Senate Commerce, Consumer Protection and Housing Committee Hearing

There is a hearing on Wednesday, February 23, 2005 at 9:00 a.m. in room 016 on some bills of interest to community associations before the House Consumer Protection Committee before chair Sen. Ron Menor. The hearing notice discusses the following bills of interest to community associations:

SB 1798 This bill would eliminate condominium associations from the coverage of the cumulative voting sections of the nonprofit corporation act. There really is no reason to treat condominiums differently from other nonprofit corporations. The nonprofit corporation act recognizes that cumulative voting takes away power from the majority. As a result, the law requires that notice be given and a member request cumulative voting before it be applied.

SB 1137 This bill would eliminate the prohibition on purchasing CDs through a securities broker from the Recodification. The prohibition was added at the last minute and would make most associations immediately in violation of the law upon the effective date of the Recodification. there is no good reason for associations to be limited in the ways it acquires its federally insured investments.

SB 767 This bill would eliminate another last minute amendment to the Recodification. It would allow condominium associations to acquire CDs from out of state banks, savings and loans and credit unions. Many condominium associations have funds that exceed the $100,000.00 federal maximum for insurance. The prohibition effectively means that condominium associations would have funds in unsafe investments.

SB 1344 This bill would include a provision that the managing agent contract would be available to members of condominium associations. The Recodification was intended to simplify the Hawaii condominium law. This bill is unnecessary and simply makes the law more complicated and longer. It also raises the issue whether other contracts might not be included in the list of documents members are entitled to review.

SB 1349 This bill would change the law so that associations would need to make 5 years of financial statements, general ledgers, the accounts receivable ledger, accounts payable ledgers, check ledgers, insurance policies, contracts, and invoices available to its members rather than 2 years. I have concerns about this bill because it attempts to micromanage condominium associations. What many people misunderstand is that there is a cost to keeping records and there does not appear to be a good reason to require that 5 years of documents be maintained and made available to members.

SB 1348 This bill requires that board of director minutes for the current and prior year be made available at no cost or on 24 hour loan to all members at the resident manager's office. Currently, only the current minutes are available at no cost or 24 hour loan. The other minutes for the current and prior year are available for review at a convenient location designated by the Board (usually the managing agent's office). I have concerns about the bill because it micromanages condominium associations. The Association is free to make the documents available on site, but many associations have few or no onsite members.


Persons wishing to testify should submit 25 copies of their testimony to the committee clerk, Room 219, State Capitol, 24 hours prior to the hearing. Testimony may also be faxed if less than 5 pages in length, to the Senate Sergeant-At-Arms Office at 586-6659 or 1-800-586-6659 (toll free for neighbor islands), at least 24 hours prior to the hearing. When faxing, please indicate to whom the testimony is being submitted, the date and time of the hearing, and the required number of copies needed for submittal.