Bill Text: HI SB1512 | 2024 | Regular Session | Introduced

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Bill Title: Relating To Condominiums.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2023-12-11 - Carried over to 2024 Regular Session. [SB1512 Detail]

Download: Hawaii-2024-SB1512-Introduced.html

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THE SENATE	S.B. NO.	1512
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO CONDOMINIUMS.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  Chapter 514B, Hawaii Revised Statutes, is amended by adding a new section to part VI to be appropriately designated and to read as follows:

     "§514B-     Use of proxies restricted; certain practices excluded.  (a)  Notwithstanding any other provision of this chapter or the declaration or bylaws of a condominium to the contrary, the use of a proxy, proxy form, or holder of a proxy shall be prohibited for any vote or for meeting quorum requirements pursuant to this chapter or the declaration or bylaws of a condominium.

     (b)  The following practices shall not be deemed as the use of a proxy, proxy form, or holder of a proxy:

     (1)  Any vote or action described in section 514B-123(a); and

     (2)  The presence at a meeting by, or vote cast by, an individual representative of a unit owner; provided that the unit owner is a person other than an individual."

     SECTION 2.  Section 514B-106, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The board [may] shall not act on behalf of the association to amend the declaration or bylaws (sections 514B‑32(a)(11) and 514B‑108(b)(7)), to remove the condominium from the provisions of this chapter (section 514B‑47), or to elect members of the board or determine the qualifications, powers and duties, or terms of office of board members (subsection (e)); provided that [nothing in this subsection shall be construed to prohibit board members from voting proxies (section 514B‑123) to elect members of the board; provided further that] notwithstanding anything to the contrary in the declaration or bylaws, the board may only fill vacancies in its membership to serve until the next annual or duly noticed special association meeting.  Notice of a special association meeting to fill vacancies shall include notice of the election.  Any special association meeting to fill vacancies shall be held on a date that allows sufficient time for owners to declare their intention to run for election [and to solicit proxies for that purpose]."

     SECTION 3.  Section 514B-121, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsections (b) and (c) to read:

     "(b)  Notwithstanding any other provision of this chapter, [except as provided in subsection (e),] or the declaration or bylaws of a condominium to the contrary, at any association meeting the board may direct the use of an electronic voting device to comply with subsection (e)(2), regardless of whether a secret ballot is used or required.  [Except as provided in subsection (e), the] The use shall be subject to the following:

     (1)  The electronic voting device and all associated equipment shall be isolated from any connection to an external network, including the Internet, or shall use a form of encryption comparable to that used for secured internet web browsers;

     (2)  The board shall establish reasonable procedures to provide for the secrecy and integrity of the unit owners' votes, including but not limited to procedures that ensure the availability of a printed audit trail containing:

          (A)  The reference number or internet address of the electronic voting device;

          (B)  Each common interest voted; and

          (C)  The vote that was tabulated;

     (3)  A copy of the printed audit trail shall be available to owners after the meeting in the same manner provided by sections 514B-154 and 514B-154.5; and

     (4)  A copy of the procedures established pursuant to paragraph (2) shall be available at no charge to any owner and a copy shall be available at any meeting at which the association uses an electronic voting device.

     If any conflict arises between this subsection and subsection (e), subsection (e) shall control.

     (c)  Special meetings of the association may be called by the president, a majority of the board, or by a petition to the secretary or managing agent signed and dated by not less than twenty-five per cent of the unit owners as shown in the association's record of ownership; provided that if the secretary or managing agent fails to send out the notices for the special meeting within fourteen days of receipt of the petition, the petitioners shall have the authority to set the time, date, and place for the special meeting and to send out the notices [and proxies] for the special meeting at the association's expense in accordance with the requirements of the bylaws and of this part; provided further that a special meeting based upon a petition to the secretary or managing agent shall be set no later than sixty days from receipt of the petition.  The petition shall be valid only if submitted within one hundred twenty days of the earliest signature."

     2.  By amending subsection (e) to read:

     "(e)  All association meetings shall be conducted in accordance with the most recent edition of Robert's Rules of Order Newly Revised.  Notwithstanding any provision to the contrary in the association's declaration or bylaws or in subsection (b), [electronic meetings and electronic, machine, or mail voting may be authorized by the board in its sole discretion:

     (1)  During any period in which a state of emergency or local state of emergency, declared pursuant to chapter 127A, is in effect in the county in which the condominium is located;

     (2)  For any association meeting for which notice was given while a state of emergency or local state of emergency, declared pursuant to chapter 127A, was in effect for the county in which the condominium is located but is no longer in effect as of the date of the meeting; provided that the meeting is held within sixty days of the date the notice was first given;

     (3)  For any electronic, machine, or mail voting for which notice of voting has been sent; provided that the electronic, machine, or mail voting deadline is within sixty days of the date the notice was first sent;

     (4)  Whenever approved in advance by:

          (A)  Written consent of a majority of unit owners; or

          (B)  Majority vote at an association meeting; or

     (5)  Whenever otherwise authorized in an association's declaration or bylaws.]

members of the association shall be allowed to participate in mail voting and participate in any association meeting by means of internet, teleconference, or other electronic transmission technology in a manner that allows members the opportunity to:

     (1)  View and hear the proceedings substantially concurrently with the occurrence of the proceedings;

     (2)  Vote on matters submitted to members of the association;

     (3)  Pose questions; and

     (4)  Make comments.

