Article III BOARD OF DIRECTORS
SECTION 1. Number and Qualification.
The affairs of the Association shall be governed by a Board of Directors. The Board of Directors shall be composed of nine (9) persons, (unless not less than sixty-five percent (65%) of all owners vote by mail ballot, or at a special or annual meeting to reduce the number of directors, (HRS S 514A-82(a)(1)(B)) all of whom shall be Owners or vendees under an agreement of sale or in the case of corporate owners, shall be officers, stockholders or employees of such corporations, or in the case of partnership Owners, any general partner of such partnership, or in the case of fiduciary Owners, shall be the fiduciaries or officers or employees of such fiduciaries.
No resident manager of the Project shall serve on the Board of Directors. There shall not be more than one representative on the Board of Directors from any one apartment. (HRS S 514A-82(a)(12)) Directors shall not expend Association funds for their travel, directors' fees, and per diem, unless owners are informed and a majority approve of these expenses. (HRS S 514A-82(b)(10))
SECTION 2. Powers and Duties.
The Board of Directors shall have the powers and duties necessary for the administration of the affairs of the Association and may do all such acts and things except as by law or by the Declaration or by these Bylaws may not be delegated to the Board of Directors by the Apartment Owners. Each member of the Board of Directors shall owe the Association a fiduciary duty in the performance of the director's responsibilities. (HRS S 514A-82.4) Any contract for goods or services having a term of more than one (1) year shall provide that it may be terminated by either party thereto at the end of the first year or at any time thereafter upon not less than ninety (90) days written notice. Such powers and duties of the Board of Directors shall include, but shall not be limited to, the following:
(a) Operation, care, upkeep and maintenance of the common elements;
(b) Preparation annually of a budget of the common expenses required for the affairs of the Association, including, without limitation, the operation and maintenance of the property;
(c) Collection of the common expenses from the Apartment Owners;
(d) Employment and dismissal of necessary personnel for the maintenance, operation, replacement and repair of the common elements;
(e) Adoption and amendment of Rules and Regulations covering the details of the operation and use of the property;
(f) Opening of bank accounts on behalf Of the Association of Apartment Owners and designating the signatories required therefor;
(g) Obtaining of insurance for the property, including the Apartments, pursuant to the provisions of ARTICLE VII hereof;
(h) Making of repairs, additions and improvements to or alterations of the property and repairs and restoration of the property in accordance with the other provisions of these Bylaws, after damage or destruction by fire or other casualty, or as a result of condemnation or eminent domain proceedings;
(i) Procuring legal and accounting services necessary or proper in the operation of the buildings or enforcement of these Bylaws;
(j) Purchasing of any other materials, supplies, furniture, labor and services, the making of repairs and structural alterations, and the payment of all insurance, taxes or assessments and other common expenses which the Board is required to secure, make or pay for pursuant to the terms of these Bylaws or by law or which in its opinion shall be necessary or proper for the operation of the buildings as apartment buildings for the enforcement of these Bylaws, provided that if any such materials, supplies, furniture, labor, services, repairs, structural alterations, insurance, taxes, or assessments are required because of the particular actions or negligence of the Owners of particular Apartments, the cost thereof shall be specially assessed to the Owners of such Apartments;
(k) Payment of any amount necessary to discharge any lien or encumbrance levied against the entire property or any part thereof which may in the opinion of the Board constitute a lien against the property or against the common elements or limited common elements rather than merely against the interest therein of particular Owners. Where one or more Owners are responsible for the existence of such lien, they shall be jointly and severally liable for the cost of discharging it and costs incurred by the Board by reason of such lien or liens; and
(l) Maintenance and repair of any Apartment if such maintenance or repair is necessary, in the discretion of the Board, to protect the common elements and limited common elements or any other portion of the buildings, and the Owner or Owners of said Apartment shall have failed or refused to perform said maintenance or repair within a reasonable time after written notice of the necessity of said maintenance or repair delivered by the Board to said Owner or Owners, provided that the Board shall levy a special assessment against such Apartment for the cost of said maintenance or repair and attorney's fees and other expenses incurred in collecting this special assessment.
