REPORT TITLE:
Condos; Sales; Own/Occ. Rqmts


DESCRIPTION:
Streamlines owner-occupancy sales requirements for condominiums.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2310
HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE SALE OF RESIDENTIAL CONDOMINIUM APARTMENTS TO
   OWNER-OCCUPANTS.



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

 1      SECTION 1.  The legislature finds that certain governmental
 
 2 regulations pertaining to the sale of residential condominium
 
 3 apartments in Hawaii unnecessarily add to the time, cost, and
 
 4 efficiency of selling those apartments, all of which negatively
 
 5 impact the consumer.  Of particular concern is part VI of chapter
 
 6 514A, Hawaii Revised Statutes, which sets forth procedures to be
 
 7 followed in the sale of residential condominium apartments to
 
 8 prospective owner-occupants.
 
 9      The legislature finds that procedures governing the sale of
 
10 condominiums to owner-occupants were initially imposed in 1980
 
11 when real estate prices in Hawaii were rising rapidly and
 
12 speculative purchasing limited the number of homes available to
 
13 bona fide owner-occupants, or resulted in such owner-occupants
 
14 paying more for such condominium.  Publication of the presale
 
15 notice and more restrictive sales procedures were seen as a way
 
16 of offering bona fide owner-occupants a first opportunity to
 
17 purchase condominium apartments at the initial offering price.
 
18      The real estate market has drastically changed since presale
 
19 notice requirements and restrictive sales practices were codified
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 in the Hawaii Revised Statutes.  Speculative investment is no
 
 2 longer a reality, and skyrocketing real estate prices evident in
 
 3 the late 1970s and early 1980s no longer exist.  The large number
 
 4 of condominium apartments available for sale and healthy
 
 5 competition in the marketplace have resulted in competitive
 
 6 prices and an environment in which an owner-occupant buyer may be
 
 7 selective.  The legislature therefore finds that some of the
 
 8 owner-occupancy sales requirements as set forth in part VI of
 
 9 chapter 514A are no longer relevant in today's market.  Certain
 
10 of the statutory requirements are confusing and cumbersome and
 
11 often inhibit sales and discourage buyers, especially first-time
 
12 homebuyers who are not familiar with condominiums and related
 
13 statutory requirements.  The requirements are also difficult to
 
14 monitor and regulate.  Accordingly, the legislature believes that
 
15 changes to chapter 514A to facilitate the marketing and sale of
 
16 condominium apartments are warranted.
 
17      The purpose of this Act is to amend part VI of chapter 514A,
 
18 Hawaii Revised Statutes, in order to set forth sales and
 
19 marketing requirements that give priority to the sale of
 
20 residential condominium apartments to owner-occupants, without
 
21 hampering a developer's need to maintain flexibility in an ever-
 
22 changing market.
 
23      SECTION 2.  Section 514A-101, Hawaii Revised Statutes, is
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1 amended as follows:
 
 2      1.  By amending the definition of "chronological system" to
 
 3 read as follows:
 
 4      ""Chronological system" means a system in which the
 
 5 residential [units] apartments designated for sale to prospective
 
 6 owner-occupants are offered for sale to prospective owner-
 
 7 occupants in the chronological order in which the prospective
 
 8 owner-occupants deliver to the developer or the designated real
 
 9 estate broker completed owner-occupant affidavits, executed sales
 
10 contracts[,] or reservations, and earnest money deposits."
 
11      2.  By amending the definition of "residential unit" to read
 
12 as follows:
 
13      ""Residential [unit"] apartment" means "apartment" as
 
14 defined in section 514A-3, but excludes:
 
15      (1)  Any apartment intended for commercial use; and
 
16      (2)  Any apartment designed and constructed for hotel or
 
17           resort use which is located on any parcel of real
 
18           property designated and governed by a county for hotel
 
19           or resort use pursuant to:
 
20           (A)  Section 46-4; or
 
21           (B)  Any other authority granted by law to a county."
 
22      3.  By adding a definition of "initial date of sale" to read
 
23 as follows:
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1      ""Initial date of sale" means the date of the first
 
 2 publication of the announcement or advertisement required
 
 3 pursuant to section 514A-102."
 
