 Aloha, welcome to Kondo Insider, Hawaii show about association living. Anyway, I'm Richard Emory, your co-host or your host today. You may have missed me in the last six or eight weeks. I was on vacation visiting the fires in Sydney and had some business obligations. But I'm glad to be back and all is well. Today's a very important day in Hawaii. It's January 23rd, 2020, the day of the cutoff for the bills for the 2020 legislature. And to date, we still haven't got all the records from today yet, but it looks like we have about 14 bills introduced that affect Kondo living. And I have as my co-host guest today, the wonderful Jane Sugimura. Welcome, Jane. Hi, Richard. Happy New Year. Happy New Year. It's Chinese New Year tomorrow. Right. So I'm going to a Chinese New Year celebration tomorrow. But anyway, the legislature, I know you and I have been looking at what we've seen so far. We don't have final opinions, but let's begin with a couple of the bills we see. One long needed Senate bill 2200 regarding the famous emotional support animals. What do you know about that? Yeah, that's a very interesting. And the reason it, you know, and Senator Sharon Morin-Walkie introduced it at our request, Hawaii Council's request, because we had, you know, a lot of concern about the people who, the licensed professionals who were writing the letters that were being given to board the directors for animals that were not, you know, the, what do you call it, the service animals, the emotional support animals. And so this bill basically says to the licensed professional, you need to actually see the person that you're writing the letter for. And you have to examine that person and make written findings that that person, you know, has a disability. And that the assistance animal that the letter is about is going to alleviate symptoms of that disability. And that disability is something that is covered by the Americans for Disability Act. And we think that, well, we hope that if this bill passes that, you know, the licensed professionals will be a lot more careful about writing these letters so that, you know, they, you know, so it doesn't result in somebody wanting a pet going to their, you know, neighborhood, family neighborhood doctor and saying, you know, here's this letter form. Can you just sign it without, you know, examining me and determining that I have a disability under ADA? Well, you know, the paper today had an article about the, I want to say the FAA on people bringing in service animals or emotional support animals on aircraft, and they're really tightening up the rules, you know, that make it only can be a dog. And number two, they again have to have their requisite forms completed showing that a licensed professional says they're in need of that animal and what disability that animal services. This has been a long time problem in a way. Yeah, you know, I think it's because, you know, people are, you know, just fed up with the abuses. I know in my building, I mean, we have, we have a bylaw amendment saying no pets. And I have people coming up to me all the time and saying, why do we have all these animals in the building? And why do some people have two and three animals? You know, they can't all be service animals. And, you know, so, but, you know, we get these letters and they're signed by a doctor or psychologist or licensed social worker. I mean, and it says what it says that the person has a disability and needs the animal. I mean, we really don't have any choice but to allow it to happen, allow them to have it. Otherwise, you know, the Hawaii Civil Rights Commission comes down on us. Nobody wants that. Well, the problem has been in the past that the Hawaii Civil Rights Commission has opposed this type of bill in the beginning saying it's a hardship on the disabled person. But then they'll feel embarrassed about having to go do this. And, you know, I think it's a time in our society that people have to rationalize and justify otherwise there's abuse. So, hopefully we'll get... Right. And, you know, and I've heard from, you know, from some disabled people that they really don't mind something like this because they're aware of the abuses and it makes it harder for them. I mean, the truly disabled people who really need to, you know, have the house rules or the regulations, you know, dealing with pets, modify so that they can have them. And so it just makes it harder for them. And so, you know, this bill, I think, is going to truly protect those people who really are disabled and are entitled under the federal law to have the house rules modified so that they can have this animal live with them and their units. Well, the other thing that I see in the list, I feel a lot of bills, so we're going to kind of touch on them lightly today and then come back in the next week or so and talk about each one in more details and the pros and the cons. But one of the ones I saw that was interesting was Senate Bill 2419, which basically says, makes violations of voting requirements for elections of a condominium association subject to the enforcement powers that a real estate commission. And I believe there's a companion house bill on this as well. I was looking at that. I was looking at that and I'm saying what kind of, I mean, it just makes it very vague. It's just what, I mean, it's violations of voting requirements. And I know, you know, we have, you know, over the years we've seen, you know, various complaints being made, you know, about improper proxies and maybe the ballots weren't counted correctly. But, you know, there are already provisions for holding