There was a person considering buying a condo in Kahului who requested a consultation out of concern that a special assessment might suddenly arise. They mentioned hearing from a friend who had already purchased a condo and received a special assessment bill for several thousand dollars. Such worries are not unfounded.

Condo management fees in Kahului and Wailuku typically range from $500 to $800 per month. Due to fewer amenities and smaller building sizes, these fees are on the lower end compared to the overall average in Maui. When looking at Maui as a whole, management fees can rise from $600 to $1,500 per month, with an average estimated between $500 and $700.

To avoid special assessments, there are three main things to check in order:

• Recent 3-5 years of financial statements and reserve fund balances
• Timing and funding rate of the reserve study
• Notices of ongoing or upcoming special assessments

Hawaii law requires condo associations to conduct a reserve study every three years, and they must set aside at least half of the necessary reserve amount determined by the study, or the full amount if using a 30-year cash flow method. Associations that have not conducted a study since 2023 should have started a new one by January 2024 and must renew it every five years thereafter.

If these standards are not met, residents can enforce compliance through lawsuits, and the burden of proof lies with the association. Conversely, if a complex adheres to this law, it means that the reserve fund can be verified through documentation. Coastal condos tend to experience faster wear and tear due to salt and humidity, leading to higher insurance and replacement costs, making the strength of the reserve fund even more critical.

Mortgage lenders also review the reserve ratio, delinquency rates, and litigation history. Associations that do not meet the standards may be classified as non-warrantable condos, making loan approval more difficult.

Another point to consider is rental regulations. Many condos near Kahului and Wailuku operate primarily for long-term residency rather than short-term rentals, but as you get closer to resort-style complexes near the coast, short-term rental regulations can become more complex. If you are looking to purchase a condo for rental income, it is essential to first check the CC&Rs for rental periods and registration procedures. Making a decision based solely on visible rental yields can lead to complications due to regulations.

If you are looking for condos near school districts that Korean families are interested in, refer to ratings from GreatSchools or Niche, but keep in mind that school district boundaries change frequently, so it's advisable to verify the actual assigned school for the address before purchasing.

The best way to significantly reduce concerns about special assessments from the start is to read the association's financial statements directly. By checking how much management fees have increased over the past few years, whether the reserve fund balance is growing, and if there have been any recent major repairs, you can gauge the likelihood of future special assessments. It is difficult to glean this information from just the management fee numbers listed in advertisements, so it is necessary to request this information directly from the seller or the association management company. This process is especially important for coastal condos, as the rate of wear and tear due to salt and humidity makes the actual amount in the reserve fund a critical factor in determining whether special assessments will arise in the coming years.

If you are a family moving to Kahului from another state, it is safer to recalculate property taxes or insurance premiums based on Hawaii standards rather than using your previous residence as a benchmark. If you are newly settling in from Korea, documents like reserve studies or CC&Rs may be unfamiliar, but checking each item one by one is not overly difficult.

When looking for condos in Kahului, it is advisable to check not only the sale price and management fees but also the three items mentioned above in order. This article does not constitute investment or legal advice, and it is recommended to review association documents with a professional before finalizing any contracts.