9th Circuit rules a Hawaii condo association's 2022 amendment raising minimum lease terms to 365…
Bowa Estates Limited v. Association of Apartment Owners of Wailea Point Village
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9th Circuit rules a Hawaii condo association's 2022 amendment raising minimum lease terms to 365 days was invalid because it required unanimous owner approval, not just a 67% vote.
Why it matters
The Ninth Circuit reversed a Hawaii federal district court ruling that had upheld a 2022 amendment to the Wailea Point Village condominium declaration, which raised the minimum lease term from 30 days to 365 days. The court held that because the amendment changed a restriction on the use of apartments, it required unanimous owner consent under the declaration's Section 10, not just the standard 67 percent approval. Since unanimous consent was never obtained, the amendment was invalid.
Who it affects
This ruling directly affects the unit owners and the Association of Apartment Owners of Wailea Point Village in Hawaii. More broadly, it may be relevant to other condominium associations and property owners in the Ninth Circuit whose governing documents contain similar amendment provisions requiring unanimous or supermajority consent for certain types of changes.
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Decision issued Jul 15, 2026
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Jul 15, 2026 · Unpublished opinion
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DEEPER READ
Wailea Point Village is a condominium community in Hawaii governed by a recorded declaration that acts as a contract among unit owners and their association. Originally, owners could rent their units for periods longer than 30 days. In 2022, the Association of Apartment Owners proposed an amendment to raise the minimum lease period to more than 365 days, effectively banning all short-term and medium-term rentals. More than 70 percent of owners voted in favor, but a group of unit owners challenged the amendment, arguing it required unanimous consent. The central legal question was how to read a specific sentence in Section 10 of the declaration. Section 10 generally allows amendments with 67 percent approval, but demands unanimous consent for amendments 'effecting a change in the fundamental purposes of or restrictions on the use of any apartment or the common elements.' The dispute came down to grammar: does the word 'fundamental' modify only 'purposes,' or does it also modify 'restrictions on the use of'? The condo association argued 'fundamental' applied to both, meaning only changes to fundamental restrictions would require unanimity. The plaintiff owners argued 'fundamental' applied only to 'purposes,' so any change to a use restriction, fundamental or not, would require unanimous approval. The Ninth Circuit agreed with the plaintiff owners. Applying Hawaii contract law, the court read the plain language of Section 10 and concluded that 'fundamental' modifies only the word 'purposes,' not 'restrictions on the use of.' The court relied on two main grammatical principles. First, the nearest-reasonable-referent canon holds that a modifier is best read to apply only to the noun it immediately precedes, especially when the surrounding phrases are not symmetrical. Here, 'purposes of' and 'restrictions on the use of' have different internal structures, making it awkward to stretch 'fundamental' across both. Second, the word 'or' in the sentence is disjunctive, signaling that the two alternatives should be treated separately, which limits how far the modifier 'fundamental' can reach. Because the 2022 amendment changed a restriction on apartment use specifically addressed elsewhere in the declaration, the court held it required unanimous consent. That consent was never obtained, so the amendment was invalid. The court reversed the district court's summary judgment in favor of the condo association and ruled for the plaintiff owners. There was no dissent noted in the opinion.