 4      4.  By amending the definition of "owner-occupant" to read
 
 5 as follows:
 
 6      ""Owner-occupant" means any individual in whose name sole or
 
 7 joint legal title is held in a residential [unit] apartment
 
 8 which, simultaneous to such ownership, serves as the individual's
 
 9 principal residence, as defined by the state department of
 
10 taxation, for a period of not less than three hundred and sixty-
 
11 five consecutive days; provided that the individual retains
 
12 complete possessory control of the premises of the residential
 
13 [unit] apartment during this period.  An individual shall not be
 
14 deemed to have complete possessory control of the premises if the
 
15 individual rents, leases, or assigns the premises for any period
 
16 of time to any other person in whose name legal title is not
 
17 held[.]; except that an individual shall be deemed to have
 
18 complete possessory control even when the individual conveys or
 
19 transfers the apartment into a trust for estate planning purposes
 
20 and continues in the use of the premise as the individual's
 
21 principal residence during this period."
 
22      SECTION 3.  Section 514A-102, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
Page 5                                                     2310
                                     H.B. NO.           
                                                        
                                                        

 
 1      "§514A-102  Announcement[,] or advertisement, publication.
 
 2 [(a)  At least once in each of the two successive weeks following
 
 3 the issuance of an effective date of the first public report for
 
 4 the condominium project, the developer shall cause to be
 
 5 published in the classified section of at least one newspaper
 
 6 published daily in the State with a general circulation in the
 
 7 county in which the project is to be located, and, if the project
 
 8 is located other than on the island of Oahu, in at least one
 
 9 newspaper which is published at least twice weekly in the county
 
10 in which the project is to be located, an announcement containing
 
11 a summary of at least the following information:
 
12      (1)  The location of the project; 
 
13      (2)  A statement of:
 
14           (A)  The total number of apartments to be included in
 
15                the project; 
 
16           (B)  The number of apartments designated as residential
 
17                units;
 
18           (C)  The price range of the units; 
 
19           (D)  The approximate size of the units; and 
 
20           (E)  A designation whether the units are fee simple or
 
21                leasehold;
 
22      (3)  A statement of the intended use, such as, but not
 
23           limited to, commercial, time sharing, or vacation
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           rental, of any apartment in the project other than a
 
 2           residential unit designated for use by an owner-
 
 3           occupant;
 
 4      (4)  A statement of the residential units by apartment
 
 5           numbers that have been designated by the developer
 
 6           pursuant to section 514A-103, and that such apartments
 
 7           shall initially be offered for a thirty-day period
 
 8           after the first publication of the announcement to only
 
 9           prospective owner-occupants who will use the
 
10           residential units as their principal residences for a
 
11           period of not less than three hundred sixty-five
 
12           consecutive days;
 
13      (5)  A statement of the availability and number of
 
14           residential units in the project that are "accessible"
 
15           and "adaptable," as those terms are defined and
 
16           interpreted in 24 Code of Federal Regulations §100 et
 
17           seq., for persons with disabilities;
 
18      (6)  A statement that the residential units that have been
 
19           designated by the developer pursuant to section
 
20           514A-103 shall be offered to prospective purchasers:
 
21           (A)  Chronologically in the order in which the
 
22                purchasers submit to the developer a completed
 
23                owner-occupant affidavit, an executed sales
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1                contract, and an earnest money deposit in a
 
 2                reasonable amount designated by the developer; or
 
 3           (B)  In an order determined by a public lottery, to be
 
 4                held at a date, time, and place specified in the
 
 5                announcement; provided that any person interested
 
 6                in participating in the lottery shall submit a
 
 7                completed owner-occupant affidavit to the
 
 8                developer or designated real estate broker by a
 
 9                date designated by the developer; and
 
10      (7)  The name, telephone number, and address of the
 
11           developer or the real estate broker, who shall be
 
12           designated by the developer, whom any interested
 
13           individual may contact to secure an owner-occupant
 
14           affidavit, public report, and to obtain further
 
15           information on the project.
 
16      (b)  Within thirty days of the issuance of an effective date
 
17 of the first public report for the condominium project, the
 
18 developer shall file with the commission proof of publication of
 
19 the announcement required under subsection (a).
 
