 And welcome to another episode of Kondo Insider. My name is Jane Sugimura, and I'm going to be your host today. And Kondo Insider is the weekly show about condominiums and condominium living, and the show is for people who live and work in condominiums. And I'm really pleased to have with me today as my guest, Raylene Tenno, and Raylene is an officer of the Hawaii Council of Community Associations, and she's also the program director. We're going to be talking about the educational programs that HCCA does. Welcome to the show, Raylene. Thank you, Jane. Glad to be here. Okay, so your job is getting the programs ready. And who comes to these educational programs? Generally, there are board of directors of condos, board of directors, or even individual homeowners, condo homeowners. And property managers? Property managers, resident managers, site managers. So people who are in the industry as well as the board members and the unit owners. Correct. And so how often do these programs happen? Generally, it's four times a year. And sometimes we will add in an extra one for a special subject matter. But generally, it's four times a year, once a quarter. And so what kinds of topics do you focus on in these seminars? Anything to do with a condo homeownership and governance, the do's and don'ts, what you can and cannot do, things of that nature. And why is it important for people to come to these seminars? It's important because you buy into a condo and there's statutes, there's rules of what you can do, how you can operate, what you have to do, like budgets and reserves. So it's important for everybody to really know why and why they're paying these maintenance fees and what it's for, what the maintenance fees are for. And that especially applies to boards of directors. Correct. And people who serve on the boards are elected. They're basically owners who live in a condominium and they're elected by the members of the association. Correct. And they serve a number of years that depends on their bylaws or their declarations. And so they're volunteers. They don't have any type of special expertise. So what qualifies them to serve on the board? They're willing us to make sure that the property is maintained. They want to keep their investment, keep it up and make sure it doesn't go down. They want to make sure it appreciates and appreciates well, making sure that the repairs are done in accordance to how it's supposed to be done. And really, it's their community. And some of them, that's the only place they're going to buy for their lifetime. So they want to make sure to preserve their investment. And these seminars, I mean, they're not free. No. They're not free. But do the people who come to these seminars have to pay out of their pockets? No. If you're a board of director, it is covered in statute where it can be paid by the association. And our fees are nominal. And it's a luncheon. It's always on a Thursday, usually on a Thursday. And it's always at the Halecoa. And it's well worth the two hours that we started at 11, lunch is at 11. The program runs for about an hour and a half. And it's well worth that time so that you can clearly understand and know what the rules and regulations are. And even just learning the topic matter, because we do a wide range of topics. Okay. Why don't we talk about some of the topics that have been part of the program? Like this year, we did mediation. That was really cool, because we actually did a mock mediation between two individuals or two groups. So they got to see live how it actually works. And then we did... And with mediation, I mean, that's something that owners would probably want to know about because it's subsidized by the state of Hawaii. Correct. And it really helps when you're having a disagreement that doesn't seem to be getting resolved by talking with the people that are involved or the other side of the fence. Mediation really helps to try to bring the parties together and try to find a solution or to compromise if you have to. Right. And it's kind of important for people who live in the same building, not to be involved in a dispute that festers. Yes. And so it's in everybody's best interest to get it resolved quickly and cheaply. And even if they're not happy with the results, because under the statute, you can do mediation. And if that doesn't work, you can go on to arbitration. Right. And under the condo rules, I mean, you can do it relatively quickly and you get a result. And under mediation, there's two types, the facilitative and the evaluative. And the evaluative is subsidized by the state of Hawaii. Correct. Right. And a lot of homeowners don't know that. Right. And I think if they knew that and knew how easy it was, I mean, in other words, you have to write a law. I mean, you have to write a letter into the board to basically set it up and say, okay, I'm upset about this and that. And this is my concern. Or something like maybe they ask the site manager for some assistance in doing a repair and nobody gets back to them. Or they don't follow up. And you make phone call after phone call. And after a while, it's like, well, what do you do? If they don't talk to you. Right. And that's the number one problem, isn't it? Where the boards do not talk to the owners who have concerns. And that's what ends up in mediation, arbitration, and sometimes until the lawsuit. Yeah. Unnecessary lawsuits. And the lawsuit should be like a last resort because that costs everybody time and money. Yeah. And it still comes out of the association money. Right. Everybody pays for that. Right. And there's a lawsuit. Everybody pays for it. Right. And then your insurance goes up. You know, it's unnecessary where it could be solved if you just come to the table and have a conversation. Right. And the state of Hawaii's got a wonderful website, doesn't it? Yeah. It's got a terrific website. And I guess if you Google, you can do real estate commission or Hawaii real estate commission. It will take you right to the page and it has like an index. And they have issues, I mean condominium issues, and they have a link. I think