NEW LAWS
The following is a summary of some new laws which may affect people
who own real property.
Liability for Underage Drinkers
Act 69 was signed by Governor Lingle on May 20, 2003. This creates potential
liability for individual homeowners, condominiums and homeowner associations.
The new law provides that the owner or the person who controls the premises
is liable if an intoxicated drinker (under 21 years of age) causes injury
or damage and the owner or the one in control of the premises knew of
the consumption of alcohol and could have reasonably prevented such alcohol
consumption. Thus, homeowners, condominiums and homeowner associations
should be careful if persons under 21 years of age are consuming alcohol
on the premises. The liability for bars and restaurant is now extended
to homeowners. A copy of Act 69 in its entirety will soon be available
on our Website, attorneyhawaii.com, under the Links & Resources section.
The trend of increasing liability is clear. We encourage our clients
to be mindful of the condition of anyone, regardless of age, who consumes
alcohol on your premises.
Relief from Costs for Association For Past Due Maintenance Fees
If you live in a condominium project, you are aware that unpaid fees
and uncollected costs ultimately become the responsibility of all the
other owners. Condominium associations often suffered losses in foreclosure
cases, because the Association typically had the lowest priority when
the foreclosure proceeds are distributed. The legislature had previously
enacted Act 39 to provide some relief to the Associations. Act 39 allowed
Associations to claim up to six (6) month of unpaid maintenance fees or
$1,800.00, whichever is less, from any sale by the lender of the foreclosed
property. This was called the Act 39 lien. The costs of filing and releasing
the Act 39 lien, however, reduced the Association’s amount of recovery.
Act 80 which was signed on May 21, 2003, allows an Association to claim
its Act 39 proceeds without the need to incur the additional cost of filing
a lien or the cost for the subsequent release of that lien. The Act 39
lien must be paid when the foreclosing lender sells the unit to a new
buyer. While there is no longer a need to file a lien, the Association
must keep track of the lender’s sale subsequent to the foreclosure
in order to collect its Act 39 claim.
Responsibility for Future Maintenance Fees
Governor Linda Lingle also signed into law Act 53. There were instances
when a foreclosing lender was slow in recording the title transfer for
property reacquired by the lender at a non-judicial foreclosure auction.
This made it difficult for Associations to recover the ongoing maintenance
fees. Act 53 now makes the lender or the purchaser at the foreclosure
sale liable for the unpaid maintenance fees thirty (30) days after the
date of the non-judicial foreclosure auction. This is regardless of whether
the lender or the purchaser records the deed conveying title. The only
exception is if the lender has a legitimate reason for not taking title,
such as bankruptcy or if there was an objection to the foreclosure process.
This should help Association collect their maintenance fees when there
is a non-judicial foreclosure.
Modification to the Condominium Law
The revision to the condominium laws has been an ongoing project for
many years. Revision of these laws is a tedious job involving input from
many sources. Act 131 extends the time to complete this project for an
additional year. Hopefully, the revision to the condominium law will be
completed in time for the 2004 legislative session.
Access to Employee Records
Governor Lingle signed Act 95 on May 28, 2003. This Act allows condominiums
and cooperatives to access and use the records of the Hawaii Criminal
Justice Data Center in the evaluation of prospective employees who will
have access to apartments, apartment keys and association funds.
Assisted Living Facilities
Act 185 was signed on June 16, 2003. This law allows a single condominium
unit or a single family home to be an assisted living facility. There
is still the issue of whether an entire condominium association could
charge all the condo owners for assisted living expenses as a common expense.
For now, condominium associations cannot be licensed as an assisted living
facility. The legislature has until July 1, 2004 to review and act on
a report about the feasibility of allowing condominiums to become licensed
as assisted living facilities.
New Restrictions in the Landlord Tenant Code
Act 194 amends the landlord tenant code to provide that in the rental
agreement for a single family residence, the landlord cannot prohibit
the tenant from posting political signs on the property.
There is a portion of the Act which may affect condominiums. It provides
political signs cannot be posted where prohibited by law. The issue is
whether a condominium association’s prohibition against signs, either
in its declaration or in its by-laws, will be viewed as being properly
prohibited by law.
Disability Parking Rules Can Now Be Enforced on Private Property
We all know you can be cited for violating the rules for disability
parking that is on public property. Act 30 enacted on April 24, 2003 allows
law enforcement officers or commissioned volunteers to also enforce disabled
parking laws on private property, if the private property has a parking
lot containing a parking space reserved for people with disability.
It Costs More to Sue
The costs of litigation is increasing. Act 216 which was signed on July
1, 2003 raises the cost of filing a District Court Complaint by $20.00
and a Circuit Court Complaint by $50.00.
NEW TRENDS IN CONDOMINIUMS
As condominiums become older, Associations should check the adequacy
of the reserves they have set aside. This is because as the buildings
get older, it may no longer be a matter of repair or maintenance, but
of replacement of entire systems.
Insurance is generally one of the largest, if not the largest expense
for most associations. Insurance companies are raising the premiums for
associations with frequent water leak and damage claims. In some cases,
coverage is not even available. Mold claims are generally excluded by
the insurance companies.
The deductible on the available insurance is also increasing. This shifts
a greater share of any damages to the insured. Owners of condominiums
should check to see if their association has a policy of assessing any
deductibles to the individual owner. The individual owners should check
their personal insurance policy to determine if it covers deductibles
assessed to them by the Association.
Condominium documents are also being amended to make individual owners
more responsible for repair and maintenance of their apartment and fixtures.
The rationale behind this movement is to take a preventative approach
to address problems, such as water leaks. Some associations now require
the owners to routinely replace components, such as washing machine hoses
and toilet rings on a regular basis before the components fail.
