Part 2 of this two-part series continues navigation of the challenges that can be found in the complex world of condominium law and how to pave the way for reform.
Governance Gone Wrong
Several recent incidents illustrate the challenges facing Hawai‘i’s community associations. On Hawai‘i Island, a condominium board began repairing common area la¯nai structures but later reclassified them as limited common elements, shifting the financial burden onto individual owners. This unexpected decision left residents scrambling to cover significant costs they had not anticipated. An arbitrator later determined the board was wrong, which cost the association a significant amount of attorneys fees.
In another case, a board amended rules to benefit a favored owner, leveraging access to voting data while excluding opposing voices. These actions created significant mistrust among residents and highlighted the potential for abuse of power within these associations.
Unauthorized contracts are another recurring issue. For example, a board president signed a multimillion-dollar construction contract without consulting other board members, just before being removed from office. This unilateral decision resulted in financial and legal complications for the entire community.
Additionally, critics of boards often face intimidation tactics, such as threats of legal fees, which discourage dissent and oversight. And unfortunately, many condominium attorneys who ought to know better than to engage in these bullying tactics nevertheless do so that they can remain as attorneys for the board.
These practices highlight urgent need for reform to ensure accountability and transparency.
Building a Better Future
Addressing these governance issues requires a multifaceted approach. Transparency should be a top priority. Clear guidelines for executive sessions and stricter rules for voting processes can prevent abuse and restore trust. Boards should be required to disclose meeting minutes and document and justify decisions made in private sessions. Ensuring that votes are conducted fairly and without undue influence is equally important to maintain the integrity of governance.
Financial responsibility must also be enforced more rigorously. Penalties for noncompliance with reserve fund requirements should be increased to deter negligence and protect owners from surprise assessments. Associations should be required to conduct regular, independent audits of their financial practices to ensure accountability and prevent mismanagement.
Equity and inclusion are equally important. Gender disparities must be addressed through education and advocacy, fostering an environment where all residents feel respected and empowered to participate in governance. Initiatives such as leadership training programs for all board members, especially underrepresented groups, can help diversify boards and promote more equitable decision-making processes.
By implementing these changes, Hawai‘i can establish a more efficient, equitable, and transparent system for managing its condominiums and community associations. These reforms will benefit residents and contribute to the long-term sustainability of these communities. In a state where shared housing plays such a vital role, creating fair and functional governance structures is essential for maintaining harmony and trust.
Proactive measures will ensure that these communities thrive, not just as living spaces, but as integral parts of the Aloha State’s social and economic fabric.
REVERE & ASSOCIATES
970 Kealaolu Ave., Honolulu, HI 96816
808-791-9550
officemanager@revereandassociates.com
revereandassociates.com
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