Moving Hawaii Condo Law

As indicated earlier, we are moving this blog. Hawaii Condo Law can be found by clicking this link. If you've been using "hawaiicondominiumlaw.com" to access this blog, you don't need to do anything new. Most of the non-legislative articles have been ported to the new blog, but the old blog will remain active for some time. The newest article about the bills that have just been introduced are on the new site.

Legislative Session to Begin

On Wednesday, January 18, 2006, the Hawaii State Legislature will open at 10:00 a.m. and will adjourn after 60 legislative days. Due to weekends, holidays, and recesses, the Legislature will adjourn on May 4, 2006. The Legislative Timetable contains the various deadlines for the session. This is the second year of the biennial session. This means that any bills introduced last year can still be considered in the 2006 session. These are called "Carried Over Measures". In addition, new bills can be introduced. The deadline for introduction of bills is January 25, 2006. As I've done before, I'll provide information about the bills that affect community associations.

Most bills affecting community associations will be heard by the Senate Commerce, Consumer Protection, and Housing Committee chaired by Senator Ron Menor and the House Consumer Protection & Commerce Committee chaired by Rep. Robert N. Herkes. Rep. Herkes is the new chair of the committee after the resignation of former Representative Ken Hiraki. Other committees will also hear legislation that affects community associations.

It's difficult to predict what kinds of bills will be considered by the legislature. We are certain that a bill tweaking the Recodification will be heard by the Legislature. We've heard rumours that a bill to expand the Pilot Condo Court Project to apply to planned community associations will be introduced. Other than that, virtually anything is a possibility.

Auditor Recommends Against Certification of Condominium Association Managers

On May 3, 2005, the Hawaii Legislature adopted a resolution asking the Legislative Auditor to conduct a sunrise review of the certification of condominium association managers. This is the first step before a profession is regulated by the State of Hawaii.

On December 22, 2005, the Auditor transmitted a letter to the Hawaii Senate President informing him of the recommendation against the mandatory certification of managers. The actual report explains the reasons for the recommendation:

The proposed regulation is unnecessary for several reasons. We found little evidence that condominium association managers have presented a danger to the health, safety, and welfare of the public. Most of the complaints filed at the Regulated Industries Complaint Office related to problems between condominium owners and their boards. In addition, complainants have many remedies available to them. Mediation services are available from the Real Estate Commission and the Regulated Industries Complaints Office. The Legislature also established a Condominium Dispute Resolution Program that would allow cases that hand not been resolved through mediation to be heard by the Commerce Department's Office of Administrative Hearing.

The Legislative Auditor also stated that the Recodification will be effective in a few months and it would be premature to consider any regulatory changes until the new law comes into effect and its impact on condominium management can be assessed.

The Legislative Auditor's standard for evaluating whether a profession is to be regulated is whether there is a significant risk to the health, safety and welfare of the public. On that basis, the Legislative Auditor has taken the position that various professions should not be regulated. Despite these recommendations, the Legislature has decided to regulate many professions. So, there is still a possibility that the Legislature will approve legislation requiring certification of condominium association managers during the upcoming legislative session.

Terrorism Risk Insurance Act Extension Moves Forward in Congress

On November 21, 2005, I reported on the Senate's Passage of an extension to the Terrorism Risk Insurance Act ("TRIA"). On December 7, 2005, the House passed it's version of the extension bill. The House Financial Services Committee's website contains a summary of the bill. The House version is broader than the Senate version which is supported by the White House. Reuter's reports that Senate Majority Leader Bill Frisk predicts that a compromise bill will be approved before TRIA's expiration on December 31, 2005.

Hawaii Supreme Court Upholds Right of Condominium Association to Vacate Residents for Maintenance

Most people involved with condominium associations understand that sometimes it is necessary to undertake repairs and maintenance of the common elements which might displace residents. For some reason, there have been a few recent instances where residents have challenged the right of an association to force the owners to vacate their units for this purpose. These cases have been complicated by the fact that very few condominium declarations and bylaws have provisions expressly authorizing the Board to force residents to vacate their apartments.

The Hawaii Supreme Court in Association Of Apartment Owners Of Ahuimanu Gardens v. Flint, just issued a decision that confirms the right of a condominium association to require owners to vacate the unit for termite fumigation of the common elements. John A. Morris of our office wrote the brief on behalf of the association. The Hawaii Supreme Court said:

Despite its lack of express authority in the Bylaws, the Board's broad authority to do all things necessary for the operation of the Association includes the authority to require Flint to temporarily vacate her unit so that termite infestation in the common elements may be treated by tent fumigation of the building in which she owns and occupies a unit.

Unfortunately, the The Hawaii Supreme Court decision is unpublished, which means it cannot be cited in other cases [Haw. Rules of App. Proc. 35(c)]. Even if it cannot be cited in other proceedings, the decision does provide some information about how the Court would rule in similar situations.

Recodification Available Online

As we have been mentioning for the last few years, the Recodification of the Condominium Property Act will be effective on July 1, 2006. The new Chapter of the Hawaii Revised Statutes will be designated Chapter 514B. The Hawaii State Legislature has updated its website to include the Recodification. This is important because this version contains some minor revisions made by the Revisor of Statutes. For instance, where the statute says the "effective date of the act", the Revisor of Statutes has replaced it with July 1, 2006.

Comfort Animals Part II

Yesterday, I wrote about comfort animals and how the 9th Circuit Court of Appeals is considering whether a comfort animal can be a reasonable accommodation under the Federal Fair Housing Act. The 9th Circuit is likely to rule whether a comfort animal must be specially trained to ameliorate a disability. Part of the reason that the 9th Circuit Case is so important is that there is a lot of confusion in the law. Some earlier cases have assumed that comfort animals would be a reasonable accommodation. For instance, Crossroads Apartments Associates, 152 Misc. 2d 830, 834, 578 N.Y.S. 2d 1004, (City Ct. 1991); HUD v. Riverbay (HUD ALJ 9-8-94), Fair Housing - Fair Lending ¶25,080 at 25,740-41; and Janush v. Charities Housing Dev. Corp., 169 F. Supp. 2d 1133, Fair Housing - Fair Lending ¶16,618 at 16,618.2 (N.D. Cal. 2000) (request to keep 2 birds and 2 cats as an accommodation for a mentally disabled resident may be required by the Act) have all indicated a possibility that comfort animals may be a reasonable accommodation. More recently, the court in Auburn Woods I Homeowners Assn. v. Fair Employment and Housing Commission (Elebiari), 121 Cal. App. 4th 1578, 18 Cal. Rptr. 3d 669, 2004 WL 1888284 (Cal. App. 2004) has also ruled that comfort animals may be permitted under the California State Fair Housing laws.

The difficulty with even these cases is that the scope of the accommodation is not fully developed. In particular, these cases rarely deal with the issue of what accommodations are necessary to permit a disabled individual equal opportunity to use and enjoy a dwelling. As a result, it is difficult for anyone to determine how much of an accommodation they should make in any particular instance. For instance, in the Janush cases, one court ruled that even if there is a basis for an accommodation, the accommodation should involve fewer than the 2 birds and 2 cats owned by the plaintiff. A later court raised doubts about the number of pets that might be permitted. Even those inclined to permit comfort animals would have probably said that a single comfort animal would be sufficient as an accommodation.

What is a comfort animal?

The Federal Fair Housing Act "FHA" prohibits discrimination against disabled individuals in addition to other protected classes. A residential housing provider is normally required to make reasonable accommodations in its policies, procedures, and practices that are necessary to afford a disabled individual with an equal opportunity to use and enjoy the dwelling. In communities that restrict pets, that means that the community cannot prohibit seeing eye dogs to someone legally blind. Some individuals have attempted to use the FHA to permit them to keep pets that would otherwise be prohibited by the community. They have claimed that they are disabled and that an animal would make them feel better.

There are a number of problems with this claim. First, to the extent that these individuals are not truly disabled, they trivialize and undermine the law that is intended to provide needed protections for those who are truly disabled. When the law was first adopted, it was assumed that disability was something that was easily proven. The Courts have limited the scope of disability in a number of ways. Therefore, an individual may not be legally disabled despite a note from their doctor. We normally recommend to our clients that they obtain a written certification from a doctor to validate the disability unless it is obvious.

Second, two courts have ruled that a comfort animal is not covered by the reasonable accommodation provisions of the Fair Housing Act. In re Keena Homes Cooperative Corp., 210 W. Va. 380, 557 S.E. 2d 787; Fair Housing - Fair Lending ¶18,328 (2001) andPrindable v. AOAO 2987 Kalakaua, 304 F.Supp. 1245, 2003 U.S. Dist. LEXIS 23744 (D. Haw. 2003) have ruled that in order for an animal to be covered by the reasonable accommodation provisions of the law, it must be individually trained to ameliorate the effects of the disability. The 9th Circuit is currently hearing the case and a decision is expected in a few months.

What is a reasonable modification?

The Federal Fair Housing Act "FHA" provides protections for people with disabilities. In addition to a prohibition against discriminating against someone because they are disabled, the FHA has two affirmative duties for those covered by the Act. One of them is to provide a reasonable accommodation. The other is that a housing provider must permit people with disabilities to make reasonable modifications to their dwelling or the common areas at the disabled person's expense that are necessary for the disabled person to use or enjoy the dwelling.

The Americans with Disabilities Act "ADA" has a similar provision. Under the ADA, a public accommodation (usually a commercial entity) must remove architectural barriers to the place of public accommodation necessary to afford the goods, services, facilities, privileges, advantages or accommodations provided by the public accommodation to individuals with disabilities if it is readily achievable. Removal of architectural barriers are readily achievable if it can be accomplished with little cost and does not prove burdensome or substantially alter the goods or services provided by the public accommodation. Under the ADA, unlike the FHA, the public accommodation pays for the cost of barrier removal. If the barrier removal is not readily achievable, the public accommodation must normally make a reasonable accommodation to provide the goods, services, facilities, etc. to the disable person.

Happy Thanksgiving!

On this Thanksgiving Weekend, we'd like to wish you all a wonderful holiday. You may have noticed that except for this last week, it has been over a month since our last post. During this time, I haven't been idle, but most of the work has been behind the scenes. I've been setting-up the new home for Hawaii Condo Law Blog. I'll be hosting the new Hawaii Condo Law Blog at the Ekimoto & Morris website. I think you'll like the added functionality as well as the new look and feel. The switch-over will occur sometime during the beginning of the new year, but you'll continue to be able to use the http://www.hawaiicondominiumlaw.com url to access the blog even when it moves to its new home.

Many of you have already seen our book, The 2005 Director's Guide to Hawaii Community Association Law. In addition, a searchable CD version of the book will be available shortly. The Director's Guide includes an explanation on Hawaii Community Association Law written by John A. Morris as well most of the laws affecting community associations. The CD version has several extras including our legislative update, the Hawaii Condominium Fee Conversion law and bookmarks to locate key sections of the Director's Guide. Copies of the book and the CD are available to our clients. You should receive your copies of the books from your community association manager. We'll let you know how to get a copy of the CD when they're produced.

John and I are working on a major rewrite of the Director's Guide to coincide with the rewrite of the Hawaii Condominium Act. The Recodification means that many things in Hawaii Condominium Law will be changing effective July 1, 2006.

What is a reasonable accommodation?

The Federal Fair Housing Act "FHA" and the Americans with Disabilities Act "ADA" provides protections for people with disabilities. In addition to a prohibition against discriminating against someone because they are disabled, these laws have affirmative duties for those covered by the two Acts. Under the FHA, one of the affirmative duties is to permit reasonable modifications. In addition, a housing provider must make reasonable accommodations to its policies, practices or procedures if it is necessary for a disabled person to use or enjoy the dwelling.

Similarly, under the ADA, a housing provider must make reasonable accommodations to its policies, practices or procedures if it is necessary to afford the goods, services, facilities, privileges, advantages or accommodations provided by the public accommodation (usually the commercial entity) to individuals with disabilities. The ADA also contains a barrier removal requirement similar to reasonable modifications.

What is a disability?

The Federal Fair Housing Act and the Americans with Disabilities Act provides protections for people with disabilities. The Fair Housing Act uses the term, "handicap" while the Americans with Disabilities Act uses the term, "disability" but they are defined the same.

A person with a disability is someone who: (1) has a physical or mental impairment which substantially limits one or more major life activities (i.e., caring for one's self, performing manual tasks, walking, seeing, breathing, etc.); (2) has a record of such an impairment; or (3) is regarded as having such an impairment. A disability does not include a current illegal use of or addiction to a controlled substance or is a transvestite. Courts have limited what constitutes a disability in a number of ways. For instance, the courts look to whether someone's condition substantially limits a major life activity in its corrected condition. Therefore, someone who is legally blind without glasses is not disabled if they are not impaired if they were to be fitted with glasses.

Terrorism Risk Insurance Act Extension Moves Forward in Congress

The Terrorism Risk Insurance Act is scheduled to expire on December 31, 2005. However, last week both the Senate Banking Committee and the House Financial Services Committee today approved different versions of legislation that would extend TRIA for two years.

On Friday, the full Senate voted to approve the Senate version of the extension legislation. The White House has indicated support for the Senate version, but has reservations about the House version which would be more expensive. The full House of Representative is expected to vote on the House version of the extension legislation after Thanksgiving recess.

What is the Terrorism Risk Insurance Act?

The Federal Government adopted the Terrorism Risk Insurance Act (TRIA) two years ago in response to the decision of most insurers to refuse to provide terrorism insurance after the events of September 11, 2001. The law included a provision requiring insurers to make available terrorism insurance to their customers. The "make available" provisions of TRIA require that, from the date of enactment (November 26, 2002) through the last day of the second year of the Program (December 31, 2004), each insurer must make available, in all of its commercial property and casualty insurance policies, coverage for losses due to covered acts of terrorism that does not differ materially from the terms, amounts and other coverage limitations applicable to losses arising from events other than acts of terrorism. TRIA did not regulate the cost of the insurance, but it included provisions that limited the insurance industry's losses which indirectly lowered the cost of the insurance.

TRIA required that the Secretary of the Treasury determine whether the "make available" provision should be extended for an additional year. On June 18, 2004, the U.S. Treasury Department today announced its decision to extend the "make available" provisions of TRIA for a third year. Currently, the TRIA "make available" is scheduled to end on December 31, 2004.

New Bankruptcy Law Now In Effect

On May 9, 2005, I posted a FAQ on the new bankruptcy law. As I stated, on October 17, 2005, all the provisions of the new bankruptcy law will be effective. So, all bankruptcy filings from today will be governed by the new bankruptcy law.

On a related note, the Bankruptcy Courts have adopted interim rules for filings from today on. Formal rules normally take many months, so they just adopted interim rules.

Purchase of Leased Fee Interest by Condominium Association Upheld

On July 22, 2005, the Hawaii Supreme Court ruled in Association of Apartment Owners of Maalaea Kai, inc. v. Stillson that the purchase of the leased fee interest by the condominium association was proper. This is the second appeal in this case. The case began when Stillson failed to pay his maintenance fees. After several demands, the Association filed a notice of lien and then sought to foreclose the lien. Stillson claimed that the Association was prohibited from purchasing the leased fee interest in the Project unless 100% of the apartment owners approved the purchase. Eventually, Stillson paid the assessments and pursued his counterclaim challenging the purchase of the leased fee interest. The trial court agreed with Stillson's argument that the purchase of the leased fee interest required approval of 100% of the apartment owners. In the first appeal, the Hawaii Supreme Court overturned the decision stating that approval of 75% would be sufficient. It remanded the case to determine whether the requisite approval was obtained.

Upon remand, the trial court ruled that less than 75% of the apartment owners approved the purchase of the leased fee interest. The court arrived at this conclusion because not all of the owners for a unit voted in favor of the purchase. For instance, written consents were submitted by many units signed by either the husband or wife of a jointly owned apartment. The trial court disallowed part of the votes for each of these units.

The Hawaii Supreme Court ruled in the second appeal that the Association could rely upon the method of voting in the By-Laws if it does not violate law. The Association's By-Laws provided that votes of units could not be split and that if one joint owner of a unit voted without objection, the vote binds all the joint owners of the unit. The Supreme Court also ruled that even if there is a defect in the voting process, the purchase of the leased fee interest by more than 75% of the owners constitutes a ratification of the purchase. The ratification is treated as if it occurred at the time of the original vote. Two of the five justices of the Supreme Court dissented.