 and welcome to Kondo Insider. As you know, we have this show every week to help board members and owners understand their responsibilities in association living. I'm sitting here with my great and fabulous co-host, Jane Sugimura, and about two weeks ago, we did a show and we'll call it Hot Topics in the Legislature in 2017. And there's so many hot topics, we only got through two of them with a lot of them to go. So just as a brief review, we spent most of our time in the last show talking about a proposal by some others to create a condo ombudsman. An ombudsman would be someone representing government who would tell condo boards how to run their association, and at the same time, we as condo owners would all get to pay for it. And that's gonna be a very hot topic this year in the Legislature, there's several bills being introduced and we're gonna encourage people to get involved and see what the issues are and let their voice be heard. But today, welcome back, Jane. Hi, well, thank you, thank you. You were gonna, and one of the other issues was the priority of payment issues. That's true. Right, that's another bill that's gonna be making its way through the Legislature. Well, I think the industry is a whole. I mean, it's not only the Hawaii Council of Community Associations, which you and I are involved in, and CAI and stuff like that. We all support owners' rights and consumer protection and things to protect the individuals who are being taken advantage of. That's true. But at the same time, it's a two-way street. Sometimes owners themselves will use excuses, installing tactics to prevent associations from doing what they're legally supposed to do. So it's a two-way street and this priority of payment issue on how boards apply maintenance fees will be a critical thing and if it gets approved, we'll help owners individually on a protection matter. Yes, and one of the issues there, which I think is an issue, is the issue of attorney's fees because what's happening now is the unit owner who is delinquent is being charged legal fees. And currently, the way the law is written in order to go to mediation or even to challenge the delinquency in small claims court, you have to pay all of the delinquency plus the attorney's fees. And there is a movement, there is a bill, in fact. I think it was introduced yesterday that would allow the unit owner who disputes the delinquency to challenge it either through mediation arbitration or in a small claims suit without paying the attorney's fees. I mean, it's not that the attorney's fees are gonna be waived or reduced. It just means that they don't have to pay it upfront in order to have their dispute disposed of in arbitration or dispute resolution. Well, I think it can be said as a whole, the industry is in favor of consumer protection for the individual, but also balancing the rights of the association is not harmed as well. But we could spend another whole show on those last two bills. Let's go on to some of the other rumors. Remember, bills are just being introduced now. We're taking information that we've heard about and haven't seen yet, but there's been some discussion about changing the law or expanding the law or clarifying the law about owner participation in board meetings. Can you tell me what we've heard about that? And what kind of the... The statute right now says that the owners can participate in board meetings, but the statute also says that the board can vote to limit participation and they can do so by making a motion and have a majority vote indicating that the owners cannot participate. And some boards have taken that to a real extreme. At least I've heard of one board that voted on that one particular motion not to allow owners to participate years ago. And they don't make a new motion at every meeting as the statute contemplates. They made this years ago. And so now there's this blanket policy where no owners can participate in meetings. And that is, you know, that is, you know, just it violates, you know, express language in the statute. This says they can't. So now there's a bill that's being introduced and Senator Ihara is introducing it on the Senate side and we're looking for somebody in the house to introduce it for the house side. But what it does is it allows any unit owner to participate at a board meeting. It still allows the board president to control the meeting. If he's got a agenda that's an hour and he might, you know, he can say, okay, you know, everybody has three minutes to speak. And if it goes on for more than 20 minutes, I'm just going to stop it because we have an agenda to complete and we'll set up some other time to deal with those issues. But so I think that's a balance, when you talked about it, it's a balance. It allows any unit owner to participate at a board meeting. It still allows the president of the board to control the meeting so that the board's business gets completed in a reasonable amount of time. Yeah, the most common example I come up with where the problem exists is boards will pass a resolution. You can only speak at the forum only. And so they begin and you can't speak anymore, which is indirect violation of the statute because it says that owners can participate in the deliberations of the board meeting. But certainly you don't want an owner taking up the entire of the board meeting in a big debate and an argument over something. The board needs the ability to have some reasonable ability to limit the debate so they can get on with their regular business. Right, and so this statute does say that the board can take reasonable steps to limit that debate. And so it is up to the president who under Robert's rules controls the meeting to take those steps and tell the speakers who want to speak, you have three minutes, everybody's got three minutes. You can't speak twice until everybody's had a chance. And if we go on for more than 20 minutes, then I'm going to stop the debate because we have an agenda to complete. That's fair. And that's fair. That means that the unit owner gets to say his piece. And I'm a board president and we allow people to talk at our board meetings and we've had some really good input, some good observations, some good comments that come from what they do in their daily lives, I mean from their jobs and their work experience. And so it's very helpful to have people in the unit owners who attend the meetings to comment on what the board is deliberating on. So I really think this is a good bill. I think in the industry supporting this bill, as I understand it, it's been carefully