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SB2686
THE SENATE
S.B. NO.
2686
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 education, training, and access to critical financial
information are essential to ensure that condominium board members understand
their fiduciary duties, legal responsibilities, compliance with local
ordinances and regulations and state and federal laws, and their operational
roles.
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Effective self-governance relies
heavily on the informed decision-making of volunteer condominium board members,
and unit owners' accessibility to the information used by their board members
to make those decisions.
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The legislature further finds that board
members and unit owners should be afforded the opportunity to obtain
information about factors contributing to condominium insurance premium
increases and disclosures of broker commissions related to association insurance
policies and the undertaking of large projects.
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The legislature also finds that associations filing of a one-page transparency
summary for any large project over $200,000 would provide a level of insight for
unit owners that mirrors government procurement disclosures.
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Accordingly, the purpose of this Act is to
require:
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(1)
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An
insurance producer to disclose a description of services to be provided, and
compensation and commission to be received, before the procurement, placement,
or renewal of any insurance policy purchased by a condominium association, and
incorporates verification procedures into annual audit requirements;
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(2)
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At
least two competitive quotes from insurance producers for any association
insurance policy procurement, placement, or renewal with an annual premium
greater than $250,000; and
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(3)
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The
board of directors to prepare and disclose to unit owners a one-page project
summary for any capital improvement, repair, or maintenance project authorized
with an estimated cost greater than $200,000.
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SECTION
2.
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Chapter 514B, Hawaii Revised
Statutes, is amended by adding a new section to part VI be appropriately
designated and to read as follows:
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"
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514B-
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Insurance and project disclosures;
requirements.
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(a)
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Before the procurement, placement, or renewal of any insurance policy purchased
by an association, an insurance producer shall disclose to the association's
board of directors, on a form prescribed by the real estate commission, the
following information:
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(1)
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A description of the services to be
provided under the insurance policy pursuant to the contract or arrangement;
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(2)
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A description of all direct and
indirect compensation, either in the aggregate or by service, that the
insurance producer reasonably expects to receive in connection with the
services described in paragraph (1); and
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(3)
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A description of the total
commission the insurance producer expects to receive, which shall be expressed
in a dollar amount and the percentage of the total compensation for the
insurance policy;
The
association shall make the disclosure available for unit owners pursuant to
section 514B-154.
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The disclosure required under this subsection
shall be included in the association's annual financial statements and audit
under section 514B-150.
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(b)
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For any association insurance policy
procurement, placement, or renewal with an annual premium greater than
$250,000, the board shall obtain at least two competitive quotes from qualified
insurance producers before procurement, placement, or renewal of an insurance
policy.
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(c)
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For any capital improvement, repair, or
maintenance project authorized by the board with an estimated cost greater than
$200,000, the board shall prepare and disclose to the unit owners a one-page
project summary that includes:
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(1)
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Total project cost;
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(2)
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The funding source or financing
mechanism;
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(3)
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A list and description of all
approved change orders; and
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(4)
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All compensation paid to
consultants, brokers, contractors, and other professional service providers.
The summary shall be provided to all
unit owners within sixty days of project approval and shall be maintained with
the association's records under section 514B-152.
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(d)
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As used in this section:
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"Commission"
means any compensation, service fee, brokerage fee, or other valuable
consideration
received by an insurance producer
for selling, soliciting, or negotiating insurance in this State and does not
include compensation paid solely for direct administrative or claims-related
services.
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"Insurance
producer" shall have the same meaning as defined in section 431:9A-102.
"
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SECTION
3.
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Section 514B-150, Hawaii Revised
Statutes, is amended by amending subsection (a) to read as follows:
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"
(a)
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The
association shall require [
an
]
:
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(1)
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An
annual audit of the association financial
accounts
, including verification of compliance with the insurance producer
disclosure requirements under section 514B- ;
and [
no
]
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(2)
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Not
less than one annual unannounced verification of
the association's cash balance by a public accountant;
provided that if the association is comprised of
less than twenty units, the annual audit and the annual unannounced cash
balance verification may be waived at an association meeting by a vote of a
majority of the unit owners.
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SECTION
4.
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This Act does not affect rights and
duties that matured, penalties that were incurred, and proceedings that were
begun before its effective date.
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SECTION
5.
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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
6.
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This Act shall take effect upon its
approval.
INTRODUCED BY:
_____________________________
Report Title:
Condominiums;
Associations of Apartment Owners; Board; Insurance; Disclosures; Commissions
Description:
Requires
an insurance producer to disclose a description of services to be provided, and
compensation and commission to be received, before the procurement, placement,
or renewal of any insurance policy purchased by a condominium association, and
incorporates verification procedures into annual audit requirements.
�
Requires at least two competitive quotes from
insurance producers for any association insurance policy procurement,
placement, or renewal with an annual premium greater than $250,000.
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Requires the board of directors to prepare
and disclose to unit owners a one-page project summary for any capital
improvement, repair, or maintenance project authorized with an estimated cost
greater than $200,000.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.