Bill Text: HI SB253 | 2025 | Regular Session | Introduced

Hawaii Senate Bill 253

Introduced

Bill Title: Relating To Condominium Reserves.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Introduced) 2025-01-21 - Referred to CPN. [SB253 Detail]

Download: Hawaii-2025-SB253-Introduced.html

THE SENATE	S.B. NO.	253
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO CONDOMINIUM RESERVES.

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

SECTION 1. The legislature finds that existing law requires condominium owners to be entitled to disclosure of information about the replacement reserves maintained by an association in which they own a unit. Recent efforts to increase transparency and accuracy include Act 62 (2022), which provides for periodic review of a reserve study by an independent reserve study preparer and lengthens the study period to thirty years, and Act 199 (2023), which requires that a detailed budget summary be prepared to better inform owners of the financial condition of an association.

Despite these efforts to emphasize the importance of compliance with the disclosure requirements relating to association fiscal matters, further amendments are needed to explicitly state that the defense of good faith compliance shall be unavailable to any association whose board adopts a budget that omits the mandated budget summary. Moreover, clarifications are needed concerning unit owners' standing to enforce compliance and that an association has the burden of proving compliance when violations are alleged.

Accordingly, the purpose of this Act is to:

(1) Exclude the good faith defense for an association whose board adopts a budget that omits a detailed budget summary as required by section 514B‑148(a), Hawaii Revised Statutes; and

(2) Clarify a unit owner's standing and the association's burden of proving compliance.

SECTION 2. Section 514B-148, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (d) to read:

"(d) No association or unit owner, director, officer, managing agent, or employee of an association who makes a good faith effort to calculate the estimated replacement reserves assessments for an association shall be liable if the estimate subsequently proves incorrect[.]; provided that this subsection shall not apply to an association if its board adopts a budget that omits the summary required by subsection (a)."

2. By amending subsection (g) to read:

"(g) [~~Subject to the procedures of section 514B‑157 and any rules adopted by the commission, any~~] Any unit owner whose association board fails to comply with this section [~~may~~] shall have standing to bring an action to enforce compliance by the board. In any [~~proceeding~~] action to enforce compliance, a board [~~that has not prepared an annual operating budget and reserve study~~] shall have the burden of proving it has complied with this section."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

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

INTRODUCED BY:	_____________________________

Report Title:

Condominiums; Budget Summaries; Associations; Boards; Compliance; Standing; Good Faith Defense; Burden of Proof

Description:

Excludes the good faith defense for associations whose boards adopt a budget that omits a detailed budget summary as required by section 514B-148, HRS. Clarifies a unit owner's standing and the association's burden of proving compliance.

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