A bill capping association transfer fees at documented cost died unheard
A bill capping association transfer fees at documented cost died unheard
2026-09-10 · Hawaii · Legislation · Did not pass
Hawaii sellers routinely face a stack of association charges at closing that nobody itemises in advance. A detailed bill to change that was referred in January and never heard.1
SB 2878 (2026) would have added a new section to HRS ch. 421J with parallel condominium coverage. Last action: “1/30/26: Referred to CPN.”
The transfer fee rules it proposed
- Transfer fees chargeable only to recover reasonable and actual costs of administrative services directly related to the sale or transfer.
- Flat fees permitted only if a reasonable estimate of actual costs based on historical data.
- Any transfer fee exceeding $350 must be supported by documentation of the actual costs incurred.
- No fee that results in a profit, or that covers unrelated costs or services not provided.
- Unspent transfer fees reimbursed to the owner within ten days of completion of the transfer.
The disclosure rules
Before closing, the association or managing agent would have had to give the seller, buyer and escrow a written itemised disclosure of estimated withholdings, prorations and pass-through charges — sewer fees, water fees, utility charges, unpaid assessments and other association obligations — identifying each category, the estimated amount and the basis.
And the enforcement edge: no undisclosed withholding could be collected at closing without documentation of actual cost or legal obligation.
Why this was aimed at chapter 421J first
Because the condominium chapter already has a cap and the planned community chapter does not.
HRS § 514B-154(j) provides that any fee to obtain copies of association records “shall be reasonable; provided that a reasonable fee shall include administrative and duplicating costs and shall not exceed $1 per page.” Section 514B-154.5(f) repeats it. Section 514B-104(a)(12) permits “reasonable charges for the preparation and recordation of amendments to the declaration, documents requested for resale of units, or statements of unpaid assessments.”
Chapter 421J has no equivalent. No per-page cap, no reasonableness standard on resale charges, and no state agency with oversight authority over planned community associations at all.
What the courts did to the condominium half in the meantime
The Hawaii Supreme Court decided Caven v. Certified Management on September 5, 2025, and it goes further than SB 2878 would have on one axis. Where a managing agent makes resale documents available for download through an internet site, HRS § 514B-154.5(e) requires it to do so at no cost — and it is “immaterial… whether that internet site is maintained by the association or its managing agent.”
The bill in Caven was $1,447.91, built from a $360 processing fee, a $165 processing fee, and $437.50 for each Statement of Account — itself a $195 processing fee, an $80 expedite fee, a $145 transfer fee and tax.
So for condominiums, a downloaded resale package must be free, and paper is capped at $1 a page. SB 2878’s $350 documentation threshold would have been a ceiling on charges that, for downloads, Caven had already reduced to zero.
For planned communities, neither applies. Caven’s claims about the planned community association’s documents were dismissed below because a planned community association “is not a condominium association within the meaning of HRS chapter 514B.”
The disclosure half, which nothing has replaced
The itemised pre-closing disclosure is the part of SB 2878 with no current substitute in either chapter. Sewer and water pass-throughs, utility prorations, unpaid assessments and miscellaneous withholdings arrive on the settlement statement, and the seller learns the total at closing.
A board can do this voluntarily and it costs nothing: publish a standing schedule of what the association charges on a transfer and what it withholds, and give it to escrow with the resale package. An association with nothing to hide loses nothing by publishing it.
What a Hawaii seller can do today
- Ask for the resale documents as a download. For a condominium, after Caven, that should be free.
- Ask for an itemisation of every charge before closing, in writing. There is no statutory right to it, but there is also nothing preventing the request, and an unexplained charge is easier to contest before funds move than after.
- Check the charge against § 514B-104(a)(12) — it authorises reasonable charges for resale documents and statements of unpaid assessments, which is a standard, not a blank cheque.
What to watch
Whether 2027 brings a planned-community version. Chapter 421J is the thinner statute across the board — no reserve mandate, no insurance mandate, no registration, no fining statute, no records fee cap — and the dormant Planned Community Association Oversight Task Force has a full draft rewrite of the chapter sitting in an interim report from December 2023 that nobody has introduced.
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