thought through and it really takes the existing law and just clarifies it to make it more abundantly clear for board members that owners get a right to participate, but they do have some control so it doesn't go out of hand. Right, and there's one other portion, one other part of the bill too, that talks about executive sessions. And executive sessions is for certain items, it's for litigation or to discuss claims or to discuss personnel issues. And this bill will allow unit owners who wouldn't otherwise want to discuss their issues at the public portion of the meeting. Let's say there's a unit owner who has a rental delinquency and wants to do a payment plan. That's something that's kind of embarrassing. You don't want to talk about it in front of everybody. So that unit owner would make a request to address the board in an executive session, would come and make the proposal, answer questions from the board members, and then leave. Well, kind of bouncing around our agenda we had here when we talked about this before the show. One of the potential bills was, by another person in the industry was to eliminate the power of the board to go into an executive session and to vote. What do you think about that? I think that's wrong, but in my experience too, if it's something that needs a vote, we've discussed it in executive session and we've come out of executive session and voted on it. So if it's something like, well, we're gonna terminate the manager or something like that. I mean, we discuss it on all that privacy stuff regarding personnel issues is dealt with in executive session, but we will come out and put the decision on the record. But if it's something confidential, like in executive session, a lot of things, one of the things we discuss is pending claims. If we have somebody makes a claim, if we're talking about settlement and we wanna talk with our attorney or our property manager about settlement strategies, that kind of stuff is not going to be put on the record anyway. And so I think that in order for the board to do its business that that type of bill that says no votes can be taken in executive session is probably not a good bill. You know, I think I refer to it if we just look back at the last week here in Hawaii. We've had the city council go in executive session. We've had the police commission go in executive session. There were discussions about the tourism agency going into executive session. It's a common thing for people to be able to meet on personnel and legal matters like settlement of cases in executive session. So I haven't seen any language on that yet, but it doesn't make sense to take away the right that all these other agencies have for condo associations. We need that protection because we're talking about a collection matter which you have the Fair Debt and Collection Practices Act or a privacy matter with regard to an individual. You could really expose the association to great liability if this was done in public. Right, and another issue too that would be handled in executive session. If a unit owner or a resident requests a reasonable accommodation, doesn't wanna talk about his or her disability in the public section of the meeting. And so that person can then request to speak to the board in executive session. And at that time can make the request for a reasonable accommodation and explain what the disability is and answer questions from the board and then leave the meeting. But those types of issues, and I agree with the proponent of the bill that it's probably better dealt with if that resident or that homeowner can come into the executive session and talk to board members about it and have it dealt with there rather than in the public portion of the meeting because I can see where some of these items may be very embarrassing. I mean, they're very personal and especially with disabilities that's protected under the privacy statute. Or a homeowner wants to make an offer on a payment plan. You really want that in public record. And it is embarrassing. It does create liability issues under the Fair Debt Act, for example. So I think that we haven't seen the language yet, but everything I've read is people saying that the board is really doing all its business in the executive session and it's not having open meetings. And I haven't seen that to be true. No, I've been on two boards for over 25 years. And in executive session we deal with delinquencies and personnel matters and claims. And it's not only lawsuits, but it might be somebody wrote a letter saying you've done X, Y, Z, all these bad things and I have a claim against you. I'm gonna call my attorney. Those kinds of things you don't want to discuss in the public meeting. You need to be in, you need the privacy of an executive session to talk about the pros and the cons and to see where you're going to go from there. Or to talk with the attorney and get the attorney's advice and decide to make a decision as to where the association should go. So I clearly believe that the executive session should remain private for just those limited issues. And I agree with you on that. The other thing I've seen is document production. You know, I'm gonna say this as the best of my knowledge is that when you talk to RICO which our primary role in condo world is to make sure documents that are listed under the statute are available to owners. There's always been this debate about the general manager's contract. I'm not talking about the gardener or the ordinary secretary or the office person, but the senior person that when they're asked for that contract, when the owner is asked for the board for that contract, that some boards say, well, it's an employment agreement, it's not a contract. And I'm gonna redact everything and not give it to you. What do you, what's your view on that? Is there anything coming forward on that? Well, I believe there's a bill that's been drafted that we're going to be submitting to the legislature. And I, and it will be the Hawaii Council and I believe CAI will be supporting it as well, requesting clarification. I think there is no dispute that an employment agreement is a contract that under the existing law, the association must produce. And, you know, and usually the unit owner who is asking for that is concerned because that's usually the highest paying employee. And that's the one who has general management control over what happens in the building. So if they're upset about what's happening in the building, they probably want to know whether, you know, what the duties are of that person and what the