HRS §514B Annual Report Guide for Hawaii Condo & HOA Boards

Every condominium association in Hawaii operates under a statute — either HRS Chapter 514B (Condominium Property Regime Act, for condominiums formed under or converted to that chapter) or the older Chapter 514A. Both chapters impose an annual set of financial and governance disclosures that go to owners and, in registration form, to the DCCA Real Estate Commission. This post is the practical guide to what the association owes each year.

The framework is deliberately owner-protective: an owner should be able to open the annual packet and read what the association is doing with the money, what the reserves look like, who is on the board, and how to inspect the records. The board's job is to produce that packet on time, without gaps, and without editorializing.

Overview of HRS Chapter 514B

HRS Chapter 514B is Hawaii's Condominium Property Regime Act. It governs the creation, operation, and governance of condominium associations formed on or after July 1, 2006. Chapter 514A governs condominiums formed earlier, though many 514A associations elected to be governed by 514B provisions after the newer chapter's adoption. Both chapters require substantially similar annual disclosures; this post uses 514B as the reference framework.

The chapter is administered by the DCCA Real Estate Branch and the Real Estate Commission (REC) under HRS Chapter 467. The REC is the venue for association registration and the receipt of the annual registration fee. Owner disputes and violations are handled through DCCA's Regulated Industries Complaints Office (RICO).

Who has to file, and where

Every condominium association in Hawaii registers annually with the DCCA Real Estate Branch. The registration is separate from the internal owner-facing annual report, but the same underlying financial and governance information supports both. Registration is done through DCCA's Professional and Vocational Licensing (PVL) online portal.

Where a managing agent is engaged, the managing agent typically files. Where the association is self-managed, the treasurer or association secretary files. The board president signs; the signature is the accountability point.

Required financial disclosures

The annual financial disclosures required under 514B include, at minimum: the operating budget for the coming year, the operating results for the year just ended, the reserve fund balance and the current status of the reserve study, and delinquency reporting.

Operating budget

The board must adopt an operating budget for the association each year. The budget is distributed to all unit owners and must show the maintenance-fee assessment supporting it. Unit owners have the right to review the budget before it takes effect and to challenge it through the process the governing documents specify.

Reserve fund + reserve study

HRS Chapter 514B requires the association to maintain a reserve fund and to have a reserve study performed periodically. Two funding methodologies are recognized in Hawaii practice:

• Cash flow (baseline) funding. The reserve balance is drawn down and refilled based on when components are expected to be replaced; the balance can go low between major projects without technically being "underfunded."
• Component (fully funded) funding. Each component's replacement cost is allocated evenly over its useful life; the reserve balance tracks the cumulative depreciation of every reserve component, so the association is "fully funded" when the balance equals the aggregate consumed useful life.

Neither is required by statute; both are permitted. The reserve study will state which methodology the study used and the resulting funding percentage. The board's annual reserve contributions must match the study's recommendation for the funding methodology adopted.

Operating results (prior year)

The audited or reviewed financial statements for the prior fiscal year, or the CPA-prepared compilation if the association is below the audit threshold in its governing documents. Statements distributed to owners include the balance sheet, statement of activities, statement of cash flows, and notes.

Delinquency reporting

The association must disclose aggregate maintenance-fee delinquencies — typically as a total dollar amount and, where the governing documents require, as a count of units in arrears. Individual owner delinquencies are not disclosed to the general owner population; those are handled through the collections process the governing documents authorize.

Required governance disclosures

Alongside the financial disclosures, 514B requires ongoing governance transparency:

• Board of directors roster. Names, positions, and terms of the elected board members. Distributed to owners at least annually, and any change during the year is communicated to owners in the ordinary course.
• Meeting minutes. The association must maintain minutes of board meetings and the annual owners' meeting. Draft minutes are prepared within a reasonable period after the meeting and are available to owners on request. Executive-session minutes may be redacted to protect litigation strategy, personnel matters, or ongoing violation proceedings.
• Insurance policies. Summary of the association's insurance coverage — general liability, property, directors and officers, fidelity — with policy amounts. Owners can request certificates of insurance for their own use (e.g., their unit-owner policy will require knowing the master policy's deductible).
• Governing documents. The declaration, bylaws, house rules, and any amendments are made available to owners at cost of production. New owners typically receive the governing-documents packet at unit purchase.

Owner records-access requirements

HRS Chapter 514B guarantees unit owners the right to inspect association records. The mechanics — how much notice, whether inspection or copies, cost recovery, what's excluded — are specified in the chapter and in the association's bylaws.

The general rule: an owner requesting a specified record in writing is entitled to inspect or receive a copy within a reasonable timeframe (typically 30 days is the operative standard). The association may charge reasonable reproduction costs. Records include board meeting minutes, financial statements, budgets, contracts, insurance certificates, and correspondence — with the expected redactions for privileged legal advice, personnel files, and matters where owner privacy is protected (individual delinquencies, violation matters).

Common compliance mistakes

• Missing or stale reserve study. The reserve study is not a one-time document. Practice is to update it every three years and to run a full new study every six to seven years, with the exact cadence set by the governing documents. A reserve study more than seven years old will not be treated as current by a lender underwriting a unit-owner loan.
• Reserve contributions below the study recommendation. If the study says $180,000/year at the funding methodology adopted and the budget funds $120,000/year, the shortfall accumulates and the board is legally and reputationally exposed. Match the contribution to the recommendation, or formally adopt a different methodology.
• Aggregate delinquencies not disclosed. Owners have a right to know the aggregate — not individual owners, but the total. Silence on delinquencies is a signal problem.
• Board minutes not maintained. Board meetings without minutes are, from a governance-audit perspective, meetings that didn't happen. Adopt a minutes standard, follow it every meeting, and file minutes centrally.
• Insurance certificates lost or expired. Owners request them; lenders demand them at refinance and unit resale. The managing agent typically has a certificate-of-insurance library; if you're self-managed, keep the current-year certificate in the same folder as the budget and reserve study.
• Governing documents not indexed. Declarations, bylaws, and every amendment — all of them — must be produceable on request. A missing amendment is a legal problem the next time it's cited.

How OpenBooks helps you prepare

For self-managed associations and for boards whose managing agent handles the accounting but not the disclosure packet, OpenBooks assembles the annual owner packet from the running ledger. The operating budget, prior-year statements, current reserve balance, aggregate delinquencies, and the reserve-study status pull directly from records that have been kept current between meetings. The result is a packet ready to distribute to owners and to attach to the DCCA registration filing — not a scramble in the last two weeks before the annual meeting.

OpenBooks does not commission the reserve study (that is a specialist engagement) and does not replace the association's attorney for governing-document interpretation. It replaces the board treasurer's weekend spent assembling the packet from bank statements and prior-year emails.