writing.
�
A unit owner who
withdraws a request for information shall not be charged for the reasonable
cost of providing the information.

����
(e)
�

Subject to any approval requirements and spending limits contained in
the declaration or bylaws, the association may authorize the board to borrow
money for the repair, replacement, maintenance, operation, or administration of
the common elements and personal property of the project, or the making of any
additions, alterations, and improvements thereto; provided that
the board shall make available any reports provided by licensed or
certified professionals that document the necessity and urgency of that
expenditure, provide to all unit owners a

written
notice of the purpose and use of the funds [
is first sent to all unit owners
and owners
]
, and hold a special meeting to
discuss the expenditure and review the reports.
�

Owners

representing
more
than
fifty per cent of the common interest
shall
vote [
or
]
and

give written consent to the borrowing.
�

In connection with the borrowing, including non‑commercial
property assessed financing, the board may grant to the lender the right to
assess and collect monthly or special assessments from the unit owners and to
enforce the payment of the assessments or other sums by statutory lien and
foreclosure proceedings.
�
The cost of the
borrowing, including, without limitation, all principal, interest, commitment
fees, and other expenses payable with respect to the borrowing or the
enforcement of the obligations under the borrowing, shall be a common expense
of the project.
�
For purposes of this section,
the financing of insurance premiums by the association within the policy period
shall not be deemed a loan and no lease shall be deemed a loan if it provides
that at the end of the lease the association may purchase the leased equipment
for its fair market value.

����
(f)
�

For financing assessments imposed upon the project under a commercial
property assessed financing program pursuant to section 196-64.5 and due from
the association, the cost of the commercial property assessed financing,
including all principal, interest, commitment fees, servicing fees, and other
expenses payable with respect to this borrowing or the enforcement of the
obligations under the borrowing, shall be a common expense of the project and
the unit owners' proportionate share of the financing assessment shall be
collected in the same manner as common expenses.
�
The written consent of at least fifty per
cent of all unit owners to finance qualifying improvements with commercial
property assessed financing shall include an acknowledgment that the annual
financing assessment required to fund debt service on the commercial property
assessed financing shall be included as part of the association's adopted
revised budget.

����
(g)
�
If the association or the board is involved
in a dispute intervention and resolution request through the ombudsman's office
pursuant to section 514B-D, no special assessment related to the dispute,
including association attorneys' fees, shall be assessed or collected from unit
owners until the ombudsman's office has completed an investigation and rendered
a final decision.
�
If the final decision
is in favor of the unit owner, any and all assessments, fines, costs, expenses,
interest, and legal fees improperly assessed to the unit owner shall be
reversed.
�
Any board member who is found
to have committed willful misconduct in violation of any laws or the governing
documents shall be removed from the board by the authority of the ombudsman.
"

����
SECTION
12
.
�
Section
514B-106, Hawaii Revised Statutes, is amended by amending subsection (a) to
read as follows:

����
"
(a)
�
Except as provided in the
declaration, the bylaws, subsection (b), or other provisions of this chapter,
the board may act in all instances on behalf of the association.
�
In the performance of their duties, officers
and members of the board shall owe the association a fiduciary duty and
exercise the degree of care and loyalty required of an officer or director of a
corporation organized under chapter 414D.
�

Any violation by a board or its officers or members of [
the mandatory
provisions of section 514B-161 or 514B-162
]
section 514B-D, 514B-E, or 514B-F
may constitute a violation of the fiduciary duty
owed pursuant to this subsection; provided that a board member may avoid
liability under this subsection by indicating in writing the board member's
disagreement with [
such board
]
the board's
action or rescinding
or withdrawing the violating conduct within forty‑five days of the
occurrence of the initial violation.
"

����
SECTION
13
.
�
Section
514B-146, Hawaii Revised Statutes, is amended as follows:

����
1.
�

By amending subsection (d) to read as follows:

����
"
(d)
�
A unit owner who disputes the
information in the written statement received from the association pursuant to
subsection (c) may request a subsequent 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
]
request dispute
intervention and resolution through the ombudsman�s office,
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
request dispute intervention and resolution
through the ombudsman�s office or
demand mediation as provided in
subsection (g) prior to paying those charges.

