After several high-profile cases involving lost or stolen money, there’s a push to make homeowner associations more accountable.
There are several proposals being considered that could change the way they operate.
The number of House bills involving condo and homeowner associations has more than quadrupled in two years.
Two years ago, four bills about condo and homeowner associations were introduced in the House. Last year, there were 10.
This year, there are 29, not including those introduced in the Senate. (Some examples are listed below.)
So why the increase in wanting to implement stricter rules?
A lawmaker tells us problems have been brewing for a long time, and it’s time for the laws to change. But a property management company says that’s unnecessary.
“I think the reason you see an overwhelming growth of numbers is people are screaming for a solution,” said Rep. Matthew LoPresti, D, Ewa Villages, Ewa Beach, Ewa Gentry. “They have real problems where their only option is to pay thousands of dollars for attorneys, and they’re asking the Legislature to help them.”
We followed one of those problems, when $276,000 was stolen from Kukui Plaza homeowners in downtown Honolulu.
We went through the list of proposed changes to the laws. Among the ideas suggested by LoPresti, getting condo associations to be more open and appointing a public advocate for associations to help mediate problems.
“More and more people are living in associations and there are more opportunities for these problems,” LoPresti said. “These people don’t have the resources to fight it. What are their options? We’re their last step.”
LoPresti says homeowner associations have too much power. Boards have the ability to cite homeowners, or put a lien on homes.
We asked the vice president of Associa, a property management company that manages 400 condos statewide: Do you share the sentiment of these lawmakers who say there needs to be more transparency with homeowner associations?
“I don’t see where they’re so powerful. They’re five to nine people. They’re not related. They’re just individual homeowners, and they debate like we see in any form of government,” replied Richard Emery.
But Associa has had problems in the past, when it was known as Certified Hawaii. In 2015, Toni Floerke, former CEO of Certified Hawaii, was sentenced to a year in prison after she pleaded no contest to stealing $100,000 from three associations.
Associa has since changed its practices.
“They immediately paid the money. This is the case where the CEO was also the treasurer of the association. That was probably not best practices,” Emery said. “Today, we don’t allow that to happen.”
Associa says there are strict rules and laws in place, including requirements over how board meetings are handled, notifying members about any maintenance fee increase, and handling association funds.
Creates the Condominium Dispute Resolution Commission to address disputes between a condominium owner and condominium association. Establishes a Commission Ombudsman. Allows the Commission to assess fees to pay for the Commission Ombudsman. (Companion: SB 165)
Requires board members of condominium associations to disclose significant financial interests prior to taking action that affects both the association and a third-party provider. Prohibits board members from receiving gifts from those types of third party providers. Expands the powers of the real estate commission to enforce violations by board members of disclosure requirements and gift prohibitions. (Companion: SB 639)
Establishes open voting and educational requirements for condominium association and board members. Requires courts to issue a judgment against a party refusing to participate in the mediation process. Requires certain employees of a managing agent to be licensed in accordance with requirements established by the real estate commission. (Companion: SB 1316)