Hawai‘i’s unique housing landscape relies heavily on condominium and community association laws, which manage shared living spaces, properties and the intricate relationships within them. Governed by specific statutes, these laws include HRS 514B for condominiums, HRS 421J for community associations, HRS 421I for cooperatives and HRS 514E for timeshares. Of these, condominium laws stand out for their comprehensiveness, detailing everything from a developer’s responsibilities to the finer points of house rules. On the other hand, statutes for other housing types are strikingly thin, often leaving owners with little guidance in case of disputes.
This imbalance becomes even more apparent in properties that combine housing models. For example, a condominium might house timeshare organizations or rental pool groups within it, creating a complicated web of governance. These associations function as hybrid entities: They resemble corporations with directors and shareholders (owners), operate like families with close living arrangements that foster interpersonal conflicts, and act like governments with the authority to create rules and collect fees. Each aspect presents opportunities for friction and dysfunction, making their efficient operation critical for residents’ quality of life.
Hawai‘i’s Invisible County
The importance of these laws extends beyond their governance structures. Hawai‘i’s condominiums and community associations represent over $100 billion in real estate value. Condominiums alone make up more than 31% of the state’s housing units, the highest percentage in the US. About 420,000 people — nearly 30% of Hawai‘i’s population — reside in these communities.
To put this into perspective, this population is larger than the combined populations of Kaua‘i, Maui, and Hawai‘i Counties. These associations form Hawai‘i’s “invisible second-largest county,” and their influence on housing and the economy is undeniable.
Beyond housing, these associations help drive Hawai‘i’s economy, supporting contractors, landscapers, property managers and numerous service providers. As new housing developments increasingly adopt these models, the reliance on condominium and community association laws will only grow. These associations are not only residential communities but also economic ecosystems, ensuring jobs and livelihoods for thousands of workers who support their operations.
Despite their pivotal role, these associations often go unnoticed until governance issues erupt into public disputes. Disputes can arise from disagreements over shared expenses, misuse of funds, or lack of communication between boards and residents. These problems underscore the importance of proactive attention, improved transparency and ongoing reforms to make the system more equitable for all involved.
Hierarchy of Governance
To understand the structure of these associations, it’s essential to examine their hierarchical governance system. At the federal level, statutes like the Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA) set broad protections to ensure equal access and non-discrimination. State laws, particularly HRS 514B and HRS 421J, provide detailed regulations governing everything, from how condos are developed to how they are marketed and managed. These state laws work in conjunction with community-specific documents: declarations (the “mini-constitutions”), bylaws (operational rules) and house rules (everyday guidelines). Meetings are governed by Robert’s Rules of Order, which help maintain procedural order and promote fair participation.
Inconsistencies in Governance
Despite this framework, the system is far from perfect. Condominium laws are significantly more detailed than those for cooperatives or timeshares, creating inconsistencies in governance. Judges often rely on condominium laws to resolve disputes in other association types, which can lead to misapplication of the statutes. This tendency can create further confusion and exacerbate tensions between owners and boards. Moreover, developers and management companies have historically played a significant role in drafting these laws, often prioritizing their interests over those of the residents. This influence can result in regulations that favor financial expediency or development goals at the expense of fairness or long-term sustainability. However, growing owner activism has resulted in notable reforms, including the anti-retaliation provision (HRS 514B-191), which protects residents who raise concerns from being targeted by their boards. Those dealing with condominiums are also required to act in good faith (HRS 514B-9). These requirements are a significant step forward but highlight the ongoing need for balance and equity in the governance structure. While the governance structure of community associations is designed to promote fairness and efficiency, several practical challenges arise.
■ Misuse of Executive Sessions. One persistent issue is the misuse of executive sessions. These private board meetings are intended for sensitive topics, such as personnel matters or potential litigation. However, boards frequently abuse this power to obscure discussions and decisions that should be made publicly. This lack of transparency undermines trust and leaves owners uninformed about critical matters affecting their community. For example, major decisions like approving large-scale renovations or reallocating shared expenses are sometimes made behind closed doors, leading to frustration and disputes among residents.
■ The Voting Process. Another common problem is the voting process. Boards often control proxies and voting timelines, giving incumbents a significant advantage. This kind of manipulation allows them to campaign more effectively than challengers, leading to imbalanced governance outcomes. Some boards also engage in practices such as targeting voters who have not yet participated, using direct outreach to sway results. Quite often, incumbents have the email addresses of owners via the management company which are not shared with challengers. These tactics undermine the principle of democratic representation and create divisions within communities.
■ Financial Planning. Financial planning also poses significant challenges. Hawai‘i’s reserves law mandates that condominiums set aside funds for future repairs and maintenance, but compliance is inconsistent.
Many associations neglect this requirement, resulting in sudden special assessments that burden owners with unexpected costs. This lack of planning is particularly problematic in aging buildings, where deferred maintenance can lead to significant safety risks and expensive emergency repairs. Ensuring adequate funding for reserves is critical to maintaining the long-term viability of these properties. The recent insurance crisis also is putting a significant strain on condominiums across the state.
■ Gender Disparities. Gender disparities further complicate the governance dynamics of community associations. Women, especially single women, frequently face harassment or discrimination from male board members or neighbors. This issue underscores the need for greater inclusivity and respect within community associations.
Advocacy and education are crucial to addressing these inequities, creating an environment where all residents feel empowered to participate in decision-making processes.
In the May-June issue, Part 2 of this two-part series will continue to cover how to navigate challenges in the complex world of condominium law and how to pave the way for reform.
REVERE & ASSOCIATES
970 Kealaolu Ave., Honolulu, HI 96816
808-791-9550
officemanager@revereandassociates.com
revereandassociates.com
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