�����
2.
�
By amending subsections (f) and
(g) to read:

����
"
(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
participate in dispute intervention and resolution through the
ombudsman's office or

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
dispute
intervention and resolution through the ombudsman's office or

mediation, either
party may [
file
]
submit

a request
for arbitration under
section 514B-162; provided that a unit owner may only [
file
]
submit a
request
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
dispute intervention and resolution or

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
submit a request for dispute intervention and resolution through
the ombudsman�s office or
file
a

demand for mediation on the disputed charges, other than common expense
assessments.
�
If the unit owner fails to [
file
for
]
submit a request for dispute
intervention and resolution through the ombudsman�s office or

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
dispute
intervention and resolution through the ombudsman�s office or
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
dispute
intervention and resolution through the ombudsman�s office or
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.
]
"

����
SECTION
14
.
�
Section
514B-146.5, Hawaii Revised Statutes, is amended by amending subsection (a) to
read as follows:

����
"(a)
�
Any notice of default and intention to
foreclose given by an association under section 667-92(a) shall, in addition to
the requirements of that section, also include a statement that the unit owner
may request
dispute intervention and
resolution through the ombudsman�s office or

mediation
by delivering a written request for
dispute
intervention and resolution through the ombudsman�s office or

mediation to the association by certified mail, return
receipt requested, or hand delivery within thirty days after service of a
notice of default and intention to foreclose on the unit owner.

����
If the association does not receive
a request for
dispute intervention and
resolution through the ombudsman�s office or
mediation within the
thirty-day period, the association may proceed with nonjudicial or power of
sale foreclosure, subject to all applicable provisions of this chapter and
chapter 667.
�
If the association receives
a request for
dispute intervention and
resolution through the ombudsman�s office or

mediation,
as set forth in this subsection, from a unit owner within thirty days after
service of a notice of default and intention to foreclose upon the unit owner,
the association shall agree to
participate in
dispute
intervention and resolution through the ombudsman�s office or

mediate
and shall be prohibited from proceeding with nonjudicial or power of sale
foreclosure until the association has participated in the
dispute intervention and resolution through the ombudsman�s office
or

mediation [
or
the time period for completion of the mediation has elapsed.
�
The mediation shall be completed within sixty
days of the date upon which the unit owner delivers a request for mediation
upon the association; provided that if the mediation is not commenced or
completed within sixty days or
]
.
�

If
the parties are unable to resolve the dispute by
dispute intervention and resolution through the ombudsman�s office
or

mediation, the association
may proceed with nonjudicial or power of sale foreclosure, subject to all
applicable provisions of this chapter and chapter 667."

����
SECTION
15
.
�
Section
514B-154, Hawaii Revised Statutes, is amended as follows:

����
1.
�

By amending subsections (b) and (c) to read as follows:

����
"
(b)
�
Financial statements, general
ledgers, the accounts receivable ledger, accounts payable ledgers, check
ledgers, insurance policies, contracts, and invoices of the association for the
duration those records are kept by the association and delinquencies of ninety
days or more shall be available for examination by unit owners at convenient
hours at a place designated by the board; provided that:

����
(1)
�
The
board may require owners to furnish to the
association
a duly executed and acknowledged affidavit
stating that the information is requested in good faith for the protection of
the interests of the association, its members, or both; and

����
(2)
�
Owners shall pay for administrative costs in excess of [
eight
]
twenty

hours per year.

����
Copies of these items shall be provided to
any owner upon the owner's request; provided that the owner pays a reasonable
fee for duplication, postage, stationery, and other administrative costs
associated with handling the request.

