Article X GENERAL PROVISIONS

SECTION 2. Abatement and Enjoinment of Violations by Apartment Owners.

The violation of any rule or regulation adopted by the Board of Directors, or the breach of any Bylaw contained herein, or the breach of any provision of the Declaration, shall give the Board of Directors the right, pursuant to S514-6 of Hawaii Revised Statutes, as amended, in addition to any other rights set forth in these Bylaws:

(a) To enter the Apartment during reasonable hours in which, or as to which, such violation or breach exists and to summarily abate and remove, at the expense of the defaulting Apartment Owner, any structure, thing or condition that may exist therein contrary to the intent and meaning of the provisions hereof, and the Board of Directors shall not thereby be deemed guilty in any manner of trespass; or

(b) To enjoin, abate or remedy by appropriate legal proceedings, either at law or in equity, the continuance of any such breach, and all costs thereof, including attorney's fees, shall be borne by the defaulting Apartment Owner.

SECTION 3. Maintenance and Repair of Apartments.

All maintenance of and repairs to any Apartment shall be made by the Owner of the Apartment, except as otherwise provided herein.

SECTION 4. Maintenance and Repair of Common Elements.

All maintenance, repairs and replacements to the common elements, whether located inside or outside of the Apartments, shall be made by the Board of Directors and be charged to all the Owners as a common expense, unless necessitated by the negligence, misuse or neglect of an Apartment Owner, in which case such expense shall be charged to such Apartment Owner.

SECTION 5. Additions or Improvements by Board of Directors.

During any fiscal year of the Association, if the Board of Directors shall determine in its judgment that the common elements shall require additions, alterations or improvements, the Board of Directors may proceed with such additions, alterations or improvements provided the aggregate cost for same during such fiscal year shall not exceed three percent (3%) of the budgeted amount for operation expenses approved by the Board of Directors and the Board shall assess all owners for the cost thereof as a common expense. Any additions, alterations or improvements costing in excess of three percent (3%) of the budgeted amount for operating expenses for such fiscal year may be made by the Board of Directors only after obtaining approval of the owners of at least fifty percent (50%) of the apartments. If such approval shall be obtained, the cost thereof shall constitute part of the common expenses. (prior amendment)

SECTION 6. Right of Access.

An Apartment Owner shall grant a right of access to his Apartment to the Manager and/or the Managing Agent and/or any other person authorized by the Board of Directors, the Manager or the Managing Agent, for the purpose of making inspections or for the purpose of correcting any condition existing in his Apartment and threatening another Apartment or a common element, or for the purpose of performing installations, alterations or repairs to the mechanical or electrical services or other common elements in his Apartment or elsewhere in the buildings, provided that requests for entry are made in advance and that any such entry is at a time reasonably convenient to the Owner. In case of an emergency, such right of entry shall be deemed granted, to be effective immediately, whether the Owner is present at the time or not.

SECTION 7. Owners May Incorporate.

Ail of the rights, powers, obligations and duties of the Owners imposed hereunder may be exercised and enforced by a nonprofit membership corporation, formed under the laws of the State of Hawaii for the purposes herein set forth by the Owners. Said corporation shall be formed upon the written approval of a majority of the voting Owners. The formation of said corporation shall in no way alter the terms, covenants, and conditions set forth herein and the Articles and Bylaws of said corporation shall be subordinated hereto and controlled hereby. Any action taken by said corporation, which said action is in violation of any or all of the terms, covenants or conditions contained herein, shall be void and of no effect.

SECTION 8. Notices.

Ail notices hereunder shall be mailed or delivered to the Board of Directors, c/o the Managing Agent, or if there be no Managing Agent, to the office of the Board of Directors or to such other address as the Board of Directors may hereafter designate from time to time, by notice in writing to all Owners and to all mortgagees of Apartments. All notices to any Owner shall be mailed or delivered to the building or to such other address as may have been designated by him from time to time, in writing, to the Board of Directors. Any notices to mortgagees of Apartments shall be sent by mail to their respective addresses, as designated by them from time to time, in writing, to the Board of Directors. All notices shall be deemed to have been given when mailed, except notices of change of address which shall be deemed to have been given when received.

SECTION 9. Captions.

The captions herein are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of these Bylaws, or the intent of any provision hereof.

SECTION 10. Gender.

The use of any gender in these Bylaws shall be deemed to include either or both of the other genders and the use of the singular shall be deemed to include the plural whenever the context so requires.

SECTION 11. Waiver.

No restriction, condition, obligation or provision contained in these Bylaws shall be deemed to have been abrogated or waived by reason of any failure to enforce the same, irrespective of the number of violations or breaches thereof which may occur.

SECTION 12. Audit.

(a) Any Owner may, at any reasonable time, and at his own expense, cause an audit or inspection to be made of the books and records of the Association.

(b) The Association shall conduct an annual audit of the Association financial accounts and no less than one annual unannounced verification of the Association's cash balance by a public accountant.

