PMK, in collaboration with the Law Office of Kyle Smith, recently negotiated a highly successful class-action settlement with Stanford Carr Development, LLC on behalf of 107 single-family homeowners from the Cottages at Kehalani subdivision.
Each household will receive just over $51,000 for numerous construction defects including hurricane straps, plumbing, and windows. After four years of protracted litigation, Judge Peter T. Cahill of the Second Circuit, State of Hawaii, granted final approval of the $9.25 million settlement on December 27, 2021.
“We are very pleased that we were able to secure some relief for the homeowners of the Cottages at Kehalani who, like all homeowners, deserve to live in the quality of home they were promised,” said Kapono Kiakona, a partner at PMK Law.”
To secure this settlement, PMK and the Law Office of Kyle Smith reviewed hundreds of thousands of documents, and oversaw extensive deposition from experts and lay witnesses, all taking place amidst the numerous court closures and delays caused by the COVID-19 pandemic.
“This settlement would be a great outcome under normal circumstances, but we are particularly happy for our clients given we were able to obtain this result in the middle of the Covid-19 pandemic,” said Kyle Smith of the Law Office of Kyle Smith.
The advent of the new year is an ideal time to look ahead to issues that may impact condominium and community association law in the coming months.
PMK Partner Kapono Kiakona summarizes two topics he expects to be most relevant:
Short term rental issues
Both the Honolulu City Council and the State Legislature are considering a bill that could alter current short-term rentals. The current Honolulu ordinance, while popular in some communities, impedes owners of units in some Waikiki condominium buildings from renting to vacationers, even though those buildings previously provided short-term rentals for Oahu visitors for decades. Proposed changes to the ordinance are designed to clarify who may rent for the short term and who may not. However, many buildings are noting that the changes to the language are likely to create more problems than they solve.
The State Legislature is considering a bill that would create a private right of action for violations of any short-term rental laws. As of February 14, 2022, the proposed legislation grants a plaintiff up to $10,000 and their attorney’s fees if they are successful. Whereas defendants could seek attorneys’ fees and damages if a complaint is found to be meritless or false. The legislature claims this is to help neighbors police their communities.
Hawaii’s construction boom of the last five years has resulted in more frequent defects among some newer buildings. During a boom, there is an incentive to complete construction as fast as possible. This creates a greater potential for errors or workarounds. Many of these mistakes aren’t discovered until years after completion.
“All building associations of newer construction should be cognizant of these issues, and as a precaution, they should pay attention to their structures, how they are operating, how they look and investigate deficiencies in full detail,” Kapono said.
If your building is less than 10 years old, it is strongly recommended that a thorough investigation be completed before the 10-year running of the Statute of Repose.
The Hawaii State Legislature passed many laws during its 2021 Legislative Session that are relevant to condominium and community association law and the residents that these laws represent.
PMK Partner Laree McGuire summarizes the most significant:
SB 329 makes it easier for condominium boards to dispose of unclaimed personal property that was abandoned in common areas. If the board knows who left it and their address, they must provide 30 days’ notice through certified mail of its plan to sell, store, donate, or dispose of the property. If the board does not know the owner, they are allowed to do away with it immediately.
Also, because of this law, boards no longer must publish a plan to dispose of or sell the abandoned property. If the board receives any money from the sale, it still needs to hold the money for a known owner for 30 days, but if unknown, the proceeds immediately become association property.
SB 186 HD1 CD1 reflects the legislature’s ongoing intent to prohibit homeowners’ associations from passing restrictive rules that disallow residents from conducting bona fide agricultural uses on agricultural land.
Previously, homeowners’ associations had sought to circumvent this requirement by renewing agricultural restrictions that existed as of July 8, 2003, claiming that the renewed terms were exempt from the law even though those agreements may have expired after 2003.
This law clarifies that “renewed” contracts that restrict agricultural uses are considered new contracts and are therefore voidable, providing owners more opportunities to disregard restrictive covenants, strengthening the state’s intent to keep agricultural land available to promote diversified agricultural and agricultural self-sufficiency.