����
(c)
�
After any association meeting,
and not earlier, unit owners shall be permitted to examine proxies, tally
sheets, ballots, owners' check-in lists, and the certificate of election;
provided that:

����
(1)
�
Owners
shall make a request to examine the documents within thirty days after the
association meeting;

����
(2)
�
The board may require owners to furnish to the association a duly
executed and acknowledged affidavit stating that the information is requested
in good faith for the protection of the interest of the association or its
members or both; and

����
(3)
�
Owners shall pay for administrative costs in excess of [
eight
]
twenty

hours per year.

����
The documents may be destroyed ninety days
after the association meeting; provided that in the event of a contested
election, the documents shall be retained until the contested election is
resolved.
�
Copies of tally sheets,
owners' check-in lists, and the certificates of election from the most recent
association meeting shall be provided to any owner upon the owner's request;
provided that the owner pays a reasonable fee for duplicating, postage,
stationery, and other administrative costs associated with handling the
request."

����
2.
�

By amending subsection (j) to read:

����
"
(j)
�
Any fee charged to a member to
obtain copies of association records under this section shall be reasonable;
provided that a reasonable fee shall include
actual
administrative and
duplicating costs and shall not exceed $1 per
printed
page, or portion
thereof, except the fee for pages exceeding eight and one-half inches by
fourteen inches may exceed $1 per page.
�
Charges
for electronic copies of documents shall be limited to reasonable and actual
administrative costs and shall first be applied to the twenty free hours
allocated to the association.
�
The maximum
charge for any requested electronic document shall be $5.
"

����
SECTION
16
.
�
Section
514B-154.5, Hawaii Revised Statutes, is amended to read as follows:

����
"
�514B-154.5
�
Association documents to be provided.
�
(a)
�

Notwithstanding any other provision in the declaration, bylaws, or house
rules, if any, the following documents, records, and information, whether
maintained, kept, or required to be provided pursuant to this section or
section 514B-152, 514B-153, or 514B-154, shall be made available to any unit
owner and the owner's authorized agents by the managing agent, resident
manager, board through a board member, or the association's representative:

����
(1)
�
All financial and
other records sufficiently detailed in order to comply with requests for
information and disclosures related to the resale of units;

����
(2)
�
An accurate copy
of the declaration, bylaws, house rules, if any, master lease, if any, a sample
original conveyance document, and all public reports and any amendments
thereto;

����
(3)
�
Detailed, accurate
records in chronological order of the receipts and expenditures affecting the
common elements, specifying and itemizing the maintenance and repair expenses
of the common elements and any other expenses incurred and monthly statements indicating
the total current delinquent dollar amount of any unpaid assessments for common
expenses;

����
(4)
�
All records and
the vouchers authorizing the payments and statements kept and maintained at the
address of the project, or elsewhere within the State as determined by the
board, subject to section 514B-152;

����
(5)
�
All signed and
executed agreements for managing the operation of the property, expressing the
agreement of all parties, including but not limited to financial and accounting
obligations, services provided, and any compensation arrangements, including
any subsequent amendments;

����
(6)
�
An accurate and
current list of members of the condominium association and the members' current
addresses and the names and addresses of the vendees under an agreement of
sale, if any.
�
A copy of the list shall
be available, at cost, to any unit owner or owner's authorized agent who
furnishes to the managing agent, resident manager, or the board a duly executed
and acknowledged affidavit stating that the list:

���������
(A)
�
Shall be used by
the unit owner or owner's authorized agent personally and only for the purpose
of soliciting votes or proxies or for providing information to other unit
owners with respect to association matters; and

���������
(B)
�
Shall not be used
by the unit owner or owner's authorized agent or furnished to anyone else for
any other purpose;

����
(7)
�
The association's
most current financial statement, at no cost or on twenty-four-hour loan, at a
convenient location designated by the board;

����
(8)
�
Meeting minutes of
the association, pursuant to section 514B-122;