     Each member of the association who participates in a meeting by means of internet, teleconference, or other electronic transmission technology shall be deemed to be present in person at the meeting.  The association shall implement reasonable measures to verify that each person permitted to vote is a member of the association [or proxy of a member].

     As used in this subsection, "mail voting" includes sending or receiving written ballots via mail, courier, or electronic transmission; provided that the transmission is a complete reproduction of the original."

     SECTION 4.  Section 514B-123, Hawaii Revised Statutes, is amended to read as follows:

     "§514B-123  Association meetings; voting; proxies.  (a)  If only one of several owners of a unit is present at a meeting of the association, that owner is entitled to cast all the votes allocated to that unit.  If more than one of the owners is present, the votes allocated to that unit may be cast only in accordance with the agreement of a majority in interest of the owners, unless the declaration or bylaws expressly provide otherwise.  There is majority agreement if any one of the owners casts the votes allocated to that unit without protest being made by any of the other owners of the unit to the person presiding over the meeting before the polls are closed.

     (b)  [Votes allocated to a unit may be cast pursuant to a proxy duly executed by a unit owner.]  A unit owner may vote by mail or electronic transmission [through a duly executed proxy].  [If a unit is owned by more than one person, each owner of the unit may vote or register protest to the casting of votes by the other owners of the unit through a duly executed proxy.  In the absence of protest, any owner may cast the votes allocated to the unit by proxy.  A unit owner may revoke a proxy given pursuant to this section only by actual notice of revocation to the secretary of the association or the managing agent.  A proxy is void if it purports to be revocable without notice.]  The association shall mail out a paper ballot to each unit owner no later than        days before the date of any meeting for the annual or other periodic election of board members.

     (c)  No votes allocated to a unit owned by the association may be cast for the election or reelection of directors; provided that, notwithstanding section 514B-106(b) or any provision in an association's declaration or bylaws to the contrary, in a mixed-use project containing units for residential and nonresidential use, where the board is comprised of directors elected by owners of residential units and directors elected by owners of nonresidential units, the association, acting by and through its board, may cast the vote or votes allocated to any nonresidential unit owned by the association in any election of one or more directors where those eligible to vote in the election are limited to owners of one or more nonresidential units, which includes the nonresidential unit owned by the association.

     [(d)  A proxy, to be valid, shall:

     (1)  Be delivered to the secretary of the association or the managing agent, if any, no later than 4:30 p.m. Hawaii-Aleutian Standard Time on the second business day prior to the date of the meeting to which it pertains; and

     (2)  Contain at least the name of the association, the date of the meeting of the association, the printed names and signatures of the persons giving the proxy, the unit numbers for which the proxy is given, the names of persons to whom the proxy is given, and the date that the proxy is given.

     (e)  If a proxy is a standard proxy form authorized by the association, the proxy shall comply with the following additional requirements:

     (1)  The proxy shall contain boxes wherein the owner may indicate that the proxy is given:

          (A)  For quorum purposes only;

          (B)  To the individual whose name is printed on a line next to this box;

          (C)  To the board as a whole and that the vote is to be made on the basis of the preference of the majority of the directors present at the meeting; or

          (D)  To those directors present at the meeting with the vote to be shared with each director receiving an equal percentage;

          provided that if the proxy is returned with no box or more than one of the boxes in subparagraphs (A) through (D) checked, the proxy shall be counted for quorum purposes only; and

     (2)  The proxy form shall also contain a box wherein the owner may indicate that the owner wishes to obtain a copy of the annual audit report required by section 514B‑150.

     (f)  A proxy shall only be valid for the meeting to which the proxy pertains and its adjournments, may designate any person as proxy, and may be limited as the unit owner desires and indicates; provided that no proxy shall be irrevocable unless coupled with a financial interest in the unit.

     (g)  A copy, facsimile telecommunication, or other reliable reproduction of a proxy may be used in lieu of the original proxy for any and all purposes for which the original proxy could be used; provided that any copy, facsimile telecommunication, or other reproduction shall be a complete reproduction of the entire original proxy.

     (h)  Nothing in this section shall affect the holder of any proxy under a first mortgage of record encumbering a unit or under an agreement of sale affecting a unit.