CITATION AND RECORD
Record source: CourtListener
NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 15 2026 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT BOWA ESTATES LIMITED; C. DONALD No. 25-6258 DEMPSEY, Trustee of the Dempsey Family D.C. No. Trust; MAYAKO Y. DEMPSEY, Trustee of 1:23-cv-00582-MWJS-RT the Dempsey Family Trust; JOACHIM BOSCH, Trustee of the Legacy Trust; MICHELLE BOSCH, Trustee of the Legacy MEMORANDUM* Trust; THOMAS C. AINSWORTH, Trustee of the R. Clayton Ainsworth 1997 Irrevocable Property Trust, Plaintiffs - Appellants, v. ASSOCIATION OF APARTMENT OWNERS OF WAILEA POINT VILLAGE, by and through its Board of Directors; DALE KNUTSON, individually; EILEEN HANTKE, individually; JILL INSKEEP, individually; JOSEPH AZAR, individually; LOWELL MCADAM, individually; MICHAEL MURRAY, individually; MIKE AVILA, individually; ROB KING, individually; ROBBIE DEIN, individually; ROBERT HOFFMAN, individually; STEVE WELLS, individually, Defendants - Appellees. * This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Appeal from the United States District Court for the District of Hawaii Micah W. J. Smith, District Judge, Presiding Argued and Submitted June 25, 2026 Honolulu, Hawaii Before: N.R. SMITH, MILLER, and JOHNSTONE, Circuit Judges. Plaintiffs-appellants condominium owners appeal from the district court’s grant of summary judgment in favor of the Association of Apartment Owners of Wailea Point Village (the “Condo Association”) on the Condo Association’s counterclaim seeking declaratory relief that a challenged amendment to the condominium’s declaration was valid. We have jurisdiction under 28 U.S.C. § 1291, and we reverse. Wailea Point Village is governed by a recorded declaration (the “Declaration”), which serves as the contract between unit owners and the Condo Association. Originally, the Declaration permitted owners to lease their units only for periods greater than 30 days. But in 2022, an amendment to the Declaration (the “Amendment”) was proposed to increase the minimum lease term to greater than 365 days. More than 70 percent of owners voted in favor of the amendment, but plaintiffs contend that the Amendment is nonetheless invalid because it was not approved unanimously. Section 10 of the Declaration generally permits amendments upon approval by 67 percent of owners but requires unanimous consent for amendments “effecting a change in the fundamental purposes of or restrictions on 2 25-6258 the use of any apartment or the common elements.” The principal issue on appeal is whether the adjective “fundamental” modifies only “purposes” or both “purposes” and “restrictions on the use.” “In interpreting a contract [under Hawaii law], ‘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) (quoting Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 839 P.2d 10, 24 (Haw. 1992)); accord Harrison v. Casa De Emdeko, Inc., 418 P.3d 559, 567 (Haw. 2018). Section 10 of the Declaration is not “ambiguous, vague, or ‘susceptible to more than one meaning,’” Cowan, 574 P.3d at 295 (quoting Hawaiian Ass’n of Seventh-Day Adventists v. Wong, 305 P.3d 452, 461 (Haw. 2013)), because its plain language clearly sets forth that “fundamental” modifies “purposes of” and does not modify “restrictions on the use of.” Because “purposes of” is not part of a straightforward parallel series with “restrictions on the use of,” the nearest-reasonable-referent canon suggests that “fundamental” is best read to modify only the noun it immediately precedes. See Prison Legal News v. Ryan, 39 F.4th 1121, 1131 (9th Cir. 2022) (citing Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 152 (2012)); see also Sylvester v. Administrative Dir. of Cts., 494 P.3d 1219, 1223–24 3 25-6258 (Haw. 2021) (discussing how the series-qualifier canon applies only “when there is a straightforward, parallel construction that involves all nouns or verbs in a series” (quoting Facebook, Inc. v. Duguid, 592 U.S. 395, 402 (2021))). The lack of parallelism in Section 10 is evident from its text. First, the phrases differ in their “internal modifiers or structure.” Lockhart v. United States, 577 U.S. 347, 352 (2016). In Section 10, “purposes” is followed by the preposition “of,” whereas “restrictions” is followed by the distinct and longer phrase “on the use of.” These syntactic differences make it awkward to read “fundamental” as carrying over to “restrictions” because the terms on either side of the “or” are not symmetrical. “[I]t takes more than a little mental energy to process” the words following “fundamental,” “making it a heavy lift to carry the modifier across them all.” Id. at 351; cf. Sylvester, 494 P.3d at 1223–24. Second, Section 10’s disjunctive use of the term “or” “indicates alternatives and requires that they be treated separately.” United States v. Nishiie, 996 F.3d 1013, 1023 (9th Cir. 2021) (quoting Azure v. Morton, 514 F.2d 897, 900 (9th Cir. 1975)); see also State v. Rogan, 573 P.3d 616, 622 (Haw. 2025) (“The import of the word ‘or’ is clear. It is a disjunctive that signals an alternative.”). The use of “or” limits the reach of the prepositive modifier “fundamental” and thereby “avoids jumping [for]ward over multiple prepositional phrases to reach the intended referent.” Hall v. United States Dep’t of Agric., 984 F.3d 825, 838 (9th Cir. 2020). 4 25-6258 Because lengthening the minimum lease term to prohibit all short-term and medium-term rentals changed a restriction on the use of the apartments that is specifically addressed in Section 7 of the Declaration, the amendment required unanimous consent. It is undisputed that unanimous consent was not obtained. Thus, the amendment was not validly adopted, and we reverse the district court’s grant of summary judgment on the Condo Association’s counterclaim for declaratory relief. REVERSED. 5 25-6258
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