Real Estate Branch

Associations often have questions about if they can use an online bank or financial institution that has limited or no presence in Hawaii. §514B-149(c)(1), HRS, provides some guidance as the requirements as to where association monies can be deposited:

“(c)(1)  All funds collected by an association, or by a managing agent for any association, shall be:

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

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

          (C)  Held by the United States Treasury;

          (D)  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, that 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

          (E)  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.”

Please review the Commission’s prior non-binding interpretations in the Deposit of Association Funds section on what constitutes “located in state.” Pay particular attention to the 02/08/06 CRC Minutes on the Community Association Banc for a detailed discussion of requirements pursuant to §514B-149(c)(1), HRS, namely the “fully staffed office in the State of Hawaii. [where] Customers will be able to review their account records and obtain personal assistance with their banking needs.”

8.29.24