Is The Condominium Model Of Housing Crumbling? - Honolulu Civil Beat

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About the Author

Lila Mower

Lila Mower is president of Kokua Council, a Hawaii nonprofit that advocates for the most vulnerable among us.

The corporate template used for governance does not allow for the representative, democratic government.

I love living in condominiums, having been a condo dweller for over 40 years. But I’m concerned that the condominium model of housing is collapsing.

Most government lawmakers and policymakers ignore problems with the current model and plow ahead, more interested in increasing the numbers of housing units rather than the communities created. While more housing will answer much of Hawaii’s ills, creation and governance under the current condominium model may encourage an exodus of those fleeing the growingly oppressive consequences of current condominium governance.

Condominiums are a form of property ownership created by government statute enabling development of higher density, lower-per-unit-cost housing. Condominium association governance is modeled after nonprofit corporations; the state Department of Commerce and Consumer Affairs lists nonprofit corporation law, HRS 414D, on its website as a law that pertains to condominiums.

The state’s condominium statute was written for those who build, sell, buy, and manage condominiums, and focused upon the transactional aspect of condominiums. Prior to its enactment as HRS 514B, an advisory committee of attorneys reviewed the draft of this condominium statute.

Statutes that were added as afterthoughts to protect association members (owners) are mostly unenforceable, possibly written to maximize the use of attorneys to interpret these vague statutes and associations’ governing documents as they please.

University Avenue and South King Street area in foreground with apartment rentals surrounded by condominiums.
Condos in the University Avenue and South King Street area. Governance of condo boards is undemocratic, the author argues. (Cory Lum/Civil Beat/2022)

The condominium governance model manifests itself as private mini-governments.
Consolidating the three branches of government into a board with no “checks and balances” against its centralized top-down power, these boards’ directors yield considerable power without accountability under the altruistic shield of being “volunteers.”

Under the façade of legality, boards have used their associations’ attorneys’ exorbitant fees to quell inquiry, crush complaint, and vanquish dissidents. These boards have the power to abuse, intimidate, censure, and discredit those members who question or oppose their decisions or actions.

Boards can and have destroyed lives through unregulated fines, liens, and foreclosures without due process for what would be considered petty and vindictive reasons that have little to do with the operation, safety, or health of the association, its members or property.

This unchecked power also allows malfeasance to proliferate. For years, experts from the insurance industry warned that Hawaii had among the most directors and officers liability insurance claims and among the highest insurance settlements nationally, despite our state’s comparatively minute population.

Boards Vs. Owners

Every week, condo owners throughout the state report allegations of financial misconduct which are difficult to uncover without access to the associations’ financials. As if to corroborate these allegations, many management companies and/or boards decline or refuse to respond to owners’ requests to access and examine those documents or create financial barriers that make examination of those documents difficult.

Most lawmakers have ignored these escalating problems, pacified by the claims of the condominium trade industry that there are only a handful of disgruntled owners and that malfeasant dysfunctional boards are rare. They appear deaf to constituents who have substantive experiences and concerns to address.

Given that condominiums are economically important to Hawaii, strategic to “affordable housing,” and that most new housing are developed as some type of common interest community, the statutes should go beyond protecting the public in their real estate transactions.

The corporate model used for condominium governance does not allow for the representative, democratic government that owners and residents are accustomed to, expect, and deserve. Simply because owners are allowed to vote does not qualify as democratic or representative.

The tools necessary for democratic self-governance —enforceable transparency, accountability, and fair and impartial due process, and effective responsiveness — are missing from the state’s statutes.

Under the current condominium association governance model, association members can be denied constitutional rights and protections. Its members are without reasonable or affordable recourse to defend and protect their rights outside of expensive lawsuits.

Those who obstructively complain that any improvement will “grow government” or “require taxpayer infusions” have not considered ways to reduce redundant and unnecessary costs, fraud, or theft. The condominium governance amendments proposed in 2023 — House Bill 176, House Bill 178, House Bill 1297, House Bill 1051, and from our colleagues, House Bill 376 and House Bill 377 — did not require any taxpayer funds.

Opponents to reform also insist that associations should be self-governed while paradoxically exerting their influence and control over these condominium communities.

Every week, condo owners throughout the state report allegations of financial misconduct.

Without owner-protective changes, the government that created condominiums is furthering the collapse of the current condominium model, allowing condominiums to become less desirable, more financially taxing, and less physically sound, and culminating in harm to a large segment of Hawaii’s population and its economy.

Condominiums are communities of people, not businesses for exploitation, and the top-down corporate governance model requires improvement.

For one who loves condo-living, reform is necessary to ensure that existing communities remain viable, with enforceable laws that protect the physical and financial health and safety of members and their property.

Mahalo to Civil Beat through its investigations for exposing the pernicious nature of the current condominium governance model.

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About the Author

Lila Mower

Lila Mower is president of Kokua Council, a Hawaii nonprofit that advocates for the most vulnerable among us.

Latest Comments (0)

What the government would not do, major private industries were forced to do to ensure that their stakes in condos associations were protected.This year, the mortgage industry produced stricter rules/guidelines to ensure that the proposed collateral, the condo & association, are financially & physically sound. Thus, many owner-sellers and buyers learned that some condos failed these guidelines. Interested buyers, if any, must buy with all cash or utilize nonconventional alternative types of financing that may come with greater risks for the borrower.The insurance industry warned of increased claims leading to higher premium costs due to poorly maintained, governed, and managed properties. The 2017 Marco Polo fire & the 2021 collapse of Champlain Towers South in Florida graphically exposed that some associations failed to keep their properties in safe/healthy conditions, failed to build/maintain inadequate reserves to fund maintenance/repairs, and thus failed their occupants & owners, and put all at great risk---physically & financially. Now some insurers have pulled or threatened to pull out of Hawaii, AFFECTING US ALL, not just condo owners.True condo reform will HELP US ALL.

lmower · 4 weeks ago

Part of the issue is that developers usually place the majority of board members to protect their interest on the board as a start. If any leave they are replaced by a supporter of the developer and/or their interests. This is not democratic or elected. Secondly, IMO many times those that are on the BOD are little else in life to do, but to exert control over others, as maybe they have never had before, or have had done to them in the past. It's kind of like a cop syndrome where you have powers because of law and how you use those powers over other citizens depends largely on you.Lastly, agree the the state law is the only way to bring some checks and balance into the equation for condo associations and owners.

wailani1961 · 4 weeks ago

At my condominium Association we have no pool, no fitness room, no library, and no common meeting room, and the maintenance fees are close to $1K for a 1 bedroom with electricity added. But we do have a roof and building with serious deferred maintenance, mismanagement, and litigation that can be seen at eCourt Kokua (two lawsuits).

Greg · 1 month ago

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