the proxies and the ballots so that the people who are objecting to maybe the results can go and look at them. I hear from a very small group every year that the sky is falling, but I haven't seen it in practice. But House Bill 2165, not the companion bill, has related issues saying, requires the managing agents have come from dominiums to confirm the eligibility of candidates for board elections in the authority of proxy assignments. And I haven't looked at that closely yet, but first of all, a lot of condos don't have managing agents. What do they do? Yeah, and, you know, to me, I thought it was really vague. I mean, how do you determine whether somebody is eligible? I mean, is there an owner or an officer or director or a general partner of a partner that owns the entity? I mean, and Richard, you know, you work for SOCIAL, I mean, is there a process that happens when somebody, you know, says, you know, puts in a request to be considered for the board? And, you know, to me, I'm thinking once you put up the names, if they're not, you know, proper people, if they're not an owner, they're not part of a corporation or a general partner. All their owners are going to speak up real quickly. You know, they, you know, they're not shy about that. And if that happens, then, you know, they just, they should be removed from the ballot. All condominium managing agents have a list of owners and it basically matches the tax records on who the owners are. And from that, you take proxies in and you check off the list that, yeah, they're an owner and they look to see if they're signed and meet the statutory requirements and proxies are issued and people are nominated who are owners, right, of the association. And there are times that people have tried to be nominated who aren't owners on the list and managing agents typically don't allow them to be nominated. So I'm not sure what the rub is here. It certainly isn't a widespread problem, but it seems that people are trying to infer that managing agents are not being diligent with regard to conducting an election and who's able to vote and who's able to be nominated. And I just don't think that's the case. And I haven't seen anything in the past to show that's a widespread problem in a way. Yeah, I haven't seen it as a problem either. But you know, why don't we see what comes up in the testimony? Because that usually kind of ferrets out what the real issues are or where exactly, you know, what area is affected. Because usually they're the ones who will come and testify. And you figure out, oh, okay, that, you know, affects these people. And then you can, you know, people, you know, you can make the adjustment in a bill. Yeah, Noe, not to ever argue with you. But when we say the real issues, it's their perception of the real issues because there just is no evidence of this widespread problem. And so someone's trying to make an issue. But another two bills, Senate bills, introduced by our Senator Baker, one of our really conscientious senators in the legislature, has to do with appealing the sunset provisions of Act 195 and Act 196. Can you explain what that means? Yeah, 195 was the priority of payments bill. And, you know, this is very controversial because, you know, if you weren't, if the property managers and the condominium associations weren't diligent, I mean, you know, the priority of payments process led to some abuse. And, you know, a priority of payments means that, you know, if you miss the payment and if you're on sure pay for some reason, if you miss the payment or made it late, let's say you, because the sure pay comes on your bank account and you didn't have the money there and somehow it didn't get paid and by the time you got the money in it was late. Anyway, you incurred a late charge and because it's automatic, and if the property management company doesn't tell you that it was late and you're going to be assessed a late charge, you don't know because owners don't get monthly statements. At least most associations don't get monthly, they don't have monthly statements. And so, you know, the owners don't usually find out until you have, you know, late charges and attorney fees and whatnot and it may be several hundreds or thousands of dollars. And this created, you know, some, you know, bad feelings between boards and owners sometimes that were foreclosure. And so there was a bill to delete the priority of payments in the condo statute. And that doesn't mean that the associations can't collect late charges. It just means that, you know, it doesn't go to the top of the list so that when the next month's maintenance fee becomes due, it doesn't get applied to the late charge first so that you're always late. What was Act 196? 196 was one that introduced binding, voluntary binding arbitration and it expanded the mediation statute to add other people because before it was just the owners and the board and now, you know, board members can, you know, who have disputes against each other and the managing agents. You know, they are now additional parties and there are additional, some other changes regarding the mediation where if you ask for mediation, evide a mediation and you don't get it, then you can file a motion to compel and recover up to $1,500 in legal fees for that effort. And I think the subset provisions in both acts were put into the bills in conference. So the sunsets weren't, you know, part of the public debate process and I think they were put in because, you know, the legislators were concerned that there might be abuse and, you know, for both of them, they've been in effect for a year now. There has been no abuse and, you know, I think it's a good thing that the sunsets are going away. I agree because we're basically saying the sunset is, both these are already laws, Act 195, 196, but they expire at the end of this year or sometime I think this year or next. And what does move? The priority payment sunset is June 30th of this year, 2020. And so what this does basically is eliminate the sunset so it continues on. So on that note, we're going to take a short one minute break and we'll come back and discuss a few more of the bills that have been introduced that will be debating over the next couple of months. We'll be right back in a minute. Aloha. 