     (i)  With respect to the use of association funds to distribute proxies:

     (1)  Any board that intends to use association funds to distribute proxies, including the standard proxy form referred to in subsection (e), shall first post notice of its intent to distribute proxies in prominent locations within the project at least twenty-one days before its distribution of proxies.  If the board receives within seven days of the posted notice a request by any owner for use of association funds to solicit proxies accompanied by a statement, the board shall mail to all owners either:

          (A)  A proxy form containing the names of all owners who have requested the use of association funds for soliciting proxies accompanied by their statements; or

          (B)  A proxy form containing no names, but accompanied by a list of names of all owners who have requested the use of association funds for soliciting proxies and their statements.

          The statement, which shall be limited to black text on white paper, shall not exceed one single-sided 8‑1/2" x 11" page, indicating the owner's qualifications to serve on the board or reasons for wanting to receive proxies; and

     (2)  A board or member of the board may use association funds to solicit proxies as part of the distribution of proxies.  If a member of the board, as an individual, seeks to solicit proxies using association funds, the board member shall proceed as a unit owner under paragraph (1).

     (j)  No managing agent or resident manager, or their employees, shall solicit, for use by the managing agent or resident manager, any proxies from any unit owner of the association that retains the managing agent or employs the resident manager, nor shall the managing agent or resident manager cast any proxy vote at any association meeting except for the purpose of establishing a quorum.

     (k)] (d)  No board shall adopt any rule prohibiting the [solicitation of proxies or] distribution of materials relating to association matters on the common elements by unit owners; provided that a board may adopt rules regulating reasonable time, place, and manner of [the solicitations or distributions, or both.] distribution."

     SECTION 5.  Section 514B-124.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  If the bylaws provide for cumulative voting for an election at a meeting, each unit owner present in person [or represented by proxy] shall have a number of votes equal to the unit owner's voting percentage multiplied by the number of positions to be filled at the election."

     SECTION 6.  Section 514B-125, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

     "(f)  A director shall not vote by proxy [at board meetings]."

     SECTION 7.  Section 514B-150, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  The board shall make available a copy of the annual audit to each unit owner at least thirty days prior to the annual meeting [which] that follows the end of the fiscal year.  [The board shall not be required to submit a copy of the annual audit report to an owner if the proxy form issued pursuant to section 514B‑123(e) is not marked to indicate that the owner wishes to obtain a copy of the report.]  If the annual audit has not been completed by that date, the board shall make available:

     (1)  An unaudited year end financial statement for the fiscal year to each unit owner at least thirty days prior to the annual meeting; and

     (2)  The annual audit to all owners at the annual meeting, or as soon as the audit is completed, but not later than six months after the annual meeting."

     SECTION 8.  Section 514B-153, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

     "(e)  The managing agent, resident manager, or board shall keep an accurate and current list of members of the association and their current addresses, and the names and addresses of the vendees under an agreement of sale, if any.  The list shall be maintained at a place designated by the board, and a copy shall be available, at cost, to any member of the association as provided in the declaration or bylaws or rules and regulations or, in any case, to any member who furnishes to the managing agent or resident manager or the board a duly executed and acknowledged affidavit stating that the list:

     (1)  Will be used by the owner personally and only for the purpose of soliciting votes [or proxies] or providing information to other owners with respect to association matters; and

     (2)  Shall not be used by the owner or furnished to anyone else for any other purpose.

     A board may prohibit commercial solicitations.

     Where the condominium project or any units within the project are subject to a time share plan under chapter 514E, the association shall only be required to maintain in its records the name and address of the time share association as the representative agent for the individual time share owners unless the association receives a request by a time share owner to maintain in its records the name and address of the time share owner."

     SECTION 9.  Section 514B-154, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  After any association meeting, and not earlier, unit owners shall be permitted to examine [proxies,] tally sheets, ballots, owners' check-in lists, and the certificate of election; provided that:

     (1)  Owners shall make a request to examine the documents within thirty days after the association meeting;

     (2)  The board may require owners to furnish to the association a duly executed and acknowledged affidavit stating that the information is requested in good faith for the protection of the interest of the association or its members or both; and

     (3)  Owners shall pay for administrative costs in excess of eight hours per year.

     The documents may be destroyed ninety days after the association meeting; provided that [in the event of] if a contested election[,] occurs, the documents shall be retained until the contested election is resolved.  Copies of tally sheets, owners' check-in lists, and the certificates of election from the most recent association meeting shall be provided to any owner upon the owner's request; provided that the owner pays a reasonable fee for duplicating, postage, stationery, and other administrative costs associated with handling the request."