FROM THE DESK OF HAROLD CHU
It’s that time of the year again! We are fast approaching the holiday
season. The government agencies in Hawaii (as well as other entities)
typically are slower during the months of November and December. One of
the reasons is the volume of documents increases as everyone tries to
get things done before the end of the year.
If there are transactions, such as a change in title that you wish to
complete by 2003, we suggest that you not delay in getting those tasks
done, especially if there are tax considerations. We advise our clients
to plan early to avoid disappointment.
A new law makes property owners liable for injury or damages caused
by underage drinkers when the owner could have reasonably prevented such
alcohol consumption. This is discussed further in this newsletter in the
article on new laws. The trend of the law is towards imposing liability
on any one allowing someone to consume alcohol irresponsibly. The law
already makes commercial establishments liable for not monitoring a customer’s
consumption. The extension of liability to homeowners for adult drinkers
is reasonably foreseeable. Thus, the cautious homeowner should be mindful
of overindulgence of alcohol by anyone, not just minors.
We are continuing our series of tips to landlords. This series of articles
in our recent newsletters is also available on our website at www.attorneyhawaii.com.
TIPS FOR LANDLORDS
(PART IV)
Landlords should familiarize themselves with the Hawaii Residential
Landlord Tenant Code.
The Landlord Tenant Code is Chapter 521 of the Hawaii Revised Statutes.
The Hawaii Revised Statutes is available at most of the public libraries.
You can also find copies of the Hawaii Revised Statutes at the University
Hawaii Law Library (Manoa Campus) and at the Supreme Court Law Library
at 417 So. King Street, Honolulu, Hawaii 96813.
The Department of Commerce and Consumer Affairs occasionally publishes
a layman’s brochure of the Residential Landlord Tenant Code. When
there is a recent printing, it can be found in most bookstores. The handbook
is a summary of the Landlord Tenant Code and addresses the more common
situations. You should be mindful it does not set further the entire statute.
The handbook was recently selling for about $3.00.
1. The landlord should disclose, in writing at the beginning of the rental,
the name and address of each person authorized to manage the premises.
2. The landlord must disclose the name and address of each person who
is an owner or who is authorized to act for the owner to: receive service
of process, receive rents, provide receipts and to receive notices and
demands.
3. Landlords, who do not reside on the island where the rental property
is located, must designate on the written rental agreement an agent residing
on the same island where the rental unit is located.
4. The landlord must provide a copy of the written rental agreement to
the tenant.
5. The landlord must furnish the tenant with a written receipts for rent
paid at the time of rent payment. Cancelled checks shall fulfill the requirement
of a written receipt. Even if the rent is paid by check, the landlord
shall furnish a receipt if the tenant requests a receipt.
6. Landlords must also disclose their general excise tax number to all
tenants for the purpose of filing for a low income tax credit.
A landlord needs to be mindful of the above because under the Hawaii
Revised Statute § 521-67, if the landlord does not make the disclosure
within the ten days after demand by the tenant of the disclosure, the
landlord can be liable to the tenant for $100 plus reasonable attorney’s
fees.
HUMOR
A man and his wife were having an argument about who should brew the
coffee each morning.
The wife said, “You should do it, because you get up first, and
then we don’t have to wait as long to get our coffee.”
The husband said, “You are in charge of the cooking around here
and you should do it, because that is your job, and I can just wait for
my coffee.”
Wife replies, “No, you should do it, and besides it is in the Bible
that the man should do the coffee.”
Husband replies, “I can’t believe that, show me.”
A BRIEF EXPLANATION OF TENANCY IN COMMON
In a tenancy in common, each owner can sell, give away, or will away
his interest as that owner sees fit. When you own property as tenants
in common and one of the owners dies, that deceased owner’s share
will go to the heirs of the decedent. The new owner becomes a new tenant
in common with the other remaining owner or owners.
In tenancy in common, the owners have fractional ownership of the property.
A person who owns a fractional interest in the property can mortgage just
their interest. People who own fractional interest in real property should
understand that it is often difficult to sell just that fractional interest,
especially if you have to do it within a limited time frame.
For estate tax purposes, the market value of fractional interest may be
discounted because a person who has a fractional interest does not have
full control over the entire property. Discounts vary from 16% to 67%
with the typical “safe” discount being 15%.
We recommend that people who own real property as tenants in common have
a written agreement setting forth their understanding with respect to
the property. This is to minimize possible later disputes.
Tenancy in common has its purpose and its role. Like all tenancies, the
owner’s intent and goal should be discussed before choosing a particular
tenancy. You may wish to check our prior article on tenancy. This can
be found in our Website at www.attorneyhawaii.com under the Newsletters
section (Volume 5 Issue 2; April-June, 2000).
HUMOR
A man and his wife were having an argument about who should brew the
coffee each morning.
The wife said, “You should do it, because you get up first, and
then we don’t have to wait as long to get our coffee.”
The husband said, “You are in charge of the cooking around here
and you should do it, because that is your job, and I can just wait for
my coffee.”
Wife replies, “No, you should do it, and besides it is in the Bible
that the man should do the coffee.”
Husband replies, “I can’t believe that, show me.”
So she fetched the Bible, and opened the New Testament and shows him
at the top of several pages, that it indeed says “HEBREWS”.
Attorney:
Harold Chu
hchulaw@lava.net
Publisher/Editor:
Cora Anderson
canders@lava.net
Secretaries:
Cora Anderson
canders@lava.net
Janette Reyes
jreyes@lava.net
Printer:
NewTech Imaging
Phone: (808) 523-7544
Fax:: (808) 526-1231
E-mail: hchulaw@lava.net
http://www.attorneyhawaii.com
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