Three years on, Lahaina's destroyed condos are still short the money to rebuild
Three years on, Lahaina's destroyed condos are still short the money to rebuild
2026-09-10 · Hawaii · Compliance · Reported — unconfirmed
Three years after the August 2023 Lahaina fire, condominium owners whose buildings burned are still assembling the money to replace them, and at one 189-unit association the insurance is reported to cover roughly twenty per cent of the need.1
The reported numbers
At Aina Nalu — 189 units in two hotel-zoned buildings — the rebuild is estimated at over $200 million against insurance covering about a fifth of it. The association’s president described being in discussions to improve coverage when the fire came, and summarised it as timing: they were mid-conversation when the loss arrived.
At Spinnaker, a long-term resident community, the picture is better — the association was more fully insured and plans to rebuild on the same footprint with modern upgrades — but design work is still under way, the final gap is not fixed, and permitting delays are producing friction among owners.
No government assistance programme is available to condominium owners in this position. The separate $4 billion global wildfire settlement is expected to add funds, with first payments reported around July–August 2026 and a multi-year distribution ahead.2
The distinction this makes visible
Hawaii requires an association to carry property insurance under HRS § 514B-143. Compliance with that section is not a statement about whether the proceeds will rebuild the building. Those are two different questions, and only the first one is a legal duty.
Where the gap comes from
Three mechanisms, and they compound.
Valuation drift. A limit set when the building was last appraised is a limit set at yesterday’s construction costs. Hawaii construction costs have not moved gently, and an association that reviews its limit on renewal without re-running a replacement-cost estimate is renewing a number, not a coverage position.
Policy form. A stated-limit or actual-cash-value form pays what it says or what the property was worth depreciated — not what replacement costs. That distinction is invisible on the declarations page to anyone not looking for it, and it is the single most consequential line in an association’s policy.
Code upgrade. A 1970s building rebuilt in 2026 is rebuilt to 2026 codes. Ordinance-or-law coverage is what pays that difference, and it is routinely carried at a fraction of what a total loss of an older building requires.
What the statute leaves a stalled association
When the proceeds do not reach the rebuild, chapter 514B offers two levers and neither is comfortable.
Assess the difference. The assessment machinery in HRS § 514B-148 is available, and on a $200 million shortfall spread over 189 units the arithmetic is the story: this is a per-unit number in the high six figures. It is not a realistic path for a mixed-income ownership.
Or leave the chapter. HRS § 514B-47 permits removal from condominium status where owners of eighty per cent of the units and all lienholders consent, and separately allows a unit owner or lienor to petition for partition and court-ordered sale where substantial damage or destruction “has not been rebuilt, repaired, or restored within a reasonable time.”
Every mortgagee holding a lien on a burned unit is therefore a party to the first route. That is the practical reason total-loss associations move slowly: the consent list is longer than the owner list.
The settlement money, and whose it is
A question boards in this position should get answered early rather than late: does a settlement recovery run to the association or to individual owners? The answer turns on who held the claim — damage to common elements is the association’s, damage to a unit is the owner’s — and on how the settlement is structured. An association that assumes proceeds will arrive at the association is making a planning assumption, not a legal finding.
The pre-loss lesson, which is the only actionable one
Every lever above is worse than the one before it, and all of them are post-loss. The only high-value moves are pre-loss, and they are ordinary:
- a current replacement-cost valuation, re-run rather than escalated by a factor;
- a policy form check — replacement cost, and what the co-insurance clause does if the valuation is short;
- ordinance-or-law limits sized to the age of the building, not to a default; and
- a documented board decision when coverage is knowingly bought short, so the owners who bear it were told.
What to watch
The settlement distribution timetable, which is multi-year; whether any Lahaina association reaches the eighty-per-cent-plus-lienholders threshold under § 514B-47; and whether the 2027 session takes up a rebuild-financing mechanism for condominium associations, which currently do not have one.
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