compensation is. And as an owner, they're entitled to that information. They are not entitled to privacy information that's protected under state and federal law, which would mean that person's residence address or telephone number or, you know, social security number. Social security number, any kind of bank account numbers, a Twitter account, you know, privacy information can be redacted, but, you know, things like the job description and the compensation. I mean, those kinds of things are information that if the unit owner wants to see it, they should be allowed to see it. And indirectly there's certainly good public policy today because public corporations, their president or their CEO, that's disclosed to shareholders that they're most senior people, but not the clerk working in the office. I think there's good basis for that. And certainly having that clarity would cut down immensely in the RICO complaints. But we're gonna take a short break. We have lots to talk about yet. So we'll be back in a minute with more of Kondo Insider. Aloha. I'm Marcia Joiner. Inviting you to join us as we navigate the journey. The journey to the end of life. The journey of looking at our possibilities of choices and options. And this is a conversation. We want you to join us in this conversation as we visit with people of different traditions, different religions and different cultures and see what they do toward the end of life. It is a wonderful time to enjoy to talk about things that we don't usually talk about and that we should talk about before the intensive care. As well as the elephant in the room. The elephant in the room is healthcare. And we really need to look at that as we approach the end of life. So join us as we navigate the journey. Aloha. Welcome back to Kondo Insider. Your co-host, Richard Emory and Jane Sugumura sitting here talking about the 2017 legislature. This is our second show on that topic because again, we expect more than 80 bills to be introduced this year affecting association living. And we just recently talked about, for the first part of the show, board meetings and contracts and those types of issues. So what else things going on in the legislature? Well, I know that there's some legislation coming out on enforcement of mediation and that would be Act 187. Do you know anything about that? Well, actually, I know quite a bit about that. And briefly, every year we get these people saying, you know, that I don't have a way to solve my disputes. And back in 2003, the legislature passed a law setting up the Office of Administrative Hearings, kind of like a condo court, kind of like an ombudsman in a way. And that was in existence for seven years and there was only 19 cases held. And I'm right now in the process of studying those cases and who fought against who and who won and what the issues were. But if you think about the cost for seven years of an ombudsman and staff to handle 19 cases, that seems a little unrealistic. The industry has always supported what we call value of mediation. And the value of mediation only costs the association and the owner, in that example, each one half of the first hour of the mediator's time. And the mediator is selected by both parties so they both agreed to what is. And their retired judges and their value of mediation, they can clearly, the judge can exert pressure to settle or solve the matter. What we found the problem is with that particular bill is that some owners and some boards, it works both ways, say, I don't wanna go to mediation. But isn't the statute say it's mandatory, it's a shell? That's right, so the shell go to mediation. But what do you do if you don't show up and who's gonna pay to go get a court order to force the person to show up? Well, the proposal in this bill says the following in simple terms. Number one, if you've been requested to go to mediation, let's just say it's the board and you don't show up or you don't wanna go, you refuse to go. Or you don't respond. You don't respond. You're barred from enforcing that house rule or that issue until such time as you attend the mediation. So even though you have this claim against that owner, until you go and show up for mediation and have that day in court, you can't do anything about it because you haven't complied with the statute on the shell side. The second part of the bill, if you still have people who are reluctant to do that, gives a government agent like Rico or the real estate commission the right to then file a forced mediation by court order and puts the cost of that on the person who refused to go. So the idea behind it is to put enough negative incentive on this that we have a chance because current, and of course it's a relatively new program, certain statistics today show under a value of mediation, more than 50% of the cases have been settled through a value of mediation. And when you say that, well, that's only half half, which you have to then look further on. So you've had this mediation and the judges said I don't agree with you and the mediation ends without agreement. It's like the part two is how many of those then went and had a lawsuit filed and went further? And the answer is none, zero. So even though they didn't reach a formal mediation agreement, the actual effect has been to get... To cut off the dispute. Cut off the dispute by getting accurate information from a judge who was disinterested in this and to keep the cost down to about $175 a party because the balance is paid from the real estate continued education fund. And so we expect that bill to be introduced supported by the industry to put greater pressure to get people for experienced retired judges to try to resolve these disputes. And you think that's gonna result in more resolution of these issues? I think it is. I think part of its education to the boards that this is available to them. We still have the old fashioned facilitate of mediation. And that's shown to be successful as well but not to the same level as a value of the mediation. There's nothing better than to have a person who can say, I think your case is poor and if I was a judge I'd make you pay the legal fees when the facilitate of mediation, the mediator has to take a wishy-washy trying to get to two parties to agree which is very difficult at times. Well, you know, there's another issue that's kind of similar to that because I've heard things from condo owners saying, you know, if the managing agent were more educated or knew more or more assertive in telling the boards what they should be doing that we wouldn't have these