HB 247 SD 2 mandates that condominium projects in agricultural districts with more than five units must include a statement of the applicant’s assessment and the county’s comments regarding what type of supportive infrastructure is available, the potential impact on government plans and resources, sensitive environmental resources, and any other county requirements. It also mandates that the developer include a public report verifying that the project will not restrict agricultural activities.
SB 1387 requires dog and cat owners to microchip their pets but exempts animals that are part of a “designated management program” such as a cat colony. Although Governor Ige vetoed the bill, the Honolulu and Kauai counties already have microchip requirements, therefore, in those counties, it may be appropriate to add this requirement to house rules and/or as a condition of granting requests for so-called “reasonable accommodation.”
HB 599 HD 1 SD 1 CD 1 allows condominium associations to use electronic meetings, and electronic machines or mail voting during a local or county state of emergency.
SB 474 HD2 CD 1 requires real estate sellers to disclose whether a property lies within the sea level rise exposure area. It was passed to address the threat posed by climate change to the state’s economy, sustainability, security, and its residents’ way of life, and to ensure that potential buyers know that property that lies within a sea-level rise exposure area may be affected over time.
HB 1142 HD2 SD2 CD 1 affirms the legislature’s intent to facilitate a transition to electric vehicles. It also expresses concern that owners of parking lots in public spaces with 100 or more stalls are not always following the state’s mandate to provide one electric charging station, and many that do exist are in disrepair.
While the law acknowledges that association properties are not technically places of “public accommodation,” and it stops short of mandates, it is an effort to ensure all associations are aware of the legislature’s determination to facilitate the transition to electric vehicles.
Max Kopper joined PMK in 2016 and became a partner on Nov. 1, 2019. He represents clients addressing construction, business, real estate, and community association governance disputes on Oahu and the neighbor islands. He previously served as an associate with the Honolulu firm of O’Connor, Playdon & Guben, LLP, focusing on construction and insurance litigation. He earned his J.D. Degree in 2011 from the University of Hawaii William S. Richardson School of Law, where he graduated cum laude.
As a young attorney, Max Kopper focused on insurance law. He soon realized that it wasn’t going to be his life’s work because it didn’t allow him to work directly with clients.
“It’s really about problem-solving and helping people. There are few things people are as passionate about as their own homes, and seemingly small issues – like a malfunctioning elevator – can have a big impact on their lives. At the end of the day, I very much enjoy providing a service to people who feel in need and stuck.”
Since the beginning of the COVID-19 pandemic, Kopper has watched condominium and homeowner association boards evolve to accommodate new challenges, such as how to alert residents of positive cases within a property and how to hold meetings during a pandemic.
In 2020, boards began conducting some meetings via phone or zoom and in 2021, they further adjusted to that new method of business. Along with this shift is the realization that while in-person meetings are still valuable (and required for annual meetings), there are times when virtual meetings are more efficient and less expensive.
In addition, PMK clients are requesting more virtual meetings.
“Because they come at a more reasonable price for clients, we can offer our opinions on issues more readily, so they don’t have to wait until a dispute has become a huge, expensive mess to bring us on,” Kopper said.
Kopper was born in Hilo and is a graduate of Kamehameha Schools. He lives in Kaneohe with his wife and two children, ages six and three. In his free time, he enjoys outdoor pursuits, specifically finding ways to introduce his children to the Oahu of his childhood, such as showing them his favorite “secret” Kaneohe Bay fishing spots.
PMK Partner R. Laree McGuire spoke with host Raelene Tenno on ThinkTech Hawaii’s Condo Insider on Thursday, February 24, 2022. McGuire discussed SB 2876 De Minimis Violations and HB 1784 Building Inspections and how these changes will impact condominiums and planned community associations in the State of Hawaii.
SB 2876 prohibits planned community associations, condominium associations, or their boards of directors from expending association funds to enforce de minimis violations of association rules or regulations that do not pose risks to the health and safety of other members, units, or unit owners and do not decrease their value. HB 1784 will require periodic inspections of certain walls and appurtenances of buildings five or more stories in height. It requires the state building code council to review the periodic inspection reports.