STAND. COM. REP. NO. 1738

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 36
                                     S.D. 2
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 36, S.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO CONDOMINIUMS,"

begs leave to report as follows:

     The purpose of this bill is to increase the clarity,
fairness, and economic efficiency of laws governing condominium
associations by:

     (1)  Specifying where and in what type of institutions and
          investments, associations may place their funds;

     (2)  Providing the association a limited lien priority over
          mortgages to collect unpaid common assessments; and

     (3)  Allowing the association to cease providing services
          and privileges to an apartment that is delinquent in
          payment of common assessments.

     Testimony in support of this bill was received from several
concerned individuals.  Testimony supporting the bill and
suggesting amendments was submitted by the Hawaii Association of
Realtors, Hawaii Council of Associations of Apartment Owners, and
Community Associations Institute.  The Association of Apartment
Owners of Makakilo Hale 1 strongly supported the intent of this
measure and suggested amendments.  The Office of Consumer
Protection and Real Estate Commission of the Department of

 
 
                                 STAND. COM. REP. NO. 1738
                                 Page 2

 
Commerce and Consumer Affairs, and Association of Apartment
Owners of the Villa on Eaton Square commented and requested
amendments.  The Hawaii Bankers Association, Hawaii League of
Savings Institutions, and Mortgage Bankers Association opposed
the bill.

     To encourage further discussion and progress toward
resolution of the problems addressed by this bill, your Committee
has amended this measure by replacing its contents with those of
four House bills that passed out of your Committee earlier this
session:  H.B. No. 647, H.D. 1; H.B. No. 648, H.D. 1;  H.B. No.
766, H.D. 1; and H.B. No. 1276, H.D. 1.  The amended bill differs
from S.B. No. 36, S.D. 2 in that it includes provisions:

     1)   Permitting associations to collect delinquent common
          assessments directly from the tenant upon notice to the
          apartment owner; and

     2)   Clearly specifying the time at which a person
          purchasing an apartment at a foreclosure sale becomes
          liable for the apartment's common assessments.

Like S.B. No. 36, S.D. 2, the amended bill:

     1)   Allows associations to terminate services and
          privileges to apartments delinquent in payment of
          common assessments, but also includes greater
          procedural protections for the apartment owner; and

     2)   Specifies where and in what type of institutions and
          investments an association may place its funds.

     In addition, your Committee has made technical,
nonsubstantive amendments for purposes of clarity and style.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 36, S.D. 2, as amended herein, and recommends
that it pass Second Reading in the form attached hereto as S.B.
No. 36, S.D. 2, H.D. 1, and be placed on the calendar for Third
Reading.


 
 
 
 
 
 
                                 STAND. COM. REP. NO. 1738
                                 Page 3

 
                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair