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Condo owner John White Sr. wasn’t planning to get involved on the board of Pearl Ridge Gardens and Tower. But when maintenance fees jumped nearly 50 percent in late 2015, he wanted to know why.
It was the beginning of a yearlong campaign to get answers about his condo association that ended in residents voting out the leadership last fall. Now White is the board president and is working to get a handle on all of the financials.
White said the process would have been less frustrating if condo owners had someplace to turn when they need help, other than paying for mediation or hiring an attorney.
The state’s Department of Commerce and Consumer Affairs provides general education and tries to make sure boards abide by legal requirements to provide homeowners with certain financial documents. But many parts of the existing state law aren’t enforceable, and there’s no hotline for condo owners to call for help.
White supports a proposal to create a new condo ombudsman office, similar to one in Nevada. Hawaii lawmakers are planning to take up the issue this year, along with a myriad of other ideas aimed at improving condo governance.
Condo owners need “somebody out there who is kind of like a referee for justice,” White says.
But getting that bill passed might not be easy. Richard Emery, a lobbyist who works for the property management company Associa, says an ombudsman’s office is unnecessary.
The state used to have a condo court but it only heard about 19 cases, Emery said. Mediation is already an option, and an ombudsman office would be costly, he said.
“Are we going to spend huge amounts of money for a governmental staff to deal with just a small number of complaints by a small number of people?” Emery says. “It doesn’t make economic sense.”
Instead, Emery is backing bills aimed at clarifying the condo law that Maui Sen. Roz Baker, who leads the Senate Commerce, Consumer Protection and Health Committee, plans to introduce.
Still, lawmakers like Sen. Maile Shimabukuro from Waianae believe there’s a need for additional regulation to protect the rights of condo owners.
“These associations are like mini-governments,” Shimabukuro says. “It’s in all of our interests to make sure that they don’t abuse their power and money.”
Rep. Matthew LoPresti can empathize with White. Back in 2008, he and his pregnant wife were living with her parents in Aiea. He’s a professor and she’s a teacher — buying a house in Hawaii, even during the recession, seemed too expensive.
In 2010, they found a condo in Ewa that was part of a planned marina community by developer Haseko. Despite the long commute to downtown Honolulu, they decided it would be a good investment and purchased a town home.
A year later, the board increased their maintenance fees and Haseko announced that instead of a marina, homeowners would get a lagoon.
LoPresti joined other homeowners to sue Haseko over the marina decision, and a jury voted to give them a $27 million award. But a judge vacated the ruling and the case is still in process. LoPresti is also part of a separate lawsuit against the property management company, Associa.
A previous version of this story incorrectly said that LoPresti was part of a separate lawsuit against his homeowners’ association.
Now the sophomore legislator wants to convince his colleagues that condo owners like him need an ombudsman and other legislative changes to help deal with problems in their associations.
“The structure as it is facilitates abuse without recourse to justice. The people are demanding this kind of action. The market is not going to fix it.” — Rep. Matthew LoPresti
He’s planning to introduce an omnibus bill that could include provisions for the ombudsman, mandatory education for condo board members and rules governing board members’ conflicts of interest.
LoPresti is also considering requiring property managers to get licenses and banning associations from voting in executive session, a practice that prevents other residents from knowing how each member voted.
“The structure as it is facilitates abuse without recourse to justice,” LoPresti says. “The people are demanding this kind of action. The market is not going to fix it.”
Shimabukuro agrees and is planning to introduce a version of LoPresti’s bill in the Senate. She says her colleagues, Sens. Brickwood Galuteria and Michelle Kidani, have also expressed concerns about whether the state is doing enough to help condo owners.
Shimabukuro is planning to introduce a bill that would allow unit owners to refrain from paying legal fees to associations until arbiters or judges decide whether they are valid.
Jane Sugimura, an attorney who is part of the Hawaii Council of Community Associations, helped draft the measure, Shimabukuro says. She hopes that’s a sign that the property management industry will be amenable to the change.
Shimabukuro says she has also signed on to two bills from Kidani that would allow money in a state trust fund for condo education to be used for arbitration costs and would reform the process of nonjudicial foreclosures.
Emery from Associa says the concerns of a few get blown out of proportion and that in reality, most condo owners are happy with the way state law works.
“Going back to 2003, there’s all these unfounded accusations, I’m going to call it fake news, by a very small minority in the industry, alleging all of these major problems,” he says.
Emery is part of a group called the Community Association Institute, which has been working to get a bill introduced this session to stop condo owners “from pursuing the collection or enforcement of the house rules until such time as they attend mediation.”
Another bill that Emery wants to see passed this year would clarify the right of owners to speak at and attend board meetings.
Emery says he’s also working with Baker to introduce a repeal of one section of the condo law and additional language to clarify the nonjudicial foreclosure process.
Baker is a condo owner as well, but is skeptical about LoPresti’s idea of imposing mandatory education for condo board members.
“I know people get frustrated with volunteer boards, but that’s the system that we set up,” she says. “What are you going to do, throw them out of their house?”
She emphasizes that her bills focus on making it easier for people to understand what the law says.
“I know people get frustrated with volunteer boards but that’s the system that we set up. What are you going to do, throw them out of their house?” — Sen. Rosalyn Baker
“Apparently some people don’t know how to read,” Baker says. “Condo law is a little complicated. It’s not something that’s easy to wrap your brain around.”
She declined to go into more specifics about her measures, saying they haven’t been finalized.
Emery agrees condo law is complicated and emphasizes that mediation is a valid option. About a third of the cases that have gone into mediation have resulted in agreements, he says.
LoPresti sees the same numbers and concludes the system isn’t working.
He isn’t confident that his omnibus measure will be successful due to what he calls “institutional inertia.” But he’s going to try.
“It’s a social justice issue,” he says.