 Welcome to the condo insider show. I'm your host today Cheryl Franklin and today we will have a unique show one where we discuss a few marginalized associations where boards behave poorly. Unfortunately it does happen. As our guest today we have Capono Kiyakona an attorney who has seen it all. Capona will share with us the good the bad and the ugly. Regular show co-host if you will. Krista Stadler will also bring it to play the importance of associations treating tenants respectfully. I'd like to welcome back my friend Krista and introduce my other friend Capono. Welcome Capono. Let's start with you sharing with us a little bit about yourself. Well I started practicing I graduated law school in 2001. I clerked for a year and I started practicing in condo work as a insurance defense counsel. I did that for a few years represented some boards and then for the last say 13 years or so I've been exclusively focused on condominiums. Didn't know that about you. I know. As your friend what's with the new look you have going there. So this is a Halloween thing that my family we dress up for Halloween together. Oh you take it to a whole new level. It's past Halloween buddy. It is. So we do just just my wife my two kids. So this year we decided on a theme but before that sometime in June this is not an immediate growth. So sometime in June I told my wife I said look I'm gonna grow out of beard because if you decide on the theme in September. I can't have a time. Yeah I can. So I grew it out and so what we did is we are DC superheroes. So my son is Nightwings. If you're a Batman fan. Yes. The original Robin. I admitted that. Yes. The original Robin Dick Grayson became Nightwings. So that's who he is. My daughter is Flash. Nice. My wife not really a superhero. She's Catwoman. That's good. Yeah that's good. And then I went dressed as Aquaman. So I grew out the beard. Yeah. The hair has been long. Yeah. Okay now I get it. They look just like Jason Momoa. Thank you for lying to me. That's pretty cool. So you have a picture to share. Well and that's the other aspect of it. What we do is our Christmas photos we do in costume as well. Oh that's a cute idea. Because normally you buy a Halloween costume you use it once. Right. At least we get two choices out of it. That's kind of cool. It's pretty cool. Yeah. So it's a nice idea. To steal that idea from you. I think everyone should do at least something fun for their Christmas photos. Yeah. It's silly year. Yeah. Whatever it is. So next year if I see you with a shaved head or something I'll know it's for Halloween. All right. Or it just got hot. It's fun. It's fun. Well I wanted to bring up why are we talking about the good the bad and the ugly. What has prompted us to have this discussion. And as a majority of you may have seen on Hawaii News Now on November 9th there was a story regarding a woman in Kailua Kona that had been charged basically a million dollars for her conduct in an association managed complex. So maybe you know a little bit more about the details. Just what I gathered from the news. So I've read the articles on it and I've seen the photos and what you see in the video and what you see is someone who is acting as a menace to her owners. To her fellow residents. Yes. And so that's a tough scenario and one which according to what I've read had been going on for many years. Years even. Yeah. Wow. So that's why it became such a large verdict against her. Yes. Wow. A million dollars. That's that's that'll hurt. That'll discourage that behavior. That will. Yeah. That tends to help. Yeah. So I'm sure you've seen a lot of unique and bad behavior. So let's just start. Let's start with a few examples and talk about that and the consequences of the expensive consequences of bad behavior. And I'd like to just before you jump in just kind of you know just speak to the fact that most 90 percent of boards behave according to best practices. Would you agree. It's only like a small. Yes. You would agree. Absolutely. I'd be way busier otherwise. Yes. Good. Most boards listen to their property manager. They listen to their attorneys and they follow along and do what they're supposed to do. Some don't. Yeah. You know what I've what I've realized and what what those out in the community either know or should know is that there is a small percentage of board members who have gotten on the board with an axe to grind. They have an agenda. They have their agenda and they stick to it and they forget that as a board member you have this fiduciary duty. Right. Your duty is to protect the values of the association. It is to put the needs of the association above your needs when you're making decisions on the board. Now when you're living your life that's different. Yeah. Take the emotion out of that. Yes. Absolutely. So what you see sometimes and there's there's a whole laundry list of different things that happen. One of the more egregious things is you'll you'll see self dealing or board members. So what they'll do is they'll vote on things that they have a personal financial state or something that will benefit their family. One scenario is I know of a board where the board president was running things and awarded a contract to one of his children to work on design aspects or managing contracts for the association. That's a big conflict of interest. Yeah. That's a huge conflict of interest. Yeah. I know of another board where they switched their insurance agent to a family member who happened to be an insurance agent but their focus was maritime I believe maritime insurance. And then as you guys know. Yeah. Condom insurance is a very specialized area. You know there's there's just a few people that do it and those that do it know exactly what they need to do. And so with that one they got into a lot of trouble. They didn't