Senate committee moves to tighten condominium oversight; managing‑agent rules deferred for review

The Senate Committee on Commerce and Consumer Protection on Feb. 14 advanced changes aimed at improving oversight of condominium buildings, including passage of a measure to add design professionals to the Real Estate Commission and further review of a bill that would require managing agents to notify unit owners and the commission when associations fail to meet reserve or budget reporting requirements.

The move followed lengthy testimony and questions about deferred maintenance, insurance market pressures and uncertainty over who counts as a condominium “managing agent.” The committee passed SB 1212, which will add at least two architect-or-engineer seats to the Real Estate Commission and expand the commission to 11 members, and postponed decision on SB 1046 so staff and stakeholders can clarify definitions and administrative burdens.

Why it matters: Hawaii has seen rising insurance and repair costs for vertical multifamily buildings. Committee members said additional technical expertise on the Real Estate Commission should improve oversight and responsiveness to condominium financial and safety problems.

During the hearing, Gregory Mesakian, commenter, urged clearer statutory language on who is a managing agent. “What is the definition of the managing? And some believe that when you say managing agent, it’s property manager or what’s often referred to as the community manager,” Mesakian said, and pointed committee members to the statutory definition in HRS 514B-1302 for consideration.

Phil Nerney, commenter, testified in opposition to the managing‑agent notification provision, saying it would “interfere with the principal‑agency contractual relationship between a managing agent and an association” and require nonlawyers to make legal judgments. “Operationally, I think it’s very difficult. It would be corrosive of the principal agent relationship,” he said.

Real Estate Commission staff told senators that, anecdotally, callers asking the commission about managing agents are often concerned with the individual assigned to an association, while the statutory “managing agent” is the licensed broker or brokerage entity contracted with the association. The staff added that, as drafted, the bill would place the reporting duty on the real estate broker that contracts with the association.

The committee’s action on SB 1212 included amendment language intended to clarify the bill’s preamble and to expand the commission by two seats for licensed design professionals. Chair Keohokalole said the change was intended to ensure “members on this commission who have an understanding of the deferred maintenance concerns in the condo market right now.” The measure passed with amendments and a defective effective date of July 1, 2050.

SB 1046 — which would require any managing agent to notify each unit owner and the Real Estate Commission when an association fails to meet budget and replacement reserve reporting requirements — was deferred to Feb. 21, 2025 to allow sponsors to refine definitions and address operational concerns raised by managing‑agent stakeholders.

The hearing also featured multiple written submissions from condominium associations and individuals on both sides of the managing‑agent bill. Palihua Town House Association and several named residents submitted written opposition; other individuals and condominium stakeholders submitted support or comments.

The committee said it will use the additional week before the next decision‑making session to consider definitional changes and administrative processes for notifying owners and the commission.

Plans going forward: SB 1212 will proceed with the adopted amendments. SB 1046 will return to the committee on Feb. 21 for further consideration.