A condominium task force established to identify issues related to condo associations and the systems in place to resolve disputes with unit owners is supposed to submit an interim report of its findings and recommendations by the end of this month. 

But instead of reporting on the issues it has identified so far, the Condominium Property Regime Task Force is considering a time-honored way to avoid saying much for now: It’s planning to ask the Legislature to direct the Hawaii State Auditor to conduct a study of condo issues.

That was the main result of a meeting held Thursday to consider a proposed interim report and bill amending condo mediation procedures submitted by the task force’s chair, Philip Nerney, a condo lawyer who typically represents condo associations. 

Drafted and submitted without input from other working group members, Nerney’s mediation proposal went nowhere.

Instead, with the late December deadline for an interim report looming, Sen. Carol Fukunaga suggested requesting a study by the Hawaii State Auditor. Such a study among other things could examine what other states do to resolve condo disputes and compare that to Hawaii, said Fukunaga, a task force member.

Rep. Sean Quinlan, also a member, described the study as a wise first step for a panel that has two years to complete its work.

“It’s really tough because there are a lot of people who have genuinely been targeted for retaliation by their condominium associations,” Quinlan said. “But we have to be very, very careful when crafting solutions because it’s going to have huge implications for property ownership.”

The task force represents a potentially important tool for helping lawmakers craft new legal frameworks for governing condominium associations. Although state law outlines broad policies for setting up condominium property regimes, the regimes themselves are private, self-governing entities, essentially creatures of private contracts between unit owners and their condominium associations. 

The task force’s work could bring change touching much of Hawaii’s population. As of 2021, there were 1,540 condominium associations consisting of six or more units registered in Hawaii, representing over 157,000 units, according to the Department of Commerce and Consumer Affairs Real Estate Commission. Industry experts have estimated these associations govern some 360,000 people – or about 1 in 4 Hawaii residents. 

The associations are essentially private governments with elected boards and the ability to impose fees and penalties on residents but often without accountability or media scrutiny. The issue, Quinlan said, is how to protect these residents from abusive or recalcitrant boards without restricting private rights.

“How do we craft a law that promotes good behavior without being too prescriptive?” he said.

Lawmaker: Task Force Can Work In Parallel With Auditor

Quinlan said he didn’t see calling for an audit as stalling.

“As long as we keep working hard in parallel with what we ask the auditor to do, it’s not going to stop the task force from doing its own work,” he said.

One key will be the audit’s scope, said Lila Mower, a longtime advocate for condo owners who serves on the task force. When testifying for establishment of the task force, Mower recommended the panel investigate what she said were issues critical to owners. 

These, she said, included examining the feasibility of creating a condo ombudsman, investigating the extent to which associations make key governing documents available to owners and assessing the success or failure of subsidized mediation conducted under the state condo law. The audit should be scoped to explore these issues, she said.

Still, the last item might go nowhere if the task force’s chair has much say. While the usefulness of mediation is a contested issue between owner advocates like Mower and condo associations and their lawyers, the chair indicated his mind is made up regardless of what an audit might find.

“Mediation is good,” he said. “I will never be convinced otherwise.”