SB253 amends Hawaii’s condominium reserve and budget disclosure laws to require condominium association budgets to include a detailed summary of reserve and operating information in a self-contained format. The bill specifies that the summary must include revenues, expenses, cash or accrual basis, fire safety and life-safety costs in larger counties, reserve fund balances, reserve assessment calculations, the qualifications and conflicts of the reserve study preparer, omitted property components, planned increases over the 30-year reserve plan, prior-year shortfalls, and the amount needed to fund reserves for the fiscal year. It also requires the summary to state whether the funding method is percent-funded or cash-flow based, and bars any method from circumventing the reserve amount determined by the reserve study.
The bill also tightens enforcement and liability rules. It removes the good-faith defense for an association if its board adopts a budget that omits the required detailed budget summary, clarifies that any unit owner whose board fails to substantially comply has standing to sue to enforce compliance, and places the burden on the board to prove substantial compliance in an enforcement action. The measure is framed as a follow-up to prior transparency laws, including Act 62 (2022) and Act 199 (2023), and is intended to strengthen disclosure and accountability around condominium finances and reserve planning.
Impact
SB253 would amend section 514B-148 of the Hawaii Revised Statutes governing condominium association budgets and replacement reserves. It would expand the required contents of the annual budget summary, require the summary to stand on its own without cross-references to other documents, limit the availability of the good-faith defense in cases where the required summary is omitted, and clarify enforcement rights and evidentiary burdens in disputes over compliance. The bill primarily affects condominium associations, boards of directors, managing agents, reserve study preparers, and unit owners.
Sentiment
The available voting history suggests generally favorable sentiment toward the bill. It passed the Senate Commerce and Consumer Protection Committee unanimously and later passed the Senate Judiciary Committee with only one dissenting vote, indicating broad support for the bill’s transparency and enforcement goals. The bill’s findings also show a legislative intent to build on prior condominium disclosure reforms rather than reverse them.
Contention
The main points of contention appear to be the bill’s stricter compliance and enforcement provisions. The most significant change is the removal of the good-faith defense when a board adopts a budget without the required detailed summary, which increases exposure for associations and their agents. Another likely area of concern is the shift in litigation posture: unit owners are expressly given standing to sue, and boards must prove substantial compliance once challenged. The bill also imposes a more rigid disclosure format by prohibiting summaries that refer readers to other parts of the budget or reserve study, which may be viewed as increasing administrative burden on associations.