Homeowners’ associations in Hawaii must be set up as a non-profit corporation and therefore must follow the state Nonprofit Corporations Act. Because community associations must be set up as corporations, association members are referred to as ‘shareholders’ in all official documents and are legally treated as such. HOAs or Cooperative Housing Corporations are also subject to Chapter 421I of the Hawaii Code which provides more detailed regulations for homeowners’ associations.
HOA membership in Hawaii is mandatory upon purchase of property within an HOA operated community.
Homeowners Association’s Rights and Responsibilities
The primary purpose of the community association is the maintenance of common elements. To raise funds for maintaining common property, the HOA may impose regular monthly, quarterly, or annual fees on homeowners. Homeowners must be notified of any changes in regular fees at least 30 days before the change is implemented. In addition to regular dues, special assessments may be imposed to pay for unexpected community costs. Special assessments may be for any amount necessary to make community repairs.
The Board Of Directors
The board of directors has the authority to make changes and additions to the community Covenants, Conditions, and Restrictions (CC&R). All amendments to community regulations must be approved by a 2/3 vote by all association members.
Every member of the board of directors must be a shareholder of the corporation (unit owner), a spouse of a shareholder, or a trust beneficiary of a shareholder. No more than one person within a unit may serve on the board of directors at a time.
It is the responsibility of the board of directors to maintain detailed financial documents and keep minutes at all meetings and keep them on file for at least five years. Association documents must be available to homeowners at a convenient time and place. Copies may be sent to homeowners upon request. Any applicable fees for copies or administrative costs may be billed to the homeowner.
In the event of account delinquency, the community association may place liens on the property and, in extreme cases, may even foreclose on the property despite on-time mortgage payments. The HOA may not foreclose on the property if account delinquency is solely from fines, penalties, legal fees, or late fees. If an account is delinquent and the property is sold voluntarily, the fees associated with that property become the joint responsibility of the seller and the buyer.
Association members, referred to as shareholders in official documents have the right to attend any meetings by the association and the board of directors. The board of directors may elect to have a closed executive session only when dealing with sensitive matters such as meeting with legal counsel. The board of directors must allow homeowners to participate in community discussions within reason. It is possible for the board to impose reasonable restrictions on homeowner participation but may not ban it completely.
All community documents such as the CC&Rs, financial records, and current shareholders list must be available to homeowners at no cost. If a homeowner requests copies of any association materials, the board may charge the homeowner for the price of the copies and any administrative costs.
Chapter 421I of Hawaii Code
To ensure that your community association is being run following all state and local laws, it helps to have a professional on your side. CSM has a team of experienced professionals that have worked with communities in almost every state in the US. Specializing in HOA financial management, we can help your board of directors manage association finances, write and submit documents, and prepare for audits. If you have any questions regarding state HOA laws and regulations, give us a call at (865) 315-7505, contact us online or email us at firstname.lastname@example.org.