have the right kind of coverage. Sure. Serious issue. And it's bad for the association. I've seen others where they have hired a spouse as the GM for the property. I've seen that. I've seen that. Now that works if your spouse if you want if you're not voting on it and two if your spouse has prior experience as a GM then that's fine you say look I'm not going to vote. I'm going to leave this up. I will disclose this is my spouse but please note these are the the qualifications they have and by all means have other people that you are considering. Yeah. Yeah. Yeah. That's the proper way to do it. I've seen it where it's kind of I think the the board president I'm speaking from experience kind of intimidates the other board members and they feel obligated to vote his way even if he loses himself but that's that's bad behavior as well. That is that is absolutely and that's one of the bigger problems you see is often with board presidents when these things go off the rails what happens is is the board president has either bullied their way into getting everyone to go their way or the other board members have abdicated their responsibility just easier to let one person make the decision it's easier to just push it off and they forget and say look this is a decision for the board it's not just a rubber stamp what the board president has done right and what percentage so let's say 90 percent are doing fine and there's the 10 percent I think it's a higher percentage that are doing fine I would be way busier if you're right. Let's just say the percentage that are having issues in that they come they come to you of that group what percentage do you find it's it's basically either because they weren't educated on the right way to do XYZ or maybe a contract they didn't have reviewed prior they kind of stumbled into this problem not on purpose and then the others that were more you know straightforward like what you just mentioned do you find more of them or the ones that gosh if they had just had an attorney look this over or known about these particular laws or things that they needed to refer back to their declarations on before acting. I think it's kind of it's an even toss up it is because what you have is people like the the route of the lease resistance they left to go that way the other aspect and this comes up in the context of boards not doing what they need to do is often they are brought on under the auspices of saying well I will save the association money yeah right that's that's the big push so they're making decisions premised on that saying well I'll keep maintenance fees down thereby ignoring the fact that your job is to preserve the asset and sometimes preserving the asset costs money right it's a balance on that it always yeah it always it always costs money and it is a balance but the the things that we've seen some of the worst things we've seen and I'm I'm sure you can speak to this is there's the push between the board and sometimes the management company saying well we can underfund this aspect of the reserves because we believe that this has a life of 25 years yeah even though it's already been 15 years and it's got a 30 year life right I've I've seen that more often than I'd like to admit under the guys of like you said keeping maintenance fees low and boards are not construction experts they're not experts at all really that's why it's important to invite contractors and project managers to educate the boards because if their premise is to keep maintenance fees low and it's time to paint the building and they're like oh it looks fine I think we can push that off another five years and like you said it's been 15 and then there are spalling issues that present a liability I can think of one example I think it was in like he where there was spalling falling from the lanai and thankfully in this case that I remember it didn't hurt anyone but then when we looked under the hood it had been like at least 20 years before they painted and treated the spalling so that's that's a huge liability for the association under the guys of keeping maintenance fees low and kicking the can down the road and that's exactly what they're doing they're kicking the can down the road the problem is is and I'm sure you can give me better numbers on it but you tend to see this when they refuse to raise it any percentage point you know I think it's safe to say 3% a year that's just that's general cost of living that's what you should raise it when they don't do that they get mad these boards that refuse to raise it they get mad when and I'm sure you deal with this more than anyone they get mad when you come back and say hey we've got to raise this 8% this these next three years yeah yeah we've had to do that and in some cases we've had to raise them 50% even 100% and some boards think oh we'll just get a loan you're that's against the law as well you can't fund under the guys of we'll get a loan or under fund thinking you'll get a loan later and assuming you can qualify for it but this is a good place for a break we're going to take a quick break and continue the conversation so please come back and join us thank you hello I'm Mufi Hanuman I want to tell you about a great show that appears on Think Tech Hawaii it's all about tourism in fact we call it tourism 101 where we talk about the issues and challenges that faces our number one industry throughout the state we'll have some interesting guests very informative dialogue and allow you an opportunity to maybe learn a little bit more about why this industry is so important for our state it's been great for us in the past we need it today and especially going forward that's tourism 101 on Think Tech Hawaii Mahalo aloha my name is Mark Shklav I am the host of Think Tech Hawaii's law across the sea program my program