one of the topics is mediation. Yes. And so if anybody out there, you know, if any homeowners out there or, you know, directors who are having fights with other directors or managing agent, they want to do evaluative mediation, they should go and click on that link. And it tells you exactly how you can do it. And it is subsidized by the state of Hawaii because we all pay into the condo ed fund. Right. Right. And condo ed fund is something that all associations have to pay. All registered associations. And most associations are registered. Yes. That's true. Right. And so you get a bill from the DCCA and you pay into it. And I think this year the cost is something like $10 per unit. Yes. Every other year. And so this, you know, so you can do the math. I mean, multiply that times the number of condos in the state of Hawaii. And, you know, that's a substantial amount of money. And the whole purpose of that fund is to educate people, boards of directors and owners on what they're supposed to be doing under the Hawaii law. And it also subsidizes dispute resolution because there's been a recognition by the state of Hawaii that these disputes just hurt everybody. And it costs the association a ton of money. And so they would prefer that these things not happen. And if they do happen, there's a fund there so that it will help resolve it. So what other types of issues? We did fire, emergency preparedness. That's always a big one. And really trying to get at the condos to really be aware of emergency preparedness, especially around their aging seniors or people that need help with evacuating, making sure that they're prepared and they're on a list so that people can watch out for them. Or even help them if they need assistance evacuating. What else do we do? We did a law update in May. So it's really keeping everybody up to date on current issues. Some of the subject matter comes from conversations that I've had with board members that have attended the seminars. They've said, you know, we have this issue, this issue. And if I hear it a few times, then I'm going to be approaching the committee like, hey, here's a topic that has been come to my attention. And we usually put it together. And one of the topics that just never seems to go away are service animals or service animals or animals that, you know, people want or call service animals, but they're not service animals. Correct. The big hot topic. Right. And I guess, you know, we don't want to, the associations don't really want to be mean or sound like they're anti-pets or whatever. But, you know, a lot of people just don't understand that condominiums have rules and regulations as some condominiums have rules to say that there are no pets. Correct. They were originally built and started out as a no pet building. I mean, Humane Society publishes a list of condos that are no pets. So really, when you're looking to buy, I mean, if you have a pet, you really shouldn't be looking at a building that is a no pet building, you know. But even in a building that has no pet requirements, I mean, there are some ways that will accommodate a service animal. Correct. There's just paperwork that you need to fill out for the association to comply. And that's because there's a federal law, Fair Housing, that applies to all condominiums. But it has to be a service animal. And it has to be a true service animal, not one that you get off the Internet, you know, one of those. It's a true service animal to do a task. Right. And in Hawaii, and in fact, federally, you know, you see these people with the vest that say service animal on it, or they come with a certificate that says this animal is a certified service animal. But what people don't understand is that number one, the state of Hawaii does not certify service animals, and neither does the federal government. Right. Everybody shows you a certificate that says that an animal is a certified service animal. That's bogus. Correct. Yeah. There's no such thing as a certified service animal. Right. But you can tell a service animal because they have a certain demeanor, and they are trained to assist their human owner. Right. And you can ask the occupant or the resident, what is it that your service animal does? You can't ask what kind of disability you have, but you can ask, well, you know, you have a service animal, what does it do? Correct. And you can ask that. That's an appropriate question to ask. And they can ask, and if the disability is not obvious, they can apply for a reasonable accommodation under fair housing, which is a federal law. Right. So it applies all over the country. And so they can apply for a reasonable accommodation and submit a letter by a healthcare provider or social worker or somebody who's certified to say that that person is a patient, has a disability under the federal law, and requires this service animal. Correct. Right. And so if they go through those steps, then the association really cannot refuse, because then there would be a violation of the federal housing law. Correct. Right. And now I guess there's a movement where they're talking about legislation, making it a misdemeanor for the people who write the letters. Right. Yes. People who are so-called authorized to write these requests for reasonable accommodation. What's that all about? It was, if they falsely sign off, then it could be a misdemeanor and there's a fine like $100, I think the first round, and then it goes up from there. There's like three tiers of fines. So for healthcare providers, they really need to be, they're going to put, they eventually could put their license on notice, you know, for fraudulently doing these, because it's really important for them to be honest with signing off. Right, because the condominiums don't want to discriminate against people who have a disability, Right. Who need the assistance of a service animal. Right. But by the same token, you don't want to make an exception for somebody who really doesn't need the exception for an animal that's really not a service animal. Right. Right. Because that's not fair to the other people who live in the