(m) Purchasing or leasing or otherwise acquiring in the name of the Board of Directors, or its designee, corporate or otherwise, on behalf of all Apartment Owners, Apartments offered for sale or lease;
(n) Purchasing of Apartments at foreclosure or other judicial sales in the name of the Board of Directors or its designee, corporate or otherwise, on behalf of all Apartment Owners;
(o) To borrow money on behalf of the Association to be used by the Association for the repair, replacement, maintenance, operation, or administration of the common elements of the project, or the making of any additions, alterations, and improvements thereto. The cost of such borrowing, including, without limitation, all principal, interest, commitment fees, and other expenses payable with respect to such borrowing, shall be a common expense of the project; provided that owners representing fifty percent (50%) of the common interest and apartments give written consent to such borrowing, having been first notified of the purpose and use of the funds; (HRS S 514A-82.3)
(p) When personal property in or on the common elements of the project has been abandoned, the Board may sell the personal property in a commercially reasonable manner, store such personal property at the expense of its owner, donate such personal property to a charitable organization, or otherwise dispose of such personal property in its sole discretion; provided that no such sale, storage, or donation shall occur until sixty (60) days after the Board complies with the following:
(1) The Board notifies the owner in writing of:
(2) If the identity or address of the owner is unknown, the Board shall first advertise the sale, donation, or disposition at least once in a daily paper of general circulation within the circuit in which the personal property is located. The proceeds of any sale or disposition of personal property shall, after deduction of any accrued costs of mailing, advertising, storage, and sale, be held for the owner for thirty (30) days. Any proceeds not claimed within this period shall become the property of the Association; (HRS S 514A-93.5)
- The idenity and location of the personal property, and
- The Board's intent to so sell, store, donate, or dispose of the personal property. Notification shall be by certified mail, return receipt requested to the owner's address as shown by the records of the Association or to an address designated by the owner for the purpose of notification or, if neither of these is available, to the owner's last known address, if any; or
(q) Notwithstanding any other language contained in the Declaration, these Bylaws, or the House Rules, the Board shall make reasonable accommodations to the provisions of these Bylaws, the Declaration, the House Rules, or any other regulations or restrictions of the project, if those accommodations become necessary to afford a handicapped person equal opportunity to use and enjoy the project premises. (42 U.S.C. S 3604(f)(3)(B))
(r) Upon the approval of the Owners of seventy-five percent (75%) of the common interests appurtenant to the Apartments, to change the use of the common elements. (HRS S 514A-13(d)(1))
(s) To lease or otherwise use for the benefit of the Association of Apartment Owners those common elements which are not actually used by any of the Apartment Owners for an originally intended special purpose, as determined by the Board of Directors; provided that unless the approval of the Owners of seventy-five percent (75%) of the common interest appurtenant to the Apartments is obtained, any such lease shall not have a term exceeding five years and shall contain a provision that the lease or agreement for use may be terminated by either party thereto on not more than sixty days written notice. (HRS � 514A-13(d)(2))
(t) To lease or otherwise use for the benefit of the Association of Apartment Owners those common elements not
falling within subparagraph(s) above, upon obtaining: (A) the approval of the Owners of seventy-five percent (75%) of the common interests appurtenant to the Apartments, including all directly affected Owners and all Owners of Apartments to which such common elements are appurtenant in the case of limited common elements, and (B) approval of all mortgagees of record on Apartments with respect to which Owner approval is required by (A) above, if such lease or use would be in derogation of the interest of such mortgagees. (HRS S 514A-13(d)(3))
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SECTION 3. Managing Agent and Manager.
Except as herein otherwise provided with respect to the initial Managing Agent, the Board of Directors shall at all times employ a responsible individual or corporation as Managing Agent to manage and control the property, subject at all times to direction by the Board, with such administrative functions and powers as shall be delegated to said Managing Agent by the Board. The compensation of the Managing Agent shall be such as shall be specified from time to time by the Board.
The Managing Agent shall have such powers and duties as may be necessary or proper in connection with
- supervision of the immediate management and operation of the Project,
- maintenance, repair, replacement and restoration of the common elements and any additions or alteration thereto,
- purchase, maintenance and replacement of any equipment,
- provision for service of all utilities to the buildings and the various Apartments,
- employment supervision and dismissal of such personnel as it deems necessary for the maintenance and operation of the Project,
- conclusion of contracts with others for the furnishing of such services as it deems proper for the Project,
- preparation of a proposed budget and schedule of assessments,
- collection of all assessments and payment of all bills,
- purchase of such insurance as is contemplated by these Bylaws,
- custody and control of all funds and maintenance of books and records and preparation of financial reports.
