REPORT TITLE:
Construction Financing


DESCRIPTION:
Requires that an owner-builder must show proof of financing
before work may commence on a construction project that exceeds
$250,000.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1904
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO CONSTRUCTION.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The Hawaii Revised Statutes is amended by adding
 
 2 a new chapter to be appropriately designated and to read as
 
 3 follows:
 
 4                             "CHAPTER
 
 5                      OWNER-BUILDER FINANCING
 
 6      § -1 Definitions.  As used in this chapter:
 
 7      "Construction" means the process of altering, adding to,
 
 8 subtracting from, improving, enhancing, or beautifying any
 
 9 realty, or constructing, altering, repairing, adding to,
 
10 subtracting from, improving, moving, wrecking, or demolishing any
 
11 building, highway, road, railroad, excavation, or other
 
12 structure, project, development, or improvement, or doing any
 
13 part thereof, including the erection of scaffolding or other
 
14 structures or works in connection therewith.
 
15      "Contractor" means any person who must be licensed under
 
16 chapter 444.
 
17      "Escrow" means any transaction affecting the title to real
 
18 property, including leaseholds, proprietary leaseholds, and
 
19 condominiums, in which a person not a party to the transaction
 

 
Page 2                                                     1904
                                     H.B. NO.           
                                                        
                                                        

 
 1 and neither having nor acquiring any interest in the title
 
 2 receives from one party to the transaction, holds until the
 
 3 happening of an event or performance of a condition and then
 
 4 delivers to another party to the transaction, any money or other
 
 5 consideration or any instrument affecting the title to that real
 
 6 property, all in accordance with the terms of the agreement
 
 7 between the parties to the transaction.
 
 8      "Escrow account" means any escrow depository account with a
 
 9 financial institution to which cash or items are deposited with
 
10 respect to any escrow.
 
11      "Escrow depository" means the corporation which, in an
 
12 escrow, and for compensation, receives, holds, and delivers the
 
13 money, other consideration, or instrument affecting title to real
 
14 property.
 
15      "Real property", "realty", or "property" includes all land
 
16 and appurtenances thereof and the buildings, structures, fences,
 
17 and improvements erected on or affixed to the land, and any
 
18 fixture which is erected on or affixed to the land, buildings,
 
19 structures, fences, and improvements, including all machinery and
 
20 other mechanical or other allied equipment and the foundations
 
21 thereof, whose use is necessary to the utility of the land,
 
22 buildings, structures, fences, and improvements, or whose removal
 

 
 
 
Page 3                                                     1904
                                     H.B. NO.           
                                                        
                                                        

 
 1 therefrom cannot be accomplished without substantial damage to
 
 2 the land, buildings, structures, fences, and improvements,
 
 3 excluding, however, any of growing crops. 
 
 4      § -2   Proof of financing.(a)  Before work may be
 
 5 commenced on a construction project that is:
 
 6      (1)  To be performed by:
 
 7           (A)  A general contractor and is valued in excess of
 
 8                $250,000; or
 
 9           (B)  One or more subcontractors, where the total value
 
10                of the work to be performed exceeds $250,000;
 
11           and
 
12      (2)  For the personal use of the owner or lessee of the
 
13           property that is the site of the construction project,
 
14           or their grandparents, parents, siblings, or children,
 
15           and will not be offered for sale or lease,
 
16 the property owner or lessee shall provide project contractors
 
17 with proof of financing of the total cost of the construction
 
18 project less any amounts paid by the property owner or lessee to
 
19 project contractors.
 
20      (b)  If the proof of financing is in the form of moneys, or
 
21 other consideration placed in an escrow account, the escrow
 
22 depository shall be licensed under chapter 419, and the amount
 

 
 
 
Page 4                                                     1904
                                     H.B. NO.           
                                                        
                                                        

 
 1 placed in escrow shall cover the total cost of the project less
 
 2 any amounts paid by the property owner or lessee to project
 
 3 contractors.  Interest earned on the funds held in escrow
 
 4 pursuant to this section shall accrue to the credit of the
 
 5 purchaser except as is otherwise provided in writing by the
 
 6 purchasers and sellers in the escrow."
 
 7      SECTION 2.  This Act shall take effect upon its approval.
 
 8 
 
 9                           INTRODUCED BY:  _______________________