building who think it's a no-pest building. Right. You know, what we're going to do now is we're going to take a break and then we'll come back and talk about a seminar that's happening this weekend. Okay? Cool. Okay. Thanks to our ThinkTech underwriters and grand tours. The Atherton Family Foundation. Carol Mun Lee and the Friends of ThinkTech. The Center for Microbial Oceanography Research and Education. Collateral Analytics. The Cook Foundation. Dwayne Kurisu. The Hawaii Community Foundation. The Hawaii Council of Associations of Abarbon Owners. Hawaii Energy. The Hawaii Energy Policy Forum. Hawaiian Electric Company. Integrated Security Technologies. Galen Ho of BAE Systems. Kamehameha Schools. MW Group. The Scheidler Family Foundation. The Sydney Stern Memorial Trust. Volo Foundation. Yuriko J. Sugimura. Thanks so much to you all. Thank you for joining us. Welcome back to this second section of Kano Insider. And I have with me today Raylene Tenno from Hawaii Association of Communities. Hawaii Council of Community Associations. And we're talking about the programs that the Hawaii Council does. Yes. And this weekend there's going to be a special board training. Yes, there is. And so what is it? And you know, the Hawaii Council is not the only one who does these board trainings. This is the board of directors of condominiums. Right? Because all of the management companies seem to be doing it. And CAI does it. And the council is doing it. It's not the first time. This is the second year. This is the second year. And we strictly only go through 514B. Which is the state statute. Correct. Relating to condominiums. Correct. And so why is this focus on board of director training? Because a lot of boards don't understand what their responsibilities are, their fiduciary duties. They don't understand what a conflict of interest is, which gets a lot of people into trouble. So for us to review what they need to be concentrating or doing as a board of director, that's going to be the focus of Saturday's event. And so how do you know that there are issues with these types of board members about conflicts of interest and fiduciary duty? I mean, how do you know that these things are happening? You just hear it talk about town, you know, you hear of instances that are happening with one condo and then, you know, someone tells you about another condo, this and that, you know. So it's really these boards, I mean, everybody needs to be trained on what they can and cannot do on a board. You know, you're handling a lot of money. Right. In fact, if you live in a condominium, everybody pays maintenance fees. Correct. Maintenance fees basically pay for something called a commonist, which means that everybody in the building kind of shares in it. Everybody gets an electrical, I mean, the condominium gets one electric bill. Yes. And some buildings have submetering. Yes. Right. So that you get a separate bill for what you use in electricity and that comes to you through the association and you pay it along with your maintenance fees. But I mean, that's something everybody pays. Yeah. And that's the advantage of living in a condo. You don't have to worry about cutting your grass, painting, you know. That's the advantage of living in a condo. It's all covered under your maintenance fees. But that maintenance fees, it gets used to pay the people, to cut the lawn, to paint the building. Yes. And to vacuum the hallways. Right. And to keep the common areas and everything. And in fact, right now in the newspapers, there's this dispute about some condominium in Waikiki, right, about the vacation rentals. Yeah. Yes. And that's been kind of like a bone of contention because a lot of condominiums have rules. Mm-hmm. Rules that limit, that say that you can't have short-term rentals. Right. It has to be 30 days or longer. 30 days or longer. And so if they have those types of rules, you can't do short-term rentals. And in fact, I think in this one condominium, the issue is using the association money to operate a front desk. Yes. That, yeah. That's just really opening up big, big, big can of worms. Not just for the association, but even for lenders. Right. And what you have is you have a board of directors who thinks, oh, well, we are the majority. And let's say this is a five-member board. And you've got three members on there who say, OK, we are all investor owners. And we want to do short-term rentals. And we don't give a rip about anybody else in the building. What's wrong with that picture? It's crazy wrong. I mean, you know, you may have the majority, but you're not following statute. You're not following your own governing documents. And as a board of director, you have to follow your governing documents, and you have to follow 514b and also sitting county ordinances. You know, so you can't, it's not the wild wild west. You can't do what you want. A lot of people get on board. Even if you're in the majority. Yeah, even if you're in the majority, you still have to comply with all the rules and regulations at every level. And the statute has very important rules about fiduciary duty. The fiduciary duty says that if you sit on the board, you can't have your own personal agenda. When you make a decision, you've got to take into account the wishes of everybody in the building. And that may include owner occupants who don't rent their units. And you have investor owners who have long-term tenants and they don't care about short-term rentals. But they pay maintenance fees just like anybody else. Right? And so you cannot say, okay, well, we're in the majority and so we can do whatever we want with this money. Yeah, and they forget that they have to follow the business judgment rule. So in a corporation, you're not going to have one rogue person just does whatever they want. You know, they still have to follow the rules and guidelines. And are there are consequences when people don't follow the rules? Oh, yeah. Major consequences. And what kind of consequences? You can have a lawsuit that can go after your D&O insurance and that is very painful, economically painful. Right. And