The Board of Directors may in its discretion limit any of the powers herein granted to the Managing Agent or grant additional powers to the Managing Agent. Upon written request of any Apartment Owner the Managing Agent shall deliver a written statement of the status of the account of such Apartment Owner. Developer or such Managing Agent as it may designate shall act as the initial Managing Agent for all Apartments in the Project. If this contract is for a period of more than one (1) year it shall provide that it may be terminated by either party thereto at the end of the first year or at any time thereafter upon not less than ninety (90) days written notice.
In no event shall any resident manager or Managing Agent solicit, for use by such manager or Managing Agent, any proxies from any owner of the Association of owners which employs him, nor shall he cast any proxy vote at any Association meeting except for the purpose of establishing a quorum. (HRS � 514A-82(b)(4))
SECTION 4. Election and Term of Office.
Election of directors shall be by secret ballot at each annual meeting and any special meeting called for the purpose. Directors shall hold office for a period of three years and until their respective successors have been elected, subject to removal as herein provided, except that at the first annual meeting one-third of the directors shall be elected for one year, one-third for two years and one-third for three years. A director shall not be elected to serve consecutive three-year terms. (prior amendment)
SECTION 5. Removal of Members of the Board of Directors.
At any regular or special meeting of Apartment Owners duly called, any one or more of the directors may be removed with or without cause by a
vote of a majority of the Apartment Owners and a successor may then and there or thereafter be elected for the remainder of the term to fill the vacancy thus created; provided that an individual director shall not be removed, unless the entire Board is removed, if Owners having sufficient votes to elect one director by cumulative voting present at such meeting shall vote against his removal. Any director whose removal has been proposed by the owners shall be given an opportunity to be heard at such meeting.
If such removal is to occur at a special Association meeting, the call for such meeting shall be by the president or by a petition to the secretary or managing agent signed by not less than twenty-five percent (25%) of the owners as shown in the Association's record of ownership; and provided further that if the secretary or managing agent shall fail to send out the notices for the special meeting within fourteen (14) days of receipt of the petition,
then the petitioners shall have the authority to set the time, date and place for the special meeting and to send out the notices for the special meeting in accordance with the requirements of these Bylaws. Except as otherwise provided herein, such meeting for the removal from office of directors shall be scheduled, noticed, and conducted in accordance with these Bylaws. (HRS S 514A-82(b)(1)) In addition, if any Director shall fail to attend four (4) consecutive regular meetingsof the Board for any reason, the Board by a majority vote of the other members may remove him and select a replacement to serve his unexpired term. Cumulative voting may be used in any vote to remove a director.
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SECTION 6. Vacancies.
Vacancies in the Board of Directors caused by any reason other than the removal of a member thereof by a vote of the Apartment Owners, shall be filled by a vote of a majority of the remaining members at a special meeting of the Board of Directors held for that purpose promptly after the occurrence of any such vacancy, even though the members present at such meeting may constitute less than a quorum, and each person so elected shall be a member of the Board of Directors for the remainder of the term of the member whose vacancy he filled and until a successor shall be elected at the next annual meeting of the Apartment Owners.
SECTION 7. Organization Meetings.
The first meeting of the Board of Directors following the annual meeting of the Apartment Owners shall be held within ten (10) days thereafter, at such time and place as shall be fixed by the Apartment Owners at the meeting at which such Board of Directors shall have been elected, and no notice shall be necessary to the newly elected members of the Board of Directors in order legally to constitute such meeting, provided a majority of the whole Board of Directors shall be present thereat.
SECTION 8. Regular Meetings.
Regular meetings of the Board of Directors may be held at such time and place as shall be determined from time to time by a majority of the members of the Board of Directors, but at least two (2) such meetings shall be held during each fiscal year. Notice of regular meetings of the Board of Directors shall be given to each member of the Board of Directors by mail at least three (3) business days prior to the day named for such meeting. Whenever practicable, notice of all Board meetings shall be posted by the managing agent or a member of the Board in prominent locations within the project seventy-two (72) hours prior to the meeting or simultaneously with notice to the Board of Directors. (HRS S 514A-82(b)(9))
SECTION 9. Special Meetings.