airs every other Monday at one o'clock on Think Tech Hawaii most of my programs deal with my own life and law experience recently I interviewed Alex Gempel who I have known for over 30 years about his voyage across the sea as a lawyer from Tokyo to Hawaii those are the type of stories that I like to bring and like to talk about human stories about law and life aloha welcome back and thank you for joining us we're just going to continue our conversation on bad behavior the good the bad and the ugly and I think the conversation lends itself to not just um I don't want to use the word malfeasance but just in bad behavior as it pertains to managing the association we also have to think about tenants because many of our boards or associations are maybe a percentage is owner occupied so we have a bunch of tenants that are actually sometimes mistreated and you can speak to that better than anybody it typically happens where there's a higher majority of owner occupied properties and then you'll get in like a six plex you'll get one tenant and everybody knows that that's a rental unit and so they're just scrutinized heavily my situation was I was actually I've pretty much owned my own home most of my life but sometimes you have periods in between where you've sold and you haven't purchased and I was a tenant in a very nice housing development and it was like the rental house you know we're talking nice homes but there was a shared driveway and it was it was almost like everyone else is living their life but one little step off and they're just on you on you so you're you're not being treated as as everyone else would for example I'll give you an example my dog got loose well the people across the street who've owned their house and lived there for years his dogs had gotten loose many times and ended up in my yard and I'd walk them back over my dog got out once and I'm getting letters from the boy yeah so those are the kind of things where there's a difference between how a tenant's being treated and do you see things come across your desk like that yeah that's absolutely the the issue of selective enforcement is huge yeah that's that's a big problem so you'll see it sometimes against tenants uh the the the really hard one is when you have a board member who's having an issue with a neighbor personal a personal issue and they bring it up at the board meeting all the time and saying we have to do this and we always have to counsel our boards to say if neither of these people had any connection to the board what would you do it doesn't matter how loud this board member squawks what matters is are you treating this person as if well let's say as if the the person that's being complained against was on the board versus the board member complaining um that's always my go-to with boards when they say look this person's terrible they're doing this they're doing that and I say respectfully let's assume they're terrible what would you do if they were your best friend in this situation what if this was your friend would you do the citation if you would great probably have a discussion which wouldn't that just be great communication in your life yeah but you know that people tend to say I don't like this I've put them in this box where I don't like yeah so let's find them yeah and those fines can get excessive I'm saying that as well and I've seen fines that were what you call selective selective enforcement to the point where the association was on a mission to evict if you will so just going through the process they wanted to make sure that they had cited them enough reasonable or not selective or not because at some point you can if you get so many citations you can file a motion via the attorney to evict and that's unfortunate as well if you know when it's unreasonable on the rental side when we're managing a property that's in a complex and there we like to have a lot of communication with the resident managers and whoever the association management company is so that we'll get that first notice that there's an issue happening and then we in our management or lease agreement with the tenant states that they have to follow all house rules any fines that are incurred even though it's assessed to the owner they'll be responsible for paying typically a warning comes in first so it comes to us even though they may get a letter on their door from the resident manager it comes to us and then we give them another friendly reminder that the next one's going to be you know some kind of financial amount that they're going to have to pay any fines so it just helps kind of get them from both sides and it allows us to be aware that there's a concern yeah which we need to be yeah definitely and it allows you the opportunity to see if it's a valid concern as well if these this association is targeting the tenant if you will which will lend itself to a whole different type of potential liability if you will yeah how about this influx in the last probably I'd say five years of people coming along and going online and buying these certificates from so-called you know doctors or medical groups that they have to take a little survey answer a few questions and then they get a letter that says that they are being prescribed an animal cat dog whatever it might be are you seeing a lot of legal issues coming across or just related to that you see a lot that come up as a board what you want to do is you want to understand that each of these needs to be a case by case basis it's it's not the blanket rule you have a blanket rule of we make a determination but that determination needs to be actively reviewed but in the case of service yeah but okay so can I share with you something that we're doing okay because this has just been such an issue and we go to the you know our property managers rental