Elite Pacific Properties Proposing Legislative Changes to Ensure Brokerage Compliance
News Release from Elite Properties, January 16, 2017
In August 2016, Oahu brokerage and property management firm Re/Max Kai Lani abruptly shut their doors, disconnected their phones, and took down their website (per HawaiiStateNews.net on September 9, 2016). At the time they were managing properties for 135 owners, and allegedly did not return the hundreds of thousands of dollars they were holding on behalf of those owners.
Hawaii law requires that property management may only be performed by a licensed brokerage firm, and requires that the brokerage firm must keep all client funds in a dedicated client trust bank account, separate from their business operating funds. Since there is currently no audit or enforcement of this requirement in Hawaii, there is no way for a property owner to know if their property management firm is in compliance.
Elite Pacific Properties, Hawaii's largest luxury brokerage firm with offices on Oahu, Maui, Kauai, and the Big Island, has taken over the property management for 55 of the 135 owners whose properties were formerly handled by Re/Max Kai Lani.
This is a sad situation, and we want to make sure that it doesn't happen again" said Paul Mayer, Managing Partner for Elite. While it is required by law that all property management funds are kept in a trust account, it seems that this wasn't happening in the Re/Max Kai Lani situation. We've learned that this is not the only time a Hawaii property management firm has been unable to return client funds to their clients. In fact, we've found several other occasions where the property owners lost significant funds, and there are probably many other cases where the funds aren't in the trust account but where a brokerage has been able to pay departing owners some other way. You have to wonder how many other firms are not in compliance with this law."
Elite is advocating legislative changes that would require property management companies to be accountable and transparent. According to Charlotte Sherwood, Director of Property Management for Elite, We've been exploring legislative changes to help prevent future situations such as this." One proposed idea is an annual audit where brokerage firms must submit copies of their client trust bank statements and an accounting report showing the funds they are required to hold on behalf of their clients, to prove they have sufficient funds in their client trust account. Ms. Sherwood has brought this idea to the attention of the Director of Government Affairs at the Hawaii Association of Realtors. This is done in other states across the country and we would like to see the same procedures applied here," she said.
We want to make sure all property owners feel confident their cash reserves with property management companies in Hawaii are safe," said Mayer.
Locally owned and operated, Elite Pacific Properties was founded in 2005 by Stephen Cipres and Paul Mayer. The company has staffed offices on Oahu, Maui, Kauai, and the Big Island. Elite Pacific Properties is a full service real estate firm focused on luxury residential property sales, multi-unit projects/developer sales, vacation rentals and property management. Elite is a member of Who's Who In Luxury Real Estate, an exclusive organization of the top luxury brokers in the world; has been named to Inc. Magazine's Inc. 5000" list for the past four years; and was a Pacific Business News “Fastest 50" company for the past three years. For more information, visit ElitePacific.com.