RELATING TO CONDOMINIUMS.

SB2433

THE SENATE

S.B. NO.

2433

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 there nearly two
hundred thousand condominium units in the State, the owners of which directly
bear the financial consequences of governance decisions, including special
assessments, maintenance fee increases, deferred maintenance, and reserve
underfunding.
�
Despite this, condominium unit
owners are not consistently included in advisory groups, task forces, or policy
discussions convened by the real estate commission or the department of commerce
and consumer affairs.

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The
legislature also finds that existing law, including procedures authorized under
chapter 92, Hawaii Revised Statutes, permits the department to utilize hearings
officers to assist with condominium dispute resolution.
�
While this framework is a step forward, it
does not address condominium unit owner representation, consumer protection, or
systemic issues related to governance, transparency, and maintenance planning.

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Accordingly,
the purpose of this Act is to expressly recognize condominium unit owners as
stakeholders in statute and require that they be included in state-level policy
and decision-making processes that affect their homes and financial stability
and authorize the condominium education trust fund to be used to support
condominium unit owner education.

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SECTION

2
.
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Section
514B-71, Hawaii Revised Statutes, is amended to read as follows:

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"
�514B-71
�

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

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(1)
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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;

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

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

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(4)
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Support for mediation of condominium
related disputes; [
and
]

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(5)
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Support for voluntary binding
arbitration between parties in condominium related disputes, pursuant to
section 514B-162.5[
.
]
; and

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(6)
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Education resources for condominium
unit owners as primary stakeholders in condominium governance, including
programs designed to improve owner understanding of association operations,
reserve requirements, financial obligations, and governance rights.

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(b)
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The commission shall use all moneys in the
condominium education trust fund for purposes consistent with subsection
(a).
�
Any law to the contrary
notwithstanding,

the commission may make a
finding that a fee adjustment is appropriate and adjust the fees paid by
associations to regulate the fund balance to an appropriate level
to
maintain a reasonable relation between the fees generated and the cost of
services rendered by the condominium education trust fund
.
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For the
purposes of finding that a fee adjustment is appropriate in order to maintain a
reasonable relation between the fees generated and the cost of services
rendered by the fund, the commission's review shall include the following:

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(1)
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Frequency and timing of anticipated
revenue to the fund;

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(2)
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Identification of a reserve amount
based on unanticipated revenue reductions and historical expenditures;

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(3)
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Anticipated expenses paid, including
recovery payouts during a biennial budget cycle;

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(4)
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Unanticipated natural disasters or
catastrophic weather events that may increase fund payments; and

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(5)
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Any statutory adjustments to fund
payout amounts.

The balance
of the fund shall not exceed a sum determined by the commission.
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The sum shall be determined by the commission
biennially.

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(c)
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The commission shall adopt rules to ensure
that condominium unit owners are recognized and included as stakeholders in all
educational programs, consultations, advisory groups, task forces, and policy
development activities funded in whole or in part by the condominium education
trust fund.
"

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SECTION

3
.
�
Section
514B-72, Hawaii Revised Statutes, is amended to read as follows:

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"
�514B-72
�

Condominium education trust fund; payments by associations and
developers.
�
(a)
�

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

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(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

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(2)
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Beginning
with the July 1, 2015, biennium registration, an additional annual condominium
education trust fund fee in an amount equal to the product of $1.50 times the
number of condominium units included in the registered project or association
to be dedicated to supporting mediation or voluntary binding arbitration of
condominium related disputes.
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The
additional condominium education trust fund fee shall total $3 per unit until
the commission adopts rules pursuant to chapter 91.
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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).

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(b)
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Each developer shall pay to the department of commerce and consumer
affairs the condominium education trust fund fee for each unit in the project,
as prescribed by rules adopted by the director of commerce and consumer affairs
pursuant to chapter 91.
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The project
shall not be registered and no effective date for a developer's public report
shall be issued until the payment has been made.

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(c)
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Payments of any fees required under this section shall be due on or
before the registration due date and shall be nonrefundable.
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Failure to pay the required fee by the due date
shall result in a penalty assessment of ten per cent of the amount due and the
association shall not have standing to bring any action to collect or to
foreclose any lien for common expenses or other assessments in any court of
this State until the amount due, including any penalty, is paid.
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Failure of an association to pay a fee
required under this section shall not impair the validity of any claim of the
association for common expenses or other assessments, or prevent the
association from defending any action in any court of this State.

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(d)
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The department of commerce and consumer affairs shall allocate the fees
collected under this section to the condominium education trust fund
established pursuant to section 514B-71.
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The fees collected pursuant to this section shall be administratively
and fiscally managed together as one condominium education trust fund
established by section 514B-71.

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(e)
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The real estate commission shall adopt rules defining
the term "stakeholder" for purposes of condominium governance and as
used in this section and section 514B-71.
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The criteria shall include condominium unit owners as stakeholders whose
interests shall be considered in commission programs and activities funded in
whole or in part by the condominium education trust fund.

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(f)
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The real estate commission shall ensure that
condominium unit owners are represented in any advisory committee, stakeholder
group, or task force convened for the purpose of condominium law review, policy
development, education program design, rulemaking, dispute resolution
evaluation, or any project funded in whole or in part by the condominium
education trust fund.
"

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SECTION 4.
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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 5.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Real Estate Commission; Condominiums; Unit Owners; Governance;
Stakeholders; Definition; Education; Condominium Education Trust Fund; Rules

Description:

Requires
the Real Estate Commission to adopt rules to recognize and define condominium
unit owners as stakeholders. Requires the Real Estate Commission to involve
condominium unit owners in consultations and activities funded by the
Condominium Education Trust Fund.

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