managers in general every April is fair housing and we go to these workshops with the folks from HUD and fair housing and civil rights and they have informed us because we've brought this up every year that we are allowed and they provided us a form to not accept the letter but to require that that our form which they've approved is sent to the care provider it has to be in the state of Hawaii and that they complete it but it also has a caveat stating you know that under perjury they are confirming that they have evaluated this person you know basically their license could be in jeopardy if even if it's a nurse or a counselor if they aren't making a true statement and then on top of that so but we have to be consistent we can't look at each case individually we have to basically say we are treating every single one the same because if otherwise we could be favoring one or the other right well I what I want us to be clear on is if you are making a determination of no we're not going to accept that or we're not going to accept an assistance animal you need to have reviewed this on a case in terms of allowing people to can they do that under the current law they can it's the limitations I think to be clear you're talking about when you can place reasonable restrictions on it now it's you can't say no assistance animal ever that would be foolish right don't do that so if that's what you heard me say that is not correct that is not correct yeah but you can place reasonable restrictions on it right and clearly no animals in the pool right yeah typically right unless there's some reason for an exception and someone asked for that exception but you know if a blind person falls in and they're seeing idols and rescues them let them rescue and probably assist exactly exactly so so in that context but what you're talking about in having the that's the pre the pre-screening portion yeah the pre-screening portion absolutely I believe the Hoy Civil Rights Commission may even have a pre-approved form on their website and that may be the one that we're using because they did provide it yes the other thing from the rental standpoint and um actually shared it in a workshop that we went to this morning another thing that we do is similar to what you're talking about basically if it's a pet we have something called a pet addendum a true pet not a comfort or service or assistance animal but a pet these are all the things you have to do and abide by keeping them on their leash and having their shots up to date and you know doing pet treatment at the end okay that's pet with a assistance animal we and this was also approved by those groups that I mentioned earlier we have an amendment to the lease that they sign which is a reasonable accommodation they have to follow all house rules just like you said you know defecating in the elevator whatever it might be um and they have to sign it if they did if they are going to have that animal through us so because they still can't go in and rip the place apart you can't ask for an additional deposit but right right and and what you just explained is a great thing for people to remember assistance assistance animals are not they are not determined to be pets so you want to have your policy clearly established that and for your board to understand that and too often they throw out the term saying this is a pet well no it's an assistance animal it's a prescription basically yes and and the civil rights commission has been clear on that and you don't want to go up against the civil rights commission oh sure on this issue unless you're on solid ground because they are judge jury and executioner and they will err on the side of protecting the homeowner or the tenant yeah and it's clear um you know so for boards the thing to remember is and this this falls into the making rules against certain owners if if pets and animals are allowed under your project docs under your bylaws your ccnr's whatever you can't make a house rule that says no pets right yeah and I shouldn't have to say that but you do but I do right no one should have to see that but but you have to remind them you say you can't make house rules that go against what your governing documents require right that's why you should be busy reviewing those rules prior to them being you know publicized to the ownership always always you should always have your attorney review your house rules to make sure there are no conflicts with your doc against your documents right I mean just just as a as a simple example if your documents say no children in the pool generally you're going to rephrase that because that's a fair housing issue it's an age related issue yeah and it's a familial status yeah see there are things we just don't think about and there are lots still out there that do probably need to be revised yeah I would imagine yeah how many associations do you represent um my firm currently represents about 350 associations all here all in Oahu Oahu big island all the major islands wow I don't know that we have anything on mola okay yeah are there even any associations there I don't I think there are yeah yeah oh well that should keep you pretty busy well I have more questions but I think we're running out of time so you know what that means we're gonna do this again we're gonna have that we're gonna do this again I was gonna say we're gonna dance again in 2020 so we're gonna have beer with us next time um we'll have to ask the producers that's okay we'll check on that but they'll have to be in a plastic bottle I'm gonna say probably not after after I got you all right so once again thank you for joining us and please continue to tune in as we share more tidbits and information and education on condo and association living thank you for joining us and we'll see you next time aloha