§514A-97 
Association of apartment owners funds; handling and disbursement.  (a)  The funds in the general operating account
of the association of apartment owners shall not be commingled with funds of
other activities such as lease rent collections and rental operations, nor
shall a managing agent commingle any association funds with the managing
agent's own funds.



(b)  For
purposes of subsection (a), lease rent collections and rental operations shall
not include the rental or leasing of common elements that is conducted on
behalf of the association or the collection of ground lease rents from
individual apartment owners of a project and the payment of ground lease rents
to the ground lessor; provided that:



(1)  The collection is allowed by the provisions of
the declaration, bylaws, master deed, master lease, or individual apartment
leases of the project;



(2)  If a management contract exists, it requires the
managing agent to collect ground lease rents from the individual apartment
owners and pay the ground lease rents to the ground lessor;



(3)  The system of lease rent collection is approved
by a majority vote of all apartment owners at a meeting of the association; and



(4)  No managing agent or association shall pay ground
lease rent to the ground lessor in excess of actual ground lease rent collected
from individual apartment owners.



(c)  All
funds collected by an association, or by a managing agent for any association,
shall be:



(1)  Deposited in a financial institution, including a
federal or community credit union, located in the State and whose deposits are
insured by an agency of the United States government;



(2)  Held by a corporation authorized to do business
under article 8 of chapter 412;



(3)  Held by the United States Treasury;



(4)  Purchased in the name of and held for the benefit
of the association through a securities broker that is registered with the
Securities and Exchange Commission, has an office in the State, and the
accounts of which are held by member firms of the New York Stock Exchange or
National Association of Securities Dealers and insured by the Securities
Insurance Protection Corporation; or



(5)  Placed through a federally insured financial
institution located in the State for investment in certificates of deposit
issued through the Certificate of Deposit Account Registry Service in federally
insured financial institutions located in the United States.



(d)  All
funds collected by an association, or by a managing agent for any association,
shall be invested only in:



(1)  Demand deposits, investment certificates, and
certificates of deposit;



(2)  Obligations of the United States government, the
State of Hawaii, or their respective agencies; provided that those obligations
shall have stated maturity dates no more than ten years after the purchase date
unless approved otherwise by a majority vote of the apartment owners at an
annual or special meeting of the association or by written consent of a
majority of the apartment owners;



(3)  Mutual funds comprised solely of investments in
the obligations of the United States government, the State of Hawaii, or their
respective agencies; provided that those obligations shall have stated maturity
dates no more than ten years after the purchase date unless approved otherwise
by a majority vote of the apartment owners at an annual or special meeting of
the association or by written consent of a majority of the apartment owners; or



(4)  Certificates
of deposit issued through the Certificate of Deposit Account Registry Service
in an amount at least equal in their market value, but not to exceed their par
value, to the amount of the deposit with the depository;



provided that before any investment longer than one
year is made by an association, the board shall approve the action; and
provided further that the board shall clearly disclose to owners all
investments longer than one year at each year's association annual meeting.



Records of
the deposits and disbursements shall be disclosed to the commission upon
request.  All funds collected by an association shall only be disbursed by
employees of the association under the supervision of the association's board
of directors.  All funds collected by a managing agent from an association
shall be held in a client trust fund account and shall be disbursed only by the
managing agent or the managing agent's employees under the supervision of the
association's board of directors.  The commission may draft rules governing the
handling and disbursement of condominium association funds.



(e)  A
managing agent or board of directors shall not transfer association funds by
telephone between accounts, including but not limited to the general operating
account and reserve fund account.



(f)  A
managing agent shall keep and disburse funds collected on behalf of the
condominium owners in strict compliance with any agreement made with the
condominium owners, chapter 467, the rules of the commission, and all other
applicable laws.



(g)  Any person who embezzles or knowingly
misapplies association funds received by a managing agent or association of
apartment owners shall be guilty of a class C felony. [L 2007, c 244, pt of §2; am L 2008, c 76, §1]