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Preamble

In the limited and overpriced housing market of Hawaii, the balance between developers, homeowners, and associations has grown increasingly strained. While condominiums and homeowner associations (AOAO/HOAs) were originally conceived to protect property values and foster harmonious communities, the legal framework governing these entities has fallen prey to systemic vulnerabilities. These flaws allow a small group of individuals to wield disproportionate control over the financial and operational well-being of entire associations, often at the expense of their fellow members.

Across both Hawaii and the broader United States, instances of unchecked power, embezzlement, inflated assessments, and deliberate negligence in maintaining common areas have become alarmingly common. With inadequate and unenforceable laws providing a shield, some board members and property managers have exploited legal loopholes, prioritizing personal interests over the collective welfare of homeowners. Meanwhile, members are left powerless, burdened by staggering financial costs, poor governance, and a lack of recourse without resorting to costly litigation.

This document proposes amendments aimed at restoring the balance between developer influence and homeowner rights. By addressing flaws in current legislation, these changes are intended to curb systemic corruption and ensure that associations operate with transparency, accountability, and fairness. These measures will protect the rights of the many, safeguard financial integrity, and promote healthy, sustainable communities where members are empowered, not exploited.

With these reforms, we can create a system that gives all members an equal voice, establishes rigorous safeguards against the abuse of power, and holds those in authority accountable for their actions. It is time to course-correct and ensure that homeowner associations work for the benefit of all—not just a privileged few.

The following proposed amendments are formatted as follows:

1. Section of the Hawaii Revised Statutes to be Amended: exact section of the (HRS) that the proposed changes will affect

2. Current Language of the Law: existing text if any

3. Proposed Amendment (Addresses Proposed Legislation #X): PL# for clarity

1. Section 514B-3 (Definitions)

Current Language: This section defines key terms such as "Affiliate of a developer," "Association," "Board," "Common elements," etc.

Proposed Amendment (Addresses Proposed Legislation #1): Add the following definitions:

• Covenants:      Legally-binding agreements that govern the privately owned properties      within an HOA, typically attached to property deeds, imposing specific      restrictions on property use.

• Rules:      Policies or procedures enacted by the HOA to govern the conduct and use of      common areas and facilities but not private properties.

• Capital Upgrade: A permanent improvement to a property that enhances      its value, prolongs its useful life, or adapts it to new uses. Capital      upgrades are distinct from routine repairs or maintenance.

• HOA Seller Certification: A document certifying compliance      with covenants, fees, and assessments, provided by the HOA to sellers upon      request.

• HOA Seller Packet: A set of governing documents, financial statements,      and certifications required to be disclosed to potential buyers in an HOA      community.

• Member:      Any individual or corporation owning property within an HOA, with one vote      per member, regardless of the number of properties owned.

• Organizational Documents: Articles of incorporation,      bylaws, and any instruments governing the internal affairs of the      association.

2. Section 514B-9 (Obligation of Good Faith)

Current Language: “Every contract or duty governed by this chapter imposes an obligation of good faith in its performance or enforcement.”

Proposed Amendment (Addresses Proposed Legislation #2): Amend this section to include:

• "Board members and property managers are required      to act in good faith and in compliance with all state and federal laws.      Intentional violations of governing documents or relevant laws shall      result in individual penalties, including but not limited to fines or      removal from office."

3. Section 514B-106 (Board; Powers and Duties)

Current Language: The Board has the powers and duties to manage the operation of the property, maintain the common elements, and enforce compliance with the governing documents.

Proposed Amendment (Addresses Proposed Legislation #2 and #5): Add:

• "The Board is required to uphold the rights of      individual members, including the right to free speech and protection from      retaliation. The Board shall promptly respond to all member complaints and      operate with transparency in all governance matters. Failure to address      valid member concerns may result in individual penalties for Board      members."

4. Section 514B-107 (Board; Limitations)

Current Language: “The board may act on behalf of the association except as provided in the declaration or bylaws.”

Proposed Amendment (Addresses Proposed Legislation #1 and #3): Include:

• "The Board shall not enact any rule, bylaw, or      amendment that infringes upon the constitutional rights of members,      including but not limited to the right to free speech. Any rule or bylaw      that violates this principle shall be considered null and void."

5. Section 514B-123 (Association Meetings; Voting; Proxies)

Current Language: "Voting at an association meeting may be conducted in person or by proxy."

Proposed Amendment (Addresses Proposed Legislation #1 and #5): Revise to state:

• "Each member shall have one vote, regardless of      the number of properties owned. No member or entity may acquire      disproportionate voting influence by owning multiple properties. Voting      shall be equal for all members."

6. Section 514B-124 (Association Meetings; Purchaser’s Right to Vote)

Current Language: This section defines the right of unit purchasers to vote.

Proposed Amendment (Addresses Proposed Legislation #5): Clarify:

• "No individual member shall be granted voting      rights greater than those of any other member. Each unit owner is entitled      to an equal vote, and no additional rights may be purchased or acquired      through property ownership."

7. Section 514B-152 (Association Records; Generally)

Current Language: "The association shall maintain records of its financial affairs and actions of the board."

Proposed Amendment (Addresses Proposed Legislation #3): Add:

• "The association shall maintain and distribute to      all members, upon request, a free member contact list containing      addresses, email addresses, and phone numbers (optional) to facilitate      transparent communication. Members may opt-in for their preferred means of      communication, and the Board shall not deny access to this information to      any member."

8. Section 514B-146 (Association Fiscal Matters; Lien for Assessments)

Current Language: "A lien is created when an owner fails to pay their share of common expenses."

Proposed Amendment (Addresses Proposed Legislation #4 and #5): Add:

• "No foreclosure action may be initiated unless      the outstanding debt exceeds $10,000 or is a percentage of the HOA’s total      units, whichever is less. Prior to foreclosure, the association must      provide a 90-day notice and offer mandatory mediation to resolve the      issue."

9. Section 514B-148 (Association Fiscal Matters; Budgets and Reserves)

Current Language: "The association shall adopt an annual budget and maintain reserves for future expenses."

Proposed Amendment (Addresses Proposed Legislation #4 and #5): Add:

• "All fines, late fees, and collection costs shall      be clearly outlined and capped at a reasonable percentage of the original      debt. Attorney fees associated with collection efforts shall be limited to      a set percentage to prevent excessive charges."

10. Section 514B-161 (Mediation) and Section 514B-162 (Arbitration)

Current Language: These sections allow for mediation and arbitration of disputes.

Proposed Amendment (Addresses Proposed Legislation #2, #4, and #5): Add to both sections:

• "Mediation shall be mandatory before any      foreclosure action or fine collection can proceed. All disputes related to      fines, fees, or foreclosure shall be resolved through state mediation or      small claims court before any further action is taken."

11. Section 514B-72 (Condominium Education Trust Fund; Payments by Associations and Developers)

Current Language: "Associations and developers shall contribute to the Condominium Education Trust Fund for the education of owners, associations, and developers."

Proposed Amendment (Addresses Proposed Legislation #2): Add:

• "A portion of the annual dues paid by      associations shall be allocated to fund a newly established 'State HOA      Office' within the Consumer Protection Division. This office shall have      the authority to enforce HOA laws, investigate violations, and levy penalties      against Board members or property managers found in violation of state or      federal law."