there have been recent incidences of this. And I guess by the time you get sued, it's kind of too late. Yeah. You can't backtrack. You're already into it too deep. You can't backtrack. So it's going to proceed. And under the D&O insurance, because it's a contract, the insurance company has to defend you. But if it turns out that you breached a fiduciary duty and you used association money on something that wasn't deemed to be a common expense because it doesn't affect everybody in the building, right? Right. Then really that director could be made to pay out of their own pockets to reimburse the association for the money that they caused to be spent illegally. Right. And that has happened in the state of Hawaii. Many times. But the insurance company has to go in and defend you until it's determined. And usually when these lawsuits happen and a lot of board members don't understand that they will get a letter from the insurance company saying, we accept the tender and we will defend you under our reservation of rights. And people say, oh, they don't look at that. And they figure, OK, well, what's that? A reservation of rights means that, yes, we will defend you because contractually, because we are the insurance company. You paid the premium and you got sued. So we have to defend you until we find out that you really screwed up. And when we find out that you screwed up, we can walk away and you're on your own. Correct. And even if we have to defend you all the way through the lawsuit and you're found guilty, we don't have to pay. Correct. We only have to defend you. And so there's nothing in the contract that says we have to pay if you screw up. Right. A lot of board of directors just think they have D&O that they're covered no matter what action they do. But that's incorrect because of exactly what you said. Insurance will defend you, but then they'll come back after. You know, if you're really been your breach of fiduciary duty or you exhibited a lot of conflicts of interest, you didn't even do follow a business, a sound business judgment rule. I mean, they'll come after you. It'll hit you back. Right. And the reason why the insurance company has to defend you on the front end is because they really don't know. But then because they're defending you in the course of a lawsuit, there's something called discovery. Right. And they will look at the minutes and they will look at all the deposition transcripts and listen to what the board of directors say. And after a while, it will dawn on them that, oh dear, maybe these people did not follow the fiduciary duty, especially if the board members are deposed and they'll say, well, this is an issue where you didn't grant a reasonable accommodation. And this is a situation where you've got a board president who's a bully and you've got six or seven sheep who just say yes, sir, and follow along blindly. Right. And so when they're deposed, they'll say, well, how come you voted that way? And if their answer is, oh, because the president, he's my neighbor, and I vote, I always support it. That's a wrong answer for a board of directors. Right? You have to really vote your honest and truth. And it's okay to be against somebody because you still have your own beliefs. And you're required as a board of director to exercise your independent judgment. Correct. You can't just follow along and be a sheep because the board president decides they're going to... Because the board president could be dead wrong. Yes. And if you don't follow the business judgment rule and look into all of the facts and exercise... And the good thing about the business judgment rule is if you follow the business judgment rule and you get an expert opinion that tells you and you rely on that opinion in good faith, and it's wrong, you're protected. Right. And if it's a wrong decision and you get sued, the insurance company will pay in that situation because, you know, it's... You relied on expert opinion. And you did everything correct. Yes. So the fact that the decision was wrong doesn't mean that you're bad or that you're going to be liable. Right. So if you follow the rules and to make your decisions and it turns out to be wrong, you're covered. But if you don't follow the rules and you do whatever you want and you get sued, that's when you're exposed. You have consequences. Yeah. You have major consequences. Oh, okay. And even if... Let's say you're condominium. Let's say you have no claims. But other condominiums, you know, who don't get board training, end up doing these crazy things and they do whatever they want, they get sued. I mean, that's going to affect you, right? It's going to affect all of us. It comes out of... It's spread across the board to every single condo. Right. We're contributing to everybody else's mistakes. We're in the same liability group. Right. So if one other... And there was this other... There was this recent case in Maui, right? It was $2.9 million for a figure of the association to do a reasonable accommodation for somebody who was visually impaired. Yeah. Right? And the insurance company paid out and everybody in the state, their insurance went up. Right. Their D&O went up, their umbrella went up. And so this is why it's in everybody's best interest to make. So if you know somebody who's on a board, ask them, did you go through board training with your management company or with CAI or Hawaii Council and you need to get trained. True. And I know the subject comes up every year at the legislature as well. So trying to do it voluntarily, coming to do a board training is so... It's going to make your Saturdays so much... It's going to make your job easier once you leave that training. Right. Right now it's voluntary, but please don't wait until it gets mandatory. Right. Because the legislators have been threatening over the years to make it mandatory. Well anyway, we've come to the end of our session here. And so I want to thank all of you for joining us for another episode of Condo Insider. And I hope you'll join us next week where we have another program dealing with condo living. So Aloha and Mahalo.