20      (c)  The developer or the developer's broker shall also
 
21 provide a copy of the announcement and the first public report
 
22 for the condominium project to each prospective purchaser and by
 
23 certified mail, delivered to the addressee only, return receipt
 

 
Page 8                                                     2310
                                     H.B. NO.           
                                                        
                                                        

 
 1 requested, to any individual occupying such unit immediately
 
 2 prior to any conversion.] At least once in each of two successive
 
 3 weeks, the developer shall cause to be published in at least one
 
 4 newspaper published daily in the State with a general circulation
 
 5 in the county in which the project is to be located, and, if the
 
 6 project is located other than on the island of Oahu, in at least
 
 7 one newspaper which is published at least weekly in the county in
 
 8 which the project is to be located, an announcement or
 
 9 advertisement containing the following information:
 
10      (1)  The location of the project;
 
11      (2)  The starting price of the residential apartments;
 
12      (3)  A designation as to whether the residential apartments
 
13           are to be sold in fee simple or leasehold;
 
14      (4)  A statement that for a thirty-day period following the
 
15           initial date of sale of the condominium project, at
 
16           least fifty per cent of the residential apartments
 
17           being marketed shall be offered only to prospective
 
18           owner-occupants;
 
19      (5)  The name, telephone number, and address of the
 
20           developer or other real estate broker designated by the
 
21           developer, whom any interested individual may contact
 
22           to secure an owner-occupant affidavit, public report,
 
23           and any other information on the project; and
 

 
Page 9                                                     2310
                                     H.B. NO.           
                                                        
                                                        

 
 1      (6)  If applicable, a statement that the residential
 
 2           apartments will be offered to prospective purchasers
 
 3           through a public lottery."
 
 4      SECTION 4.  Section 514A-103, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "§514A-103  Designation of residential units.  (a)  The
 
 7 developer of any project containing residential [units]
 
 8 apartments shall designate at least fifty per cent of such
 
 9 [units] apartments for sale to prospective owner-occupants
 
10 pursuant to section 514A-105.  Such [units] apartments shall
 
11 constitute a proportionate representation of all the residential
 
12 [units] apartments in the project with regard to factors of
 
13 square footage, number of bedrooms and bathrooms, floor level,
 
14 and whether or not such unit has a lanai.
 
15      (b)  A developer shall have the right to substitute a unit
 
16 designated for owner-occupants with a unit that is not so
 
17 designated provided that the units are similar with regard to
 
18 factors enumerated in subsection (a).  Such a substitution will
 
19 not require an amendment to the public report."
 
20      SECTION 5.  Section 514A-104, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "§514A-104  [Unit] Apartment selection, requirements.(a)
 
23 When the chronological system is used, the developer or the
 

 
Page 10                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1 developer's real estate broker, as the case may be, shall offer
 
 2 the residential [units] apartments that have been designated
 
 3 pursuant to section 514A-103 as follows:
 
 4      (1)  For thirty days from the date of the first published
 
 5           announcement or advertisement required under section
 
 6           514A-102, the developer or developer's real estate
 
 7           broker shall offer the residential [units] apartments
 
 8           that have been designated pursuant to section 514A-103
 
 9           to prospective purchasers chronologically in the order
 
10           in which they submit to the developer or the
 
11           developer's real estate broker, a completed owner-
 
12           occupant affidavit, an executed sales contract[,] or
 
13           reservation, and an earnest money deposit in a
 
14           reasonable amount designated by the developer.  The
 
15           developer or the developer's real estate broker shall
 
16           maintain at all times a sufficient number of sales
 
17           contracts and affidavits for prospective owner-
 
18           occupants to execute.  Prospective purchasers who do
 
19           not have the opportunity to select a residential [unit]
 
20           apartment during the thirty-day period shall be placed
 
21           on a back-up reservation list in the order in which
 
22           they submit a completed owner-occupant affidavit and
 
23           earnest money deposit in a reasonable amount designated
 

 
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                                     H.B. NO.           
                                                        
                                                        

 
 1           by the developer.
 
 2      (2)  If two or more prospective owner-occupants intend to
 
 3           reside jointly in the same residential [unit,]
 
 4           apartment, only one residential [unit] apartment
 
 5           designated pursuant to section 514A-103 shall be
 
 6           offered to them or only one of them shall be placed on
 
 7           the back-up reservation list. 
 
 8      (3)  No developer, employee or agent of the developer, or
 
 9           any real estate licensee shall, either directly or
 
10           through any other person, release any information or
 
11           inform any prospective owner-occupant about the
 
12           publication announcement or advertisement referred to
 
13           in section 514A-102, including the date it is to appear
 
14           and when the chronological system will be initiated,
 
15           until after the announcement or advertisement is
 
16           published.
 