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Welcome back to Condo Insider with Jane Sugimura talking about the legislature and what bills we expect to talk about in 2020. I should say that we are by any of them as far as the legislature. There's a lot of old bills from last year that technically are still alive. They didn't get a hearing last year that we're not talking about. So there's a bunch of those out there above the 14 I mentioned. But there was an interest in one Senate bill 2007 which basically requires a property manager of a cooperative or co-op, a plan community association or condo to be certified in property management by a national recognized body. Yeah, that's very interesting. Yeah, what was the reason for that? And I note that according to the notes on this bill, Carl Rhodes, Senator Carl Rhodes, introduced it by request. That means somebody asked him to introduce this bill and he did so. I saw, you know, it's hard to, do you have any reason why this bill is being submitted? You know, in the past, we've had introductions to make all property managers be a real estate broker which makes no sense because we don't buy or sell real estate and the education is different for a community association manager we caught. And then you deal with the issues. There's lots of associations that don't retain a managing agent and have community association managers. Then you look at the fact in condo world, you have commercial condos, spatial condos, parking condos, assisted living condos, senior living condos. There's different training and skill sets required for that type of association. I don't know what the issue is here because we have projects that are self-managed, but industry managers now are certainly going through training through various trade organizations. They don't call them certified in property management. Certainly it's the wrong terminology. But we'll have to see what is on the shakes because again, it seems to me where people are misunderstanding that a community association manager, co-property manager, is making the decisions. The board is making the decisions. And not only that, the manager can't practice law. So I'm not sure what's driving this, but it's certainly not appropriately worded in my opinion to address any relative issue in this. Along that vein, there's something on your list that we might want to talk about, and I know that it's being drafted. And that's a resolution, which is one of the last items on your list. And that's a resolution that calls for a task force to be set up to come back with recommendations to the next legislature in 2021 with legislation that would mandate that all condominium board members be educated and certified. And the reason for that is so that the board, and that goes along with all of these bills that want the property managers to be certified and licensed and whatnot, because a lot of unit owners believe that somebody needs to be responsible. And if there is a law that says that board members have to do shared duties and shouldn't get involved in conflicts of interest, shouldn't do selective enforcement, and when you talk to some board members, they don't even know what you're talking about. And the legislators have been asking for this for a long time to mandate education of board members and certify them. So if they serve on a board, I mean, they have to be certified. And one of the things that a task force that are going to consider is use of the condominium ed fund to require the real estate commission to use the procurement system and hire a vendor to come up with a program to do webinars and certify board members. And the task force is going to be made up of stakeholders, plus the DCCA and the real estate commission and stakeholders would be Hawaii Council, CAI, COCO, the property management companies that are in town, maybe some people from ARM, but people who are in the industry, and they should be part of this task force to give their input on what the legislation is going to look like. And one of the suggestions that I'm going to make is that the DCCA actually come up with a curriculum and all the stakeholders should be involved in that as well. Come up with a curriculum that the vendors are going to be using in their webinars. And people and all the property management companies, they do training. And if they can apply to the DCCA and say, okay, give us the curriculum, we're going to do the training, we'll take your point. And then that way, CAI, Hawaii Council, all the property management companies who already do training, right? We follow the DCCA real estate commission's curriculum and we can certify. So we have all these people certifying and educating board members. And what hopefully will happen is that board members can no longer say they don't know what a fiduciary duty is. They understand conflict of interest and the obligations of a board member so that to at least maybe minimize some of the