When Spencer Taylor, a homeowner in the Villas at Peppers Ferry in Christiansburg, Virginia, had a complaint against his condominium board, Taylor took his concerns to Heather Gillespie.

As Virginia’s Common Interest Community Ombudsman, Gillespie referees disputes between condominium owners and boards through a low-cost, public process that holds boards accountable while giving homeowners a chance to air grievances publicly.

In Taylor’s case, he learned the association had violated the state’s condo law by using $176 of money paid by owners for things like maintenance of common areas to replace four faulty toilets in two privately owned condo units.

Top, Kakaako skyline with foreground Nuuanu condominiums.
Approximately one in four Hawaii residents lives in a home governed by a condominium association. The  number will likely grow if state and local government officials succeed in developing more housing. Cory Lum/Civil Beat/2022

In many cases, Gillespie said in an interview, the threat of public accountability is enough to get condo boards to respond to complaints, and the Villas at Peppers Ferry board was no exception.

By the time Taylor’s complaint landed in Gillespie’s desk, the board had removed the charges for the toilets from its books. Gillespie wrote in a report that she was satisfied the board had cured its apparent violation of the law, but she added, “The Association needs to ensure going forward that it does not misuse association funds and that it fully complies with the Condominium Act.”

The system, Gillespie said, had worked.

“If they come into compliance, that’s always our goal,” Gillespie said, although she added that condo owners who have been battling recalcitrant boards sometimes aren’t satisfied.

“Sometimes the complainant still wants her pound of flesh,” she said.

As the Hawaii Legislature prepares for the 2023 session, scheduled to begin Jan. 18, a loose association of condominium owners is joining forces with a longtime advocacy organization to push to make Hawaii one of roughly half a dozen states in the U.S. with a third-party ombudsman to help settle condo disputes.

While condo associations in Hawaii are self-governing, they still must follow state condo laws, and are overseen by the state Department of Commerce and Consumer Affairs. Many say the current regulatory and legal framework is adequate to protect homeowners.

Others, like Lila Mower, president of Hawaii’s Kokua Council, disagree. While the boards wield many powers of local governments, the boards often operate with a woeful lack of accountability, says Mower, who is resurrecting previously stalled efforts to establish an ombudsman office in Hawaii.

“A self-governing entity does not regularly police itself,” said Mower, a former banker who previously served on the board of Nauru Tower, where she lives. “That’s what we don’t have: policing.”

Too often, she said, boards are “self-governing dictatorships, self-governing autocracies.”

Adrian Tam
State Rep. Adrian Tam is working with condo owners on legislation to create an ombudsman for homeowners association disputes. 

Mower is not alone in pushing for change. Hawaii Rep. Adrian Tam said he has been working with Mower and others to address issues that face people who live in condominiums. A major concern, he said, is to ensure escalating association fees don’t drive people, especially older adults, out of their homes.

“My main goal has always been to make sure our maintenance fees stay at a reasonable rate and that the condos have enough in their reserves to cover repair expenses,” said Tam, whose district includes Waikiki.

“Being a senior means that you have a fixed income, and if the maintenance fees go up, you have to either leave or find a new job,” Tam said.

He also said he supports establishing a condominium ombudsman or similar position.

“In Hawaii to have someone at the Department of Commerce and Consumer Affairs who addresses condo issues is important, especially when you consider the housing crisis,” Tam said.

It’s not just people in Waikiki who live in condos. There were 1,535 condo associations representing 157,614 units in Hawaii in 2021, according to the state Department of Business, Economic Development and Tourism. Industry experts have estimated some 360,000 people – or about 1 in 4 residents — live in properties governed by condo and community associations.

That number is likely to grow if state and local government officials succeed in efforts to create more housing for residents, Tam said. Invariably many new homes will be in multi-family buildings under the jurisdiction of associations.

Associations are like private governments, with the powers to establish rules, tax homeowners via dues, spend money, fine residents for breaking rules and take property via foreclosure if people don’t pay fees and fines.