(c) The Board of Directors shall make available a copy of the annual audit to each owner at least thirty (30) days prior to the annual meeting which follows the end of the fiscal year. The Board shall provide upon all official proxy forms a box wherein the owner may indicate that the owner wishes to obtain either a summary of the annual audit report, or an unabridged copy of the annual audit report. The Board shall not be required to submit a summary of the annual audit report or a copy of the annual audit report to the owner if the proxy form is not marked. If the annual audit has not been completed by that date, the Board shall make available:

1. An unaudited year end financial statement for the fiscal year to each owner at least thirty (30) days prior to the annual meeting; and
   
   
2. The annual audit to all owners at the annual meeting, or as soon as the audit is completed, whichever occurs later.

SECTION 13. Interpretation.

The provisions of these Bylaws shall be liberally construed to effectuate the purpose of creating a uniform condominium complex whereby the Owners of Apartments shall carry out and pay for the operation and maintenance of the project as a mutually beneficial and efficient establishment.

SECTION 14. Amendment.

These Bylaws may be amended at any time by the vote or written consent of sixty-five percent (65%) of all owners; provided that any proposed bylaws with the rationale for the proposal may be submitted by the Board of Directors or by a volunteer owners' committee. If submitted by that committee, it shall be accompanied by a petition signed by not less than twenty-five percent (25%) of the owners as shown in the Association's record of ownership. The proposed bylaws, rationale, and ballots for voting on any proposed bylaw shall be mailed by the Board of Directors to the owners at the expense of the Association for vote or written consent without change within thirty (30) days of the receipt of the petition by the Board of Directors. The vote or written consent required to adopt the proposed bylaw shall not be less than sixty-five percent (65%) of all owners; provided that the vote or written consent must be obtained within one hundred twenty (120) days after mailing. In the event that the bylaw is duly adopted, then the Board shall cause the bylaw amendment to be recorded in the Bureau of Conveyances of the State of Hawaii. The volunteer owners' committee shall be precluded from submitting a petition for a proposed bylaw which is substantially similar to that which has been previously mailed to the owners within one year after the original petition was submitted to the Board. The foregoing shall not preclude any owner or voluntary owners committee from proposing any bylaw amendment at any annual Association meeting. (HRS 514A-82(b)(2))

SECTION 15. Severability.

The provisions hereof shall be deemed independent and severable, and the invalidity or partial invalidity or enforceability of any one provision shall not affect the validity or enforceability of any other provision hereof.

SECTION 16. Robert's Rules of Order.

All meetings of the Association and the Board of Directors shall be conducted in accordance with Robert's Rules of Order or other accepted rules for the conduct of meetings.

SECTION 17. Location and Inspection of Books.

(a) Location and Financial Records.

The Board of Directors or managing agent shall maintain or cause to be maintained accurate and complete books of account and other financial records in accordance with recognized accounting practices. The records shall include, without limiting the generality of the foregoing, detailed and accurate records in chronological order of all receipts and expenditures of the Association, specifying and itemizing all expenses paid or incurred in connection with the maintenance, repair, restoration and replacement of the common elements and any other expenses incurred, all vouchers authorizing payment of such expenses and monthly statements showing the total current delinquent amount of unpaid assessments for common expenses. All records and the vouchers authorizing the payments and statements affecting the common elements of the project shall be kept at the project or at such other convenient place within the State of Hawaii as the Board shall designate. (HRS � 514A-85(a) and (b))

(b) Inspection of Financial Records and Minutes.

     (i) The Association's most current financial statement and minutes of the Board of Directors' meetings, once approved, shall be available to any owner at no cost or on twenty-four (24) hour loan, at a convenient location designated by the Board of Directors. (HRS � 514A-83.5(a))

     (ii) Minutes of meetings of the Board of Directors and the Association for the current and prior year shall be available for examination by owners at convenient hours at a place designated by the Board. The minutes shall include the recorded vote of each Board member on all motions except those voted on in executive session. Copies of meeting minutes shall be provided to any owner upon the owner's request provided that the owner pay a reasonable fee for duplicating, postage, stationery, and other administrative costs associated with handling the request. (HRS � 514A-83.5(b))

     (iii) Financial statements, general ledgers, the accounts receivable ledger, accounts payable ledgers, check ledgers, insurance policies, contracts, and invoices of the Association for the current and prior year and delinquencies of ninety (90) days or more shall be available for examination by owners at convenient hours at a place designated by the Board; provided:

1. That the Board may require owners to furnish to the Association a duly executed and acknowledged affidavit stating that the information is requested in good faith for the protection of the interests of the Association or its members or both; and
   
   
2. That owners pay for costs in excess of eight (8) hours per year.
   
   
3. Copies of these items shall be provided to any owner upon the owner's request, provided that the owner pay a reasonable fee for duplicating, postage, stationery, and other administrative costs associated with handling the request. (HRS S 514A-83.5(c))

     (iv) Owners shall also be permitted to view proxies, tally sheets, ballots, owners' check-in lists, and the certificate of election for a period of thirty (30) days following any Association meeting; provided:

1. That the Board may require owners to furnish to the Association a duly executed and acknowledged affidavit stating that the information is requested in good faith for the protection of the interest of the Association or its members or both; and
   
   
2. That owners pay for costs in excess of eight (8) hours per year.

Proxies and ballots may be destroyed following the thirty day period. Copies of tally sheets, owners' check-in lists, and the certificates of election from the most recent Association meeting shall be provided to any owner upon the owner's request, provided that the owner pay a reasonable fee for duplicating, postage, stationery, and other administrative costs associated with handling the request. (MRS S 514A-83.5(d))

     (v) Owners may file a written request with the Board to examine other documents. The Board shall give written authorization or written refusal with an explanation of the refusal within thirty (30) calendar days of receipt of the request. (HRS S 514A-83.5(e))

SECTION 18. Prohibited Acts of Association Employees.

