Legislature seeks to clarify the lawmakers’ intent when it comes to foreclosures by condo associations.
Originally reported by CivilBeat.org
Bill SB 55, before the Hawai'i State Legislature, would add provisions to laws governing foreclosures and condos in Hawaii that say Homeowner Associations don’t need to have a clause in their bylaws since foreclosure power is already granted by the state.
The measures argument is whether a condo association should be required to state that they have the power to conduct nonjudicial foreclosures in their governing documents, the practice of allowing homeowner associations to initiate foreclosures to collect liens for maintenance fees in order to avoid a presumably lengthy court process.
Opponents decry that lawmakers never intended to give homeowner associations authority to conduct nonjudicial foreclosures and ICA judges, last year, ruled power of foreclosure MUST be written into the associations by-laws. There is a class-action suit claiming that Associations were not intended to have the power of nonjudicial foreclosure, only a seat in the resoulution process.
Proponents of the measure say the power of nonjudicial foreclosure is needed to collect unpaid fees from delinquent owners. Otherwise, the unpaid fees that typically go to common expenses would need to be picked up by other residents.
Lawmakers, however, state in the preamble of SB 551 that it was indeed the Legislature’s intent to give associations the power to foreclose. They noted a 1999 committee report on a bill that granted that power.
One of the measures proposed intends that if an owner requests mediation within 30 days after a notice of intent to foreclose, the association would not be able to immediately pursue nonjudicial foreclosure. If the mediation wasn’t completed within 60 days after that, then the foreclosure could proceed.