disputes. And so what they're proposing is that managing agents be licensed. And do you think that that's gonna address the concerns? Well, I don't, as an industry, you know, if you had licensing where they had to have designations from CAI or IROM or industry designations or some kind of tenure, I don't think the industry is opposed to that. What we're opposed to is if you, for example, said they have to be a real estate licensee, a real estate licensee who buys themselves real estate, their education has nothing to do with what we do. And then you have to look at the word agent. What is an agent? We're an agent of the board. We owe them under the law duty, loyalty, and obedience. And we can certainly proffer our opinions and suggestions out of fixed things. In the end, it's the board's decision. And frankly, we're not allowed to practice law. So there's times we have to defer to an architect or a lawyer as the management company because we're not lawyers and we can't be in a position where we're accused of practicing law unlawfully. So I don't think manager licensing as a whole, the way it's been proposed in the past, is the appropriate way to deal with this issue. And what do you think about training property managers so that they become almost like experts under 514B? And so that they can use that education to advise the boards that they serve. Well, I think it's a merit to discussion that, but let's look at the following. Number one, there's a lot of associations that are self-managed. They don't have a management company. Then number two, you look at a management company, you have small and large associations. Some of those associations have contracts with management companies to do bookkeeping services only. They don't get involved in the decision-making because that project's so big, they have a general manager who they're relying on for some of this stuff. So you can't just cast into one size fits all because the industry is so vast with the types of associations and the types of scopes that work with the management company. But I would certainly say having a bill which Condo Insiders is trying to do and the industry organizations is trying to do to have meaningful education programs for board members, association staff, and management companies is certainly very helpful. Okay. And there's another issue too that's coming up. The repeal of 514A. Talk about that. You're the expert on that. I know the issues, but I want you to talk about that. Right now we have two laws, 514A for condos that were built before 2006 and 514B for condos that were built after 2006. And the law, 514B has been in effect now for 10 years. And there is some confusion because we have two sets of laws. Every time you amend 514B, you have to amend 514A and because what happened with 514B is you took 514A, you rearranged it, updated it. The sections are not the same or there may be exact wording, but it's been moved around. And so it's very, very confusing for both the legislators who have to deal with amending and amending the law and for the people who have to enforce it and abide by it. And it's very, very confusing. So there is a bill that's being introduced. Senator Baker is introducing it to repeal 514A so that the only one on the books is 514B. Well, and part of the confusion comes from the fact. If you look at 514B, I think it's part five governance. It takes over 514A. It basically abolishes 514A governance restrictions. And so you get homeowners or boards even that may be confused because they're saying we're into 514A and they don't know 514B section five applies to them. It's kind of confusing, which I think by eliminating 514A, you have one set of books for the, or one set of laws for the association to comply and it'll do away with a lot of the confusion. Right, and then there is one set part of 514A and B which is the development section. And we were told that there were some concerns because there were some projects out there that were created under 514A because both statutes have the statutory provisions where you create a condominium and so some, but they're different under 514A and 514B. And so we are told, we were informed that there were, there are some projects that were formed under 514A that still have units that have not been sold. And so there's like a grandfather provision that says, even though 514A is being repealed, that those condos that were developed or created under 514A, they will, those provisions will stay in effect for several years until those units are sold. Well, that makes sense. I mean, because you do have developers who have unsold units and get very expensive and confusing that you give them kind of a grace period before the whole section's appealed. They give them a chance to work through it knowing that there's a sunset date on 514A for them on those particular provisions. So I think the industry as a whole supports the fact that we should do away with 514A. It's creating too much confusion in the marketplace. And I know that that bill has been drafted and going to be introduced. And we have a house companion already. We talked to Representative McAlvey. He's already signed off on it. So there's the bills, there's a house version and a Senate version. And we're out of time because very important for me to get this message across to the owners is the legislature's the time for owners and board members to be heard. Tell us about how they can get involved in the legislative process. They can go to the website and I think it's streaming hawicouncil.com. And we have a section on the website called testimony, ABCs. If you will click on that, we have, there will be instructions on how you, the unit owner, or the listener can participate in legislation that's gonna be considered this session. I think there's also a section under that menu of services called join our army. So if you wanna be on the email list to know what's going on, what bills are being introduced, if you go to hawicouncil.com and join our army, where you kept it, and we're not telling you how to view or what to say, but you'll be included in our army of interested people trying to affect positive legislation for the industry. Right. And so we hope that you will join the army and cause we are gonna need your help. It looks like it's gonna be a very interesting and dynamic session. Well, thank you for being here again. I have a feeling we're gonna do this again another month, bringing everybody up to date on everything, but thank you all for watching Condo Insider. We hope you enjoyed our show. And until next week, aloha.