17      (4)  The developer shall compile and maintain a list of all
 
18           prospective purchasers that submitted a completed
 
19           owner-occupant affidavit, an executed sales contract[,]
 
20           or reservation, and an earnest money deposit, and
 
21           maintain the back-up reservation list, if any.  Upon
 
22           the request of the commission, the developer shall
 
23           provide a copy of the list of all prospective
 

 
Page 12                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1           purchasers and the back-up reservation list.
 
 2      (b)  When the public lottery system is used, the developer
 
 3 or the developer's broker, as the case may be, shall offer the
 
 4 residential [units] apartments that have been designated pursuant
 
 5 to section 514A-103 as follows:
 
 6      (1)  From the date of the first published announcement or
 
 7           advertisement required under section 514A-102, until
 
 8           five calendar days after the last published
 
 9           announcement[,] or advertisement, the developer or
 
10           developer's real estate broker shall compile and
 
11           maintain a list of all prospective owner-occupants who
 
12           have submitted to the developer or the developer's real
 
13           estate broker a duly executed owner-occupant affidavit.
 
14           All prospective owner-occupants on this list shall be
 
15           included in the public lottery described below.  The
 
16           developers and the developer's real estate broker shall
 
17           maintain at all times sufficient copies of such
 
18           affidavits for prospective owner-occupants to execute.
 
19           Upon the request of the commission, the developer shall
 
20           provide a copy of the lottery list of those prospective
 
21           owner-occupants.
 
22      (2)  The developer or developer's real estate broker shall
 
23           conduct a public lottery [no later than thirty calendar
 

 
Page 13                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1           days after the first published announcement, but no
 
 2           earlier than six calendar days after the last published
 
 3           announcement.  The public lottery shall be held] on the
 
 4           date, time, and location as set forth in the published
 
 5           announcement.  Any person, including all prospective
 
 6           owner-occupants eligible for the lottery, shall be
 
 7           allowed to attend the lottery.
 
 8      (3)  The public lottery shall be conducted in such a manner
 
 9           that no prospective owner-occupant shall have an unfair
 
10           advantage, and shall, as to all owner-occupants whose
 
11           affidavits were submitted to the developer or the
 
12           developer's real estate broker within the time period
 
13           referred to in the first sentence of subsection (b)(1)
 
14           above, be conducted without regard to the order in
 
15           which the affidavits were submitted.  If two or more
 
16           prospective owner-occupants intend to reside jointly in
 
17           the same residential [unit,] apartment, only one of
 
18           them shall be entitled to enter the public lottery.
 
19      (4)  [At] After the public lottery, each prospective owner-
 
20           occupant purchaser, in the order in which they are
 
21           selected in the lottery, shall be given the opportunity
 
22           to select one of the residential [units] apartments
 
23           that have been designated pursuant to section 514A-103,
 

 
Page 14                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1           execute a sales contract, and submit an earnest money
 
 2           deposit in a reasonable amount designated by the
 
 3           developer.  The developer shall maintain a list, in the
 
 4           order of selection, of all prospective purchasers
 
 5           selected in the lottery, and maintain a list of all
 
 6           prospective purchasers who selected one of the
 
 7           residential [units] apartments designated pursuant to
 
 8           section 514A-103.  Those prospective purchasers
 
 9           selected in the lottery who did not have the
 
10           opportunity to select one of the residential [units]
 
11           apartments designated pursuant to section 514A-103 but
 
12           who submitted an earnest money deposit in a reasonable
 
13           amount designated by the developer shall be placed on a
 
14           back-up reservation list in the order in which they
 
15           were selected in the public lottery.  Upon request of
 
16           the commission, copies of the aforementioned lists
 
17           shall be submitted."
 
18      SECTION 6.  Section 514A-104.5, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "§514A-104.5  Affidavit.(a)  The owner-occupant affidavit
 
21 required by section 514A-104 shall expire after three hundred
 
22 sixty-five consecutive days have elapsed after the recordation of
 
23 the instrument conveying the apartment to the affiant.  The
 

 
Page 15                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1 affidavit shall expire prior to this period upon acquisition of
 
 2 title to the property by an institutional lender or investor
 
 3 through mortgage foreclosure, foreclosure under power of sale, or
 
 4 a conveyance in lieu of foreclosure.
 
