Background
Wailea Point Village is governed by a recorded declaration that originally permitted unit owners to lease their units for periods greater than thirty days. In two thousand and twenty-two, the association proposed an amendment to increase the minimum lease term to greater than three hundred sixty-five days. More than seventy percent of owners voted in favor of the amendment, but the plaintiffs contended it was invalid because it was not approved unanimously. The district court granted summary judgment in favor of the association on its counterclaim seeking declaratory relief that the amendment was valid.
The court’s reasoning
The court applied Hawaii law, which requires that contract terms be interpreted according to their plain, ordinary, and accepted use in common speech. The court analyzed Section ten of the declaration, which permits amendments by sixty-seven percent approval but requires unanimous consent for amendments effecting a change in the fundamental purposes of or restrictions on the use of any apartment. The court found that the adjective fundamental modifies only purposes and does not modify restrictions on the use. This conclusion was based on the lack of parallelism between the phrases purposes of and restrictions on the use of, as well as the disjunctive use of the word or. Because lengthening the minimum lease term to prohibit short-term and medium-term rentals changed a restriction on the use of the apartments, the amendment required unanimous consent. Since unanimous consent was not obtained, the amendment was not validly adopted.
it is fundamental that terms of a contract should be interpreted according to their plain, ordinary and accepted use in common speech, unless the contract indicates a different meaning
Cowan v. Exclusive Resorts PBL1, LLC, 574 P.3d 288, 295 (Haw. 2025)
What it means going forward
Condominium associations in Hawaii must ensure that amendments fundamentally changing use restrictions obtain unanimous owner consent rather than a simple majority or supermajority vote. This ruling clarifies the application of the plain meaning rule to modifiers in disjunctive contract clauses.