Think of your community association as a small town that offers services to owners and residents. Owners become members when they purchase their unit and have obligations to the association. Leaders are elected to govern on issues in the best interests of the members, collect assessments, and maintain shared spaces. Association officials are tasked with managing the property and must be fiscally responsible with fees collected from members.
All associations have similar documents and requirements to follow and it is a best practice for owners to be aware of such documents and policies for their association. Board members need to have a deeper understanding of their association documents should disputes arise.
Types of community associations in Hawaii
There are three types of community associations in the State of Hawaii—Condominiums, Planned Communities, and Cooperatives. Each one has various levels of services and expectations. The Hawaii Department of Commerce and Consumer Affairs Real Estate Division explains differences between the types of associations:
Regulations for Condominiums fall under Hawaii Revised Statute (HRS) Chapter 514B, Condominiums. However, they may be incorporated under Chapter 414D, Hawaii Nonprofit Corporation Act.
In addition to their individual units, owners own all communal areas of the association based on their Percent of Common Interest (PCI). The unit PCI, as stated in the association’s Declaration, is typically based on square footage, but can be whatever the developer wants it to be. An owner’s stated PCI dictates the owner’s share of association expenses.
Not all owners have the same PCI. For instance, an owner with a PCI of 1.374%, can’t simply stake out an equivalent area of common space and call it his. Rather, it means the owner is responsible to pay to maintain 1.374% of that area.
Master Associations, which is a Planned Community, can also have a sub-association. Condominiums can fall under such a structure. Owners in a sub-association pay maintenance fees to the condominium association and community dues to the master association and must follow both associations’ documents. Owners in these communities need to be aware of both association’s process. So, owners requesting unit modifications must get approvals from both the sub-association and master association. If you are unsure of the process and specifications, contact the association manager for more information.
- Planned Communities
In Hawaii, Planned Communities fall under HRS Chapter 541J, Planned Community Associations regulations, and like condominiums, may also be incorporated under HRS Chapter 414D, Hawaii Nonprofit Corporation Act.
In Planned Communities, the association owns all communal areas, while owners only own their unit and have one vote in association matters. Dues depend on what association documents specify, but in most cases, every owner pays the same amount.
Planned Communities can also be a sub-association in a Master Association and can fall under a structure like Condominiums. Owners in a Planned Communities sub-association pay maintenance fees to the condominium association and community dues to the master association and must follow both associations’ documents. Owners in these communities need to be aware of both association’s process. So, owners requesting unit modifications must get approvals from both the sub-association and master association. If you are unsure of the process and specifications, contact the association manager for more information.
HRS 421I, Cooperative Housing Corporations regulate Chapter Cooperatives, along with HRS Chapter 414, Hawaii Business Corporation Act.
In a Cooperative, owners purchase a stock which allows each tenant shareholder to occupy a unit for dwelling purposes only. They do not own their unit. The cooperative owns the association. If the association’s documents allow it, the board could interview prospective owners and tenants and deny them permission to purchase or move in. However, the denial cannot violate Fair Housing Act provisions.
Whichever association you consider, it should meet your personal situation and it is important you understand the association requirements and owner responsibilities.