����
(9)
�
Meeting minutes of
the board,
including executive session records of voting results regarding
the imposition of special assessments, charges, fines, legal fees, and all
other decisions and information to which association members are privileged,

pursuant to section 514B-126, which shall be:

���������
(A)
�
Available for
examination by unit owners or owners' authorized agents at no cost or on
twenty-four-hour loan at a convenient location at the project, to be determined
by the board; or

���������
(B)
�
Transmitted to any
unit owner or owner's authorized agent making a request for the minutes within
fifteen days of receipt of the request by the owner or owner's authorized
agent; provided that:

�������������
(i)
�
The minutes shall
be transmitted by mail, electronic mail transmission, or facsimile, by the
means indicated by the owner or owner's authorized agent, if the owner or
owner's authorized agent indicated a preference at the time of the request; and

������������
(ii)
�
The owner or
owner's authorized agent shall pay a reasonable fee for administrative costs
associated with handling the request, subject to section 514B-105(d);

���
(10)
�
Financial
statements, general ledgers, the accounts receivable ledger, accounts payable
ledgers, check ledgers, insurance policies, contracts, and invoices of the
association for the duration those records are kept by the association, and any
documents regarding delinquencies of ninety days or more shall be available for
examination by unit owners or owners' authorized agents at convenient hours at
a place designated by the board; provided that:

���������
(A)
�
The board may
require unit owners or owners' authorized agents to furnish to the association
a duly executed and acknowledged affidavit stating that the information is
requested in good faith for the protection of the interests of the association,
its members, or both; and

���������
(B)
�
Unit owners or
owners' authorized agents shall pay for administrative costs in excess of [
eight
]

twenty
hours per year;

���
(11)
�
Proxies, tally
sheets, ballots, unit owners' check-in lists, and the certificate of election
subject to section 514B-154(c);

���
(12)
�
Copies of an
association's documents, records, and information, whether maintained, kept, or
required to be provided pursuant to this section or section 514B‑152,
514B-153, or 514B-154;

���
(13)
�
A copy of the
management contract from the entity that manages the operation of the property
before the organization of an association;

���
(14)
�
Other documents
requested by a unit owner or owner's authorized agent in writing; provided that
the board shall give written authorization or written refusal with an
explanation of the refusal within thirty calendar days of receipt of a request
for documents pursuant to this paragraph; and

���
(15)
�
A copy of any
contract, written job description, and compensation between the association and
any person or entity retained by the association to manage the operation of the
property on-site, including but not limited to the general manager, operations
manager, resident manager, or site manager; provided that personal information
may be redacted from the contract copy, including but not limited to the
manager's date of birth, age, signature, social security number, residence
address, telephone number, non-business electronic mail address, driver's
license number, Hawaii identification card number, bank account number, credit
or debit card number, access code or password that would permit access to the
manager's financial accounts, or any other information that may be withheld
under state or federal law.

����
(b)
�

Subject to section 514B-105(d), copies of the items in subsection (a)
shall be provided to any unit owner or owner's authorized agent upon the
owner's or owner's authorized agent's request; provided that the owner or
owner's authorized agent pays a reasonable fee for duplication, postage,
stationery, and other administrative costs associated with handling the
request.

����
(c)
�

Notwithstanding any provision in the declaration, bylaws, or house rules
providing for another period of time, all documents, records, and information
listed under subsection (a), whether maintained, kept, or required to be
provided pursuant to this section or section 514B-152, 514B-153, or 514B-154,
shall be provided no later than thirty days after receipt of a unit owner's or
owner's authorized agent's written request, unless a lesser time is provided
pursuant to this section or section 514B-152, 514B-153, or 514B‑154, and
except as provided in subsection (a)(14).

����
(d)
�

Any documents, records, and information, whether maintained, kept, or
required to be provided pursuant to this section or section 514B-152, 514B-153,
or 514B-154, may be made available electronically to the unit owner or owner's
authorized agent if the owner or owner's authorized agent requests such in
writing.

