Q: What are some important considerations relating to forming a CPR and selling Units?
Forming a CPR does not permit for any development that would not otherwise be permitted under county land use laws. For example, if county land use laws permit a property to have one dwelling, forming a two-unit CPR on the property would not permit each unit to have one dwelling.
Forming a CPR does not permit for any development that would not otherwise be permitted under any restrictions that may be imposed on title to a property. For example, if there is a restrictive covenant on a property that restricts the property to one dwelling, forming a two-unit CPR on the property would not permit each unit to have one dwelling.
In order to sell units in a CPR that contains structures over one year old, a Developer must obtain “a verified statement signed by an appropriate county official that..[t]he structures are in compliance with all zoning and building ordinances and codes applicable to the project at the time it was built.” In order to issue the statement, the county will inspect the property. If there are code violations, the county may require that repairs be made, and if they are not made, the county may cite the Developer for a violation.
Q: Can I CPR my property?
A: Perhaps. Please provide us with the following information:
Title policy, title report, current deed, tax map key number, or property address
Current use, number of dwellings, etc.
Reason you wish to CPR
The Real Estate Branch of the Department of Commerce and Consumer Affairs has published a helpful reference guide called "So You Want To Go Condo?" linked here for your reference and copied below.
What is a condominium property regime or “CPR”?
CPR is a specific form of ownership and governing process created when real property is submitted to the condominium property regime, a process often referred to as CPRing a property. The creation and administration of CPRs are governed by Chapter 514B of the Hawaii Revised Statutes (“HRS”). Condominium ownership is ownership of a unit and a percentage of undivided interest in the common elements. The unit owner is entitled to exclusive ownership of the unit, but the underlying land is a common element owned in common with other unit owners in the condominium project; for example, common elements are often lobbies, hallways, roofs, roadways, and recreational facilities. Limited common elements which provide for exclusive use by an owner (versus ownership) often include yard areas and parking spaces. Condominiums can exist in many structural forms; for example, offices, single family dwellings, townhouses, commercial warehouses, agricultural plots, boat slips, units in a low or high rise building, or parking stalls. Condominiums also have a variety of uses. As permitted by local zoning and permitting laws, a condominium could be residential, office, commercial, industrial, agricultural, or a combination of uses such as a building with both residential and commercial condominiums. CPRing a property is not the same thing as subdividing a property. CPRing a property will not determine what can be built on a property, how many units can be placed on a property, or change building, zoning, density, or usage restrictions imposed by local laws.
What property can be CPRed?
In Hawaii, the condominium project must contain two or more units as defined by statute. The number and type of units must meet zoning requirements and be allowable. Neither the Hawaii Real Estate Commission (“Commission”) nor the counties approve or disapprove what real property can be CPRed.
How is a CPR created?
Generally, the first step in creating a CPR is to contact the appropriate county agency to ascertain the allowable uses of the real property. The allowable uses are not dependent upon the form of ownership. Provide the county agency with the tax map key number or property address to confirm the number of units and allowable uses and structures. In Hawaii, only the owners (or lessees) can submit real property to a CPR. A condominium is created when the following documents are recorded at either the Bureau of Conveyances or filed at the Office of the Assistant Registrar of the Land Court depending upon the specific real property: - Declaration of condominium property regime; - Bylaws of the association of unit owners; - Condominium map (floor plans and elevation); and - Master deed or lease. It is strongly recommended that these documents be drafted with the advice of an attorney who specializes in this area of law. A Hawaii registered architect or professional engineer must certify the condominium map (or floor plan and elevation). How long it takes for a developer to create a CPR depends upon how long it takes to create and record or file the required documents. The property owner(s) or lessee(s) may be the developer of the condominium project. If the developer is not the owner or lessee, then the owner must agree to the submission of the property to CPR by consent and joinder to the declaration of condominium property regime. Hawaii Administrative Rules Chapter 107 also contains specific requirements for CPRs. Copies of statutes, rules, and informal Commission rulings are available on the Commission’s website.
How is a condominium project registered?
Before any unit is offered for sale or sold, the condominium project must be registered with the Commission. Condominium registration packets, including the developer’s public report form, instructions, checklists, and fee information, are available free from the Commission on its website. A developer’s public report is a disclosure statement meant for prospective purchasers. The report provides a description of the condominium project, including permitted uses, restrictions, warranties, and encumbrances. Once a developer’s public report is filed, the Commission may issue an effective date. On average, it takes from six to eight weeks from submission of a complete registration file to the Commission for the issuance of an effective date. Larger or more complex projects may take longer. The issuance of an effective date is not an approval of the condominium project. The Commission does not approve or disapprove any condominium project. Basically, the issuance of an effective date means that units can be sold. When a circumstance occurs that would render a public report misleading in any material respect as determined by the Commission, the developer must submit an amendment to the developer’s public report. Prior to registration with the Commission and the issuance of an effective date for a public report, any attempt to encourage the acquisition of a legal or equitable interest in a condominium, including advertising, is prohibited by statute. Violators are subject to a fine of up to $10,000 or imprisonment for up to one year or both. In addition, violators are subject to a civil penalty of up to $10,000 for each violation.
How is a condominium association registered?
An association of unit owners (“AOUO”), formerly known as association of apartment owners, is the governing entity created by the CPR. Each AOUO of six or more units must register biennially, every two years, with the Commission. Please call the Real Estate Branch office to obtain a registration form.
Chapter 514A, HRS, condominiums
In the event a property was submitted to a CPR prior to July 1, 2006, and thus subject to Chapter 514A, HRS, please contact the REB for specific information on registration.
Source: Real Estate Branch Department of Commerce and Consumer Affairs (October 2016), So You Want To Go Condo?