No employee of the Association shall engage in selling or renting apartments in the Project except Association owned apartments, unless such activity is approved by an affirmative vote of sixty-five percent (65%) of the owners. (HRS � 514A-82(b)(8))

SECTION 19. Budgets and Reserves.

(a) The Board of Directors shall prepare and adopt an annual operating budget and distribute it to the Apartment Owners. At a minimum, the budget shall include the following:

1. The estimated expenses of the Association; revenues and operating
   
   
2. Information as to whether the budget has been prepared on a cash or accrual basis;
   
   
3. The total replacement Association as of the date of the budget; reserves of the
   
   
4. The estimated replacement reserves the Association will require to maintain the property based on a reserve study performed by the Association;
   
   
5. A general explanation of how the estimated replacement reserves are computed; and
   
   
6. The amount the Association must collect for the fiscal year to fund the estimated replacement reserves.

(b) The Association shall assess the Apartment Owners to fund a minimum of fifty percent (50%) of the estimated replacement reserves. For each fiscal year the Association shall collect a minimum of fifty percent (50%) of the full amount required to fund the estimated replacement reserves for that fiscal year reserves except:

1. The Association may fund the estimated replacement reserves in increments after January 1, 1993 and prior to January 1, 2000; and
   
   
2. The Association may fund in increments, over three years, estimated replacement reserves which have been substantially depleted by an emergency.

(c) The Association shall compute the estimated replacement reserves by a formula which is based on the estimated life and the estimated capital expenditure or major maintenance required for each part of the Project. The estimated replacement reserves shall include:

1. Adjustments for revenues which will be received and expenditures which will be made before the beginning of the fiscal year to which the budget relates; and
   
   
2. Separate, designated reserves for each part of the Project for which capital expenditures or major maintenance will exceed $10,000. Parts of the Project for which capital expenditures or major maintenance will not exceed $10,000 may be aggregated in a single designated reserve.

(d) No Association or director, officer, managing agent, or employee who makes a good faith effort to calculate the estimated replacement reserves for the Association shall be liable if the estimate subsequently proves incorrect.

(e) The Board may not exceed its total adopted annual operating budget by more than twenty percent during the fiscal year to which the budget relates, except in emergency situations. Prior to the imposition or collection of an assessment under this paragraph, the Board shall pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process, and the resolution shall be distributed to the Apartment Owners with the notice of assessment.

(f) The requirements of this Section 19 shall override any other requirements in these Bylaws, or any other Association document relating to preparation of budgets, calculation of reserve requirements, assessment and funding of reserves, with the exception of:

1. any provisions relating to the repair and maintenance of property,
   
   
2. any requirements in the Association's Declaration, these Bylaws, or any other Association documents which require the Association to collect more than fifty percent of reserve requirements; or
   
   
3. any provisions relating to upgrading the common elements, such as additions, improvements, and alterations to the common elements.

(g) Subject to the procedures of Section 514A-94 and any rules adopted by the Hawaii Real Estate Commission, in the event the Board of Directors fails to comply with this Section 19, any Apartment Owner may enforce compliance by the Board. In any proceeding to enforce compliance, if the Board has not prepared an annual operating budget and reserve study, the Board shall have the burden of proving it has complied with this Section 19.

(h) As used in this Section 19:

"Capital Expenditure" means an expense which results from the purchase or replacement of an asset whose life is greater than one year, or the addition of an asset which extends the life of an existing asset for a period greater than one year.

"Emergency Situation" means any of the following:

1. An extraordinary expense required by an order of a court;
   
   
2. An extraordinary expense necessary to repair or maintain any part of the Project for which the Association is responsible where a threat to personal safety on the Project is discovered;
   
   
3. An extraordinary expense necessary to repair any part of the Project for which the Association is responsible that could not have been reasonably foreseen by the Board in preparing and distributing the annual operating budget; or
   
   
4. An extraordinary expense necessary to respond to any legal or administrative proceeding brought against the Association that could not have been reasonably foreseen by the Board in preparing and distributing the annual operating budget.
   
   

"Major Maintenance" means an expenditure for maintenance or repair which will result in extending the life of an asset for a period greater than one year.

"Replacement Reserves" means funds for the upkeep, repair, or replacement of those parts of the Project including, but not limited to roofs, walls, decks, paving, and equipment, which the Association is obligated to maintain. (HRS � 514A-83.6)

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