����
(e)
�

An association may comply with this section or section 514B-152,
514B-153, or 514B-154 by making the required documents, records, and
information available to unit owners or owners' authorized agents for download
through an internet site, at the option of each unit owner or owner's
authorized agent and at no cost to the unit owner or owner's authorized agent.

����
(f)
�

Any fee charged to a unit owner or owner's authorized agent to obtain
copies of the association's documents, records, and information, whether
maintained, kept, or required to be provided pursuant to this section or
section 514B-152, 514B-153, or 514B-154, shall be reasonable; provided that a
reasonable fee shall include
actual
administrative and duplicating costs
and shall not exceed $1 per
printed
page, or portion thereof, except
that the fee for pages exceeding eight and one-half inches by fourteen inches
may exceed $1 per
printed
page.
�
Charges
for electronic copies of documents shall be limited to reasonable and actual
administrative costs and shall first be applied to the twenty free hours
allocated to the association.
�
The maximum charge for any requested electronic document
shall be $5.

����
(g)
�
Copies of the documents listed in subsection
(a) shall be provided to the complaints and enforcement officer or ombudsman no
later than thirty days after receipt of the complaints and enforcement
officer's request or as determined by the complaints and enforcement officer
upon a showing of good cause; provided that if the complaints and enforcement
officer or ombudsman is denied access to any item in subsection (a), the
complaints and enforcement officer or ombudsman may request the commission to
conduct an investigation of the matter pursuant to section 514B-65.

����
[
(g)
]
(h)
�
This section shall apply to all condominiums
organized under this chapter or any predecessor thereto.

����
[
(h)
�
Nothing in this section shall be construed to
create any new requirements for the release of documents, records, or
information.
]"

����
SECTION
17
.
�
Section
514B-157, Hawaii Revised Statutes, is amended to read as follows:

����
"
�514B-157
�
Attorneys' fees, delinquent assessments, and
expenses of enforcement.
�
(a)
�
Fees
for attorneys' services incurred by a board shall not be reimbursed by
individual unit owners when the services are for the purposes of:

����
(1)
�
Responding to written or oral inquiries,
comments, complaints, or requests for dispute intervention by unit owners
regarding condominium operations, property usage, board fiduciary duties,
common elements, and resident actions;

����
(2)
�
Expressing unit owners' intentions to challenge
the existing declaration, bylaws, and rules of the association; or

����
(3)
�
Participation in criminal defense resulting from
unit owners' allegations of wrongdoing based on the board's performance of
fiduciary responsibilities.

����
(b)
�
All costs and expenses, including reasonable
attorneys' fees, incurred by or on behalf of the association for:

����
(1)
�
Collecting any delinquent assessments
, including commercial
property assessed financing assessments imposed pursuant to section 196-64.5,
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 the person or persons; 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 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
[
.
]
; provided further that if a unit owner requests
dispute intervention and resolution that initiates an investigation by the
ombudsman's office, costs and expenses for the investigation shall be suspended
until the complaints and enforcement officer completes the investigation and
issues a decision on the matter.

����
[
(b)
]

(c)
�
If any claim by an owner is
substantiated in any action against an association, any of its officers or
directors, or its board to enforce any provision of the declaration, bylaws,
house rules, or this chapter, then all reasonable and necessary expenses,
costs, and attorneys' fees incurred by an owner shall be awarded to [
such
]

the
owner; provided that no such award shall be made in any derivative
action unless:

����
(1)
�
The owner first shall have demanded and allowed reasonable time for the
board to pursue such enforcement; or

����
(2)
�
The owner demonstrates to the satisfaction of the court that a demand for
enforcement made to the board would have been fruitless.

����
If any claim by an owner is not substantiated in
any court action against an association, any of its officers or directors, or
its board to enforce any provision of the declaration, bylaws, house rules, or
this chapter, then all reasonable and necessary expenses, costs, and attorneys'
fees incurred by an association shall be awarded to the association, unless
before filing the action in court the owner has first submitted the claim to
dispute
intervention and resolution through the ombudsman's office,
mediation, or [
to
]
arbitration under subpart D, and made a good faith effort to resolve the
dispute [
under any of those procedures
].

