SB 2878

THE SENATE
S.B. NO.
2878
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII
A BILL FOR AN ACT
relating
to fee transparency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
���� SECTION 1.� The purpose of this Act is to improve
transparency and fairness and prevent hidden or misleading charges, reduce
disputes, and ensure consumers have the information necessary to make informed
financial decisions by:
���� (1)� Establishing standards for transfer
fees assessed by a planned community association, condominium association, or
managing agent when a residential unit is sold or ownership is transferred; and
���� (2)� Requiring the disclosure of estimated
withholdings and pass-through charges expected to be collected at closing,
including but not limited to sewer fees and water fees.
���� SECTION
2.� Chapter 421J, Hawaii Revised
Statutes, is amended by adding a new section to be appropriately designated and
to read as follows:
���� "�421J-  � Restriction on transfer fees; disclosure
required.� (a)�
The association or managing agent may only charge transfer fees to
recover the reasonable and actual costs of administrative services directly
related to the sale or transfer of ownership of a unit.� All fees related to sale or transfer of
ownership shall have a clear and direct connection to
the services provided.
���� (b)� Flat transfer fees shall only be permitted if
they are a reasonable estimate of actual costs based on historical data.
���� (c)� Transfer fees that exceed $350 shall be
supported by documentation demonstrating the actual costs incurred to provide
the services.
���� (d)� No association or managing agent shall charge
a transfer fee that results in a profit, or for unrelated costs, or costs for
services not actually provided.
���� (e)� Any unspent transfer fees charged by an
association or managing agent shall be reimbursed to the owner no later than
ten days after the completion of the transfer.
���� (f)� Before the closing of any sale or transfer of
ownership of a unit, the association or managing agent shall provide the
seller, buyer, and the closing or escrow agent a written itemized disclosure of
any estimated withholdings, prorations, or pass-through charges expected to be
collected at closing, including but not limited to:
���� (1)� Sewer fees;
���� (2)� Water fees;
���� (3)� Utility charges;
���� (4)� Unpaid assessments; and
���� (5)� Other amounts required to satisfy
association-related obligations.
���� The
disclosure shall identify each category of withholding, the estimated amount,
and the basis for the estimate.� No
undisclosed withholding shall be collected at closing unless supported by
documentation demonstrating the actual cost incurred or the legal obligation
requiring the withholding."
���� SECTION
3.� Chapter 514B, Hawaii Revised
Statutes, is amended by adding a new section to be appropriately designated and
to read as follows:
���� "�514B-  � Restriction on transfer fees; disclosure
required.� (a)�
The association or managing agent may only charge transfer fees to
recover the reasonable and actual costs of administrative services directly
related to the sale or transfer of ownership of a unit.� All fees related to sale or transfer of
ownership shall have a clear and direct connection to
the services provided.
���� (b)� Flat transfer fees shall only be permitted if
they are a reasonable estimate of actual costs based on historical data.
���� (c)� Transfer fees that exceed $350 shall be
supported by documentation demonstrating the actual costs incurred to provide
the services.
���� (d)� No association or managing agent shall charge
a transfer fee that results in a profit, or for unrelated costs, or costs for
services not actually provided.
���� (e)� Any unspent transfer fees charged by an
association or managing agent shall be reimbursed to the owner no later than
ten days after the completion of the transfer.
���� (f)� Before the closing of any sale or transfer of
ownership of a unit, the association or managing agent shall provide the
seller, buyer, and the closing or escrow agent a written itemized disclosure of
any estimated withholdings, prorations, or pass-through charges expected to be
collected at closing, including but not limited to:
���� (1)� Sewer fees;
���� (2)� Water fees;
���� (3)� Utility charges;
���� (4)� Unpaid assessments; and
���� (5)� Other amounts required to satisfy
association-related obligations.
���� The
disclosure shall identify each category of withholding, the estimated amount,
and the basis for the estimate.� No
undisclosed withholding shall be collected at closing unless supported by
documentation demonstrating the actual cost incurred or the legal obligation
requiring the withholding."
���� SECTION
4.� This Act does not affect rights and
duties that matured, penalties that were incurred, and proceedings that were
begun before its effective date.
���� SECTION
5.� New statutory material is
underscored.
���� SECTION
6.� This Act shall take effect upon its
approval.
INTRODUCED BY:
_____________________________
Report Title:
Transfer Fees;
Transparency; Disclosure; Property Managers; Planned Community Associations;
Condominiums
Description:
Restricts
transfer fees relating to sale or transfer of ownership charged by condominium
associations and planned community associations.� Requires associations to disclose certain estimated
withholdings and pass-through charges.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.