 5      (b)  The affidavit shall include statements by the affiant
 
 6 affirming that[:
 
 7      (1)  If the affiant intends to secure financing from a
 
 8           financial institution, the financing shall be an owner-
 
 9           occupant mortgage loan;
 
10      (2)  At any time after obtaining adequate financing or a
 
11           commitment for adequate financing up until the
 
12           expiration of the affidavit,] the affiant shall notify
 
13           the commission immediately upon any decision to cease
 
14           being an owner-occupant[; and
 
15      (3)  At closing of escrow the affiant shall file a claim for
 
16           an owner-occupant property tax exemption with the
 
17           appropriate county office].
 
18      (c)  The affidavit shall be personally executed by all the
 
19 prospective owner-occupants of the residential [unit] apartment
 
20 and shall not be executed by an attorney-in-fact.
 
21      [(d)  The affidavit shall be reaffirmed as provided in
 
22 section 514A-105(c)]."
 
23      SECTION 7.  Section 514A-104.6, Hawaii Revised Statutes, is
 

 
Page 16                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1 amended to read as follows:
 
 2      "[[]§514A-104.6[]]  Prohibitions.(a)  No person who has
 
 3 executed an owner-occupant affidavit shall sell or offer to sell,
 
 4 lease or offer to lease, rent or offer to rent, assign or offer
 
 5 to assign, or convey the [unit] apartment until at least three
 
 6 hundred sixty-five consecutive days have elapsed since the
 
 7 recordation of the purchase[.]; provided that a person who
 
 8 continues in the use of the premise as the individual's principal
 
 9 residence during this period, may convey or transfer the
 
10 apartment into a trust for estate planning purposes.  Any
 
11 contract or instrument entered into in violation of this part
 
12 shall be subject to the remedies provided in section 514A-69.
 
13      (b)  No developer, employee or agent of a developer, or real
 
14 estate licensee shall violate or aid any other person in
 
15 violating this part.  [It is the affirmative duty of any
 
16 developer, employee or agent of a developer, and real estate
 
17 licensee to immediately report to the commission any person who
 
18 violates or attempts to violate this part.]"
 
19      SECTION 8.  Section 514A-105, Hawaii Revised Statutes, is
 
20 amended to read as follows:
 
21      "§514A-105  Sale of residential [units.] apartments;
 
22 developer requirements.  [(a)  From the issuance of an effective
 
23 date of the first public report until the developer has complied
 

 
Page 17                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1 with section 514A-104, the developer shall offer all the
 
 2 residential units designated pursuant to section 514A-103 for
 
 3 sale only as set forth in section 514A-104; provided that
 
 4 notwithstanding this part, in the case of a project which
 
 5 includes one or more existing structures being converted to
 
 6 condominium status, each residential unit contained in the
 
 7 project shall first be offered for sale to any individual
 
 8 occupying the unit immediately prior to the conversion and who
 
 9 submits an owner-occupant affidavit and an earnest money deposit
 
10 in a reasonable amount designated by the developer.
 
11      (b)  Each contract for the purchase of a designated
 
12 residential unit by an owner-occupant may be conditioned upon the
 
13 purchaser obtaining adequate financing, or a commitment for
 
14 adequate financing, by a date which is no earlier than fifty
 
15 calendar days after the developer's execution and acceptance of
 
16 the sales contract, and if the financing or commitment is not
 
17 obtained, the contract may be canceled by either the developer or
 
18 the purchaser.  If the sales contract is so canceled, the
 
19 developer shall re-offer the residential unit first to those
 
20 prospective owner-occupants on the back-up reservation list who
 
21 have not executed a sales contract for a residential unit in the
 
22 project in the order in which their names appear on that list.
 
23      (c)  Any prospective owner-occupant who executes an
 

 
Page 18                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1 affidavit as set forth in section 514A-104.5 and a sales contract
 
 2 for the sale of one of the designated residential units shall be
 
 3 required to reaffirm the person's intent to be an owner-occupant
 
 4 no earlier than the person's receipt for a final public report
 
 5 and no later than closing of escrow for the unit.  The developer
 
 6 may provide in its sales contract that failure to sign the
 
 7 reaffirmation upon reasonable request shall constitute a default
 
 8 under the sales contract by the