     SECTION 10.  Section 514B-154.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Notwithstanding any other provision in the declaration, bylaws, or house rules, if any, the following documents, records, and information, whether maintained, kept, or required to be provided pursuant to this section or section 514B-152, 514B-153, or 514B-154, shall be made available to any unit owner and the owner's authorized agents by the managing agent, resident manager, board through a board member, or the association's representative:

     (1)  All financial and other records sufficiently detailed in order to comply with requests for information and disclosures related to the resale of units;

     (2)  An accurate copy of the declaration, bylaws, house rules, if any, master lease, if any, a sample original conveyance document, and all public reports and any amendments thereto;

     (3)  Detailed, accurate records in chronological order of the receipts and expenditures affecting the common elements, specifying and itemizing the maintenance and repair expenses of the common elements and any other expenses incurred and monthly statements indicating the total current delinquent dollar amount of any unpaid assessments for common expenses;

     (4)  All records and the vouchers authorizing the payments and statements kept and maintained at the address of the project, or elsewhere within the State as determined by the board, subject to section 514B-152;

     (5)  All signed and executed agreements for managing the operation of the property, expressing the agreement of all parties, including but not limited to financial and accounting obligations, services provided, and any compensation arrangements, including any subsequent amendments;

     (6)  An accurate and current list of members of the condominium association and the members' current addresses and the names and addresses of the vendees under an agreement of sale, if any.  A copy of the list shall be available, at cost, to any unit owner or owner's authorized agent who furnishes to the managing agent, resident manager, or the board a duly executed and acknowledged affidavit stating that the list:

          (A)  Shall be used by the unit owner or owner's authorized agent personally and only for the purpose of soliciting votes [or proxies] or for providing information to other unit owners with respect to association matters; and

          (B)  Shall not be used by the unit owner or owner's authorized agent or furnished to anyone else for any other purpose;

     (7)  The association's most current financial statement, at no cost or on twenty-four-hour loan, at a convenient location designated by the board;

     (8)  Meeting minutes of the association, pursuant to section 514B-122;

     (9)  Meeting minutes of the board, pursuant to section 514B-126, which shall be:

          (A)  Available for examination by unit owners or owners' authorized agents at no cost or on twenty-four-hour loan at a convenient location at the project, to be determined by the board; or

          (B)  Transmitted to any unit owner or owner's authorized agent making a request for the minutes within fifteen days of receipt of the request by the owner or owner's authorized agent; provided that:

              (i)  The minutes shall be transmitted by mail, electronic mail transmission, or facsimile, by the means indicated by the owner or owner's authorized agent, if the owner or owner's authorized agent indicated a preference at the time of the request; and

             (ii)  The owner or owner's authorized agent shall pay a reasonable fee for administrative costs associated with handling the request, subject to section 514B-105(d);

    (10)  Financial statements, general ledgers, the accounts receivable ledger, accounts payable ledgers, check ledgers, insurance policies, contracts, and invoices of the association for the duration those records are kept by the association, and any documents regarding delinquencies of ninety days or more shall be available for examination by unit owners or owners' authorized agents at convenient hours at a place designated by the board; provided that:

          (A)  The board may require unit owners or owners' authorized agents to furnish to the association a duly executed and acknowledged affidavit stating that the information is requested in good faith for the protection of the interests of the association, its members, or both; and

          (B)  Unit owners or owners' authorized agents shall pay for administrative costs in excess of eight hours per year;

    (11)  [Proxies, tally] Tally sheets, ballots, unit owners' check-in lists, and the certificate of election subject to section 514B-154(c);

    (12)  Copies of an association's documents, records, and information, whether maintained, kept, or required to be provided pursuant to this section or section 514B‑152, 514B-153, or 514B-154;

    (13)  A copy of the management contract from the entity that manages the operation of the property before the organization of an association;

    (14)  Other documents requested by a unit owner or owner's authorized agent in writing; provided that the board shall give written authorization or written refusal with an explanation of the refusal within thirty calendar days of receipt of a request for documents pursuant to this paragraph; and

    (15)  A copy of any contract, written job description, and compensation between the association and any person or entity retained by the association to manage the operation of the property on-site, including but not limited to the general manager, operations manager, resident manager, or site manager; provided that personal information may be redacted from the contract copy, including but not limited to the manager's date of birth, age, signature, social security number, residence address, telephone number, non-business electronic mail address, driver's license number, Hawaii identification card number, bank account number, credit or debit card number, access code or password that would permit access to the manager's financial accounts, or any other information that may be withheld under state or federal law."

     SECTION 11.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 12.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 13.  This Act shall take effect on July 1, 2023.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Condominiums; Meetings; Members; Proxies; Internet; Voting

 

Description:

Prohibits the use of proxies in condominium association voting.  Requires associations to allow members to vote by mail and attend and cast votes in association meetings through internet, teleconference, or other electronic transmission technology.  Requires associations to mail out paper ballots before any annual or other periodic election of board members.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.