����
SECTION
18
.
�
Section
514B-163, Hawaii Revised Statutes, is amended to read as follows:

����
"
[
[
]�514B-163[
]
]
�
Trial de
novo and appeal
.
�
(a)
�

The submission of any dispute to
the
ombudsman's office or

an arbitration under section 514B-162 shall in no
way limit or abridge the right of any party to a trial de novo.

����
(b)
�

Written demand for a trial de novo by any party desiring a trial de novo
shall be made upon the other parties within [
ten
]
sixty
days
after service of the
final decision
by the ombudsman or the ombudsman's office or

arbitration
award upon all parties and the trial de novo shall be filed in circuit court
within [
thirty
]
ninety
days of the written demand.
�
Failure to meet these deadlines shall
preclude a party from demanding a trial de novo.

����
(c)
�
The
award of arbitration shall not be made known to the trier of fact at a trial de
novo.

����
(d)
�
In any
trial de novo demanded under this section, if the party demanding a trial de
novo does not prevail at trial, the party demanding the trial de novo [
shall
]

may
be charged with all reasonable costs, expenses, and attorneys' fees
of the trial.
�
When there is more than
one party on one or both sides of an action, or more than one issue in dispute,
the court [
shall
]
may
allocate its award of costs, expenses, and
attorneys' fees among the prevailing parties and tax [
such
]
the

fees against those nonprevailing parties who demanded a trial de novo in
accordance with the principles of equity.
"

����
SECTION
19
.
�
Section
514B-191, Hawaii Revised Statutes, is amended by amending subsection (a) to
read as follows:

����
"(a)
�
An association, board, managing agent,
resident manager, unit owner, or any person acting on behalf of an association
or a unit owner shall not retaliate against a unit owner, board member,
managing agent, resident manager, or association employee who, through a lawful
action done in an effort to address, prevent, or stop a violation of this
chapter or governing documents of the association:

����
(1)
�
Complains or
otherwise reports an alleged violation;

����
(2)
�
Causes a complaint
or report of an alleged violation to be filed with the association, the
commission,
the ombudsman's office,
or other appropriate entity;

����
(3)
�
Participates in or
cooperates with an investigation of a complaint or report filed with the
association, the commission,
the ombudsman's office,
or other
appropriate entity;

����
(4)
�
Otherwise acts in
furtherance of a complaint, report, or investigation concerning an alleged
violation; or

����
(5)
�
Exercises or
attempts to exercise any right under this chapter or the governing documents of
the association."

����
SECTION 20.
�
There is appropriated out of the condominium
education trust fund the sum of $
���������

or so much thereof as may be necessary for fiscal year 2026-2027 for the
administrative costs associated with the establishment of the ombudsman's
office for condominium associations within the department of commerce and
consumer affairs, including the hiring of necessary staff.

����
The sums

appropriated shall be expended by the department of commerce and
consumer affairs for the purposes of this Act.

����
SECTION 21.
�
In codifying the new sections added by
section 2 of this Act, the revisor of statutes shall substitute appropriate
section numbers for the letters used in designating the new sections in this
Act.

����
SECTION 22.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.

����
SECTION 23.
�
This Act shall take effect on January 1,
2027; provided that sections 20 and 21 shall take effect on July 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

DCCA;
Condominiums; Condominium Associations; Ombudsman's Office; Dispute
Intervention and Resolution; Complaints and Enforcement Officers; Appropriation

Description:

Establishes
the Ombudsman's Office for Condominium Associations within the Department of
Commerce and Consumer Affairs.
�
Updates
the Condominium Property Act to integrate the role and functions of the
ombudsman's office for condominium associations.
�
Appropriates funds from the Condominium
Education Trust Fund for establishment of the Ombudsman's Office for
Condominium Associations.

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