concerns made by the unit owners to the legislature. And there was this case recently in Maui that I think we had, what's his name? The attorney on Conor and Sider. The Maui one. Terry, you ever hear? Eric Ferrer. Eric Ferrer, right? Yeah. And in that case, the board members are named individually, but the judge, because he said, oh, these people are unpaid volunteers and I'm not going to hold them liable. The insurance company ended up paying for it and then the cost of that settlement that's spread around to all the condominiums in the state because I know my insurance went up, my association insurance went up, my umbrella insurance went up and I talked to Susabio, she says, that's what happened. So that Maui case happened and the insurance company had to pay, guess who had to chip in and pay off the insurance companies. So hopefully this will minimize these types of events and with board members who are educated and maybe they're not going to be experts, at least they're going to know. And there's going to be a record because everybody who's certified is going to be, their name is going to be submitted to the DCCA and they cannot say that they didn't know and hopefully this will affect insurance premiums, it will affect the amount of claims that are made in the state of Hawaii and so that's on the table for next year, but the resolution is supposed to be introduced this year. I'm all for the task force because then they can deal with, the two unit condominium have to do this. Then they can deal with the issue, well the biggest problem is, you know CAI does seminars, you do seminars through HCCA, condominium council Maui does seminars, we do condo insider every week, there's newsletters, the real estate commission puts that information. The problem is either no one reads it or they don't go to the seminars. This is a volunteer job. But you have a mandatory system where if everybody who serves on a board, if they don't get the certification, they can't serve and hopefully that will weed out the people who are causing the problems because we all know, that board in Eric Ferrer's case, they didn't have a clue. They didn't have a clue about fiduciary duty, they didn't have a clue about reasonable accommodation. That was a travesty and if they had known or they had people who knew what the law was, then maybe they wouldn't have ended up in the lawsuit and we wouldn't have had a $2.9 million judgment entered against an association. I think my point is as follows, that education is good but it needs to be the basic responsibilities. You don't need to train the board to be property managers. Then nobody wants to go because it's going to become too difficult. Then you need to have education online so it's easy for people to do so the people will take this volunteer job. You're not going to solve everything by thinking you can mandate a law and fix it. I'm all for the resolution and the task force but it's not such a simple issue and I think the task force will set it up. This way I think what we're saying is that they can be held accountable because now when they get sued or when claims are made they can't say, oh, we didn't know. Like, you know, like that I think there's an Eric Ferrer situation, you know, really showed what could happen in the worst case analysis. You had a board president who was a bully and he had eight sheets who just filed the board president because he was a board president which was the wrong thing to do and I think, you know, at a very minimum they had to take the webinar and participate in the training they're going to know that this is a no-no and they shouldn't do it and I think that's the whole point of mandatory education and certification is to let them know that there are certain things they're not supposed to do and if they engage in doing it there are consequences. It's interesting, Senate Bill 2871 basically talks about giving in our case the real estate commission authority not to collect money these biannual registration fees if the commission determines they think there's already enough money in it. If you look at our fund today I don't know the exact number but I'm going to say there's about $2 million in our real estate education fund that could be used for education and I would give the real estate commission credit that they do some education it helps subsidize some seminars but the amount of money we're charging we're collecting money much faster than we're spending it we ought to look at this resolution to see what we can do to improve education. I'm all afraid of that. That's why we're going to be meeting with the executive director of the real estate commission to tell them he's got all his money and right now there's a moratorium they have too much money and Representative Takashi Ono's committee I think had hearings last year and they made a decision that there's a moratorium on payments to be made to the Colombian education fund because they had too much money and they're not spending it. I'm going to wrap this up now to the end of the show we're going to have lots more conversation in the coming weeks on bills that survive and don't survive as always I love working with you on this show I love the educational opportunities for our association boards and management companies and others out there so I want to thank you for working with me today on this I look forward to looking at the final list of bills having a couple of glasses of wine and then maybe having a couple more glasses of wine but anyway thank you for being on the show and we'll see you all on condo insider tune in next Thursday three o'clock aloha