Special meetings of the Board of Directors may be called by the President on three (3) business days' notice to each member of the Board of Directors, given by mail, which notice shall state the time, place and purpose of the meeting. Special meetings of the Board of Directors shall be called by the President or Secretary in like manner and on like notice by the written request of at least three (3) members of the Board of Directors.
SECTION 10. Waiver of Notice.
Any member of the Board of Directors may at any time waive notice of any meeting of the Board of Directors in writing, and such waiver shall be deemed equivalent to the giving of such notice. Attendance by a member of the Board of Directors at any meeting of the Board shall constitute a waiver of notice by him of the time and place thereof. If all the members of the Board of Directors are present at any meeting of the Board, no notice shall be required and any business may be transacted at such meeting.
SECTION 11. Quorum of Board of Directors.
At all meetings of the Board of Directors, a majority of the members thereof shall constitute a quorum for the transaction of business, and the votes of a majority of the members of the Board of Directors present at a meeting at which a quorum is present shall constitute the decision of the Board of Directors. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time. At any such adjourned meeting at which a quorum is present, any business which might have been transacted at the meeting originally called, may be transacted without further notice.
SECTION 12. Fidelity Bonds.
The Board of Directors may obtain adequate fidelity bonds for all officers and employees of the Association handling or responsible for Association funds. The premiums on such bonds shall constitute a common expense.
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SECTION 13. Compensation.
No member of the Board of Directors shall receive any compensation from the Association for acting as such.
SECTION 14. Liability and Indemnity of the Board of Directors.
The members of the Board of Directors shall not be liable to the Apartment Owners for any mistake of judgment or otherwise except for their own gross negligence or willful misconduct. The Association of Owners shall indemnify each Director of the Association against all costs, expenses and liabilities, including the amount of judgments, amounts paid in compromise settlements and amounts paid for services of counsel and other related expenses which may be incurred by or imposed on him in connection with any claim, action, suit, proceeding, investigation or inquiry hereafter made, instituted or threatened in which he may be involved as a party or otherwise by reason of his being or having been such Director, or by reason of any past or future action taken or authorized or approved by him or any omission to act as such Director, whether or not he continues to be such Director at the time of the incurring or imposition of such costs, expenses or liabilities, except such costs, expenses or liabilities as shall relate to matters as to which he shall in such action, suit or proceeding be finally adjudged to be, or shall be, liable by reason of his negligence or willful misconduct toward the Association in the performance of his duties as such Director.
As to whether or not a Director was liable by reason of gross negligence or willful misconduct toward the Association in the performance of his duties as such Director, in the absence of such final adjudication of the existence of such liability, the Board of Directors and each Director may conclusively rely upon an opinion of legal counsel selected by or in the manner designated by the Board of Directors. The foregoing right of indemnification shall not be exclusive of other rights to which any such Director may be entitled as a matter of law or otherwise, and shall inure to the benefit of the heirs, executors, administrators and assigns of each such Director.
SECTION 15. Conflict of Interest.
A director shall not vote at any board meeting on any issue in which he has a conflict of interest. A director shall not cast any proxy vote at any Board meeting. (HRS S 514A-82(a)(13)) A director who has a conflict of interest on any issue before the Board shall disclose the nature of the conflict of interest prior to a vote on that issue at the Board meeting, and the minutes of the meeting shall record the fact that a disclosure was made. (HRS 514A-82(b)(5))
SECTION 16. Open and Executive Board Meetings.
All meetings of the Board of Directors shall be open to all owners, and owners who are not directors may participate in any deliberation or discussion unless a majority of a quorum of the Board votes otherwise. The Board of Directors, with the approval of a majority of a quorum, may adjourn a meeting and reconvene in executive session to discuss and vote upon personnel matters or pending or threatened litigation or orders of business of a similar nature. The nature of any and all business to be considered in executive session shall first be announced in open session. (HRS S 514A-83.1)
SECTION 17. Provision of Project Documents.
The Association at its expense shall provide all Board members with a current copy of the Association's Declaration, Bylaws, house rules, and, annually, a copy of the Hawaii Condominium Property Act with amendments. (HRS S 514A-82(b)(ll))
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