But the analogy between associations and governments quickly breaks down. Bylaws, for example, are generally considered contract terms that residents agree to. Accordingly disputes are often private matters handled through mediation, with no way for residents to know a neighbor had a dispute with a condo board except through “the coconut wireless,” Mower said.

In addition, financial information is often privileged, available only for property owners, and even information that owners are entitled to is hard to get, she said.

Jane Sugimura, an attorney and president of the Hawaii Council of Associations of Apartment Owners, agreed information can be hard to obtain.

“That’s the most common thing,” she said. “The owner says, ‘I’d like a document.’ And the board says, ‘You can’t have it.’”

Critics Say Ombudsman Offices Have Mixed Records

Still Sugimura is among those opposing an ombudsman. A better solution, she says, is for lawmakers to pass a measure requiring association board officers to undergo training so they understand their responsibilities. Those include not only the duty to be transparent with condo owners but also their fiduciary duties as directors.

“They don’t understand they are the decision-makers,” she said. “You end up with situations where the property manager is running things.”

Another condo associations group, the Community Associations Institute, has criticized ombudsman offices in the states that have them: Colorado, Florida, Nevada, Delaware, Illinois and Virginia.

“To date, existing ombudsman programs have, at best, a mixed record in support of homeowners living in community associations,” the organization said in a paper published in 2018.

“To date, no ombudsman program provides a fair and balanced process to adjudicate community association disputes,” the paper continued. “Most often it serves to create a process by which a homeowner may file a complaint against the elected board, but does not provide the ability for the board to file a complaint against a homeowner.”

But in Virginia, at least, the ombudsman appears to provide a significant outlet for complaints. In a report to Virginia lawmakers for 2020-21, Gillespie reported her office “responded to 1,350 telephone calls and 3,045 email messages.” About one-third involved condo associations; the rest pertained to property owner associations and a small percentage to time shares.

The greatest number of condo issues related to associations not responding to a complaint submitted through the association complaint procedure, or associations not adopting a complaint procedures at all, the office reported.

The office issued 63 determinations like the one relating to the Villas at Peppers Ferry that year. Most related to complaints about the method of communication between owners and the board, meetings and notice, budget requirements, and access to books and records.

The report doesn’t describe the determinations issued in each case. But in an interview Gillespie stressed the goal was getting boards to comply with the law, which she said the process generally succeeds in doing.

A final contested point in the debate in Hawaii involves the power condo owners have to vote out bad board members.

As Sugimura sees it, the easy solution is for residents to get rid of board members who refuse to follow rules, fulfill fiduciary duties or be accountable.

“You don’t like what the board is doing, get them the hell out,” Sugimura said. “If you don’t get off your duff and do something, you deserve the board you have.”

Kakaako condominiums tower over the lifeguard towers located at Ala Moana Beach Park.
Condominiums are generally governed by an elected board and critics of the ombudsman idea say all that’s needed is better training for board members. Cory Lum/Civil Beat/2022

But others, including Mower, describe Sugimura’s comment as self-servingly naive. They say the Legislature must implement changes to make sure elections can be fair. The current system, they say, favors incumbents. One idea is to prohibit the use of proxy votes by absentee owners and allow only in-person votes to count.

To illustrate, Mower pointed to a 2021 letter from Honolulu attorney Terry Revere to House Speaker Scott Saiki in support of a bill to change the condo laws. Facing defeat, Revere wrote, the board of a large condo in Hawaii Kai violated the state law by soliciting votes from proxies at the last minute.

“When called out on it,” Revere wrote, “the Board, its lawyer and management acknowledged that there may have been a violation of the statute.”

But instead of tossing the illegal votes or simply admitting defeat and resigning, Revere wrote, the board postponed the election for two months.

“This is akin to a team losing a football game 27-3 with two minutes to go, then cheating, then announcing that since the other side objected to it cheating, it was now going to put on its referee hat and start the game over with the score 0-0,” Revere wrote. “So the guilty are rewarded and the innocent owners who played by the rules punished.”

Revere did not return calls for comment. Saiki said he did not remember receiving the email.

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