Why do I have to file an annual report as a developer?
§514B-58, Hawaii Revised Statutes, mandates that developers file an annual report until all units in the project undergo a bonafide sale. The report serves as a reminder to the developer to update the developer’s public report for any changes.
A common complaint from small project developers is the lack of exemption for developers who reside in a unit for the long term; however, should a developer intend to sell, the annual report serves as a reminder tool to ensure that developers have disclosed all material and pertinent facts within the developer’s public report.
At the time of sale, developers may forget about non-visible changes to the property, such as modifications to easement rights, view plane building restrictions, or bylaws governing commercial and pet practices, which may materially impact the value and usage of a unit to a buyer. The annual report serves to remind developers to promptly update their developer’s public reports as those changes occur. These continuous updates help to protect the developer from accusations of fraud and omission in a later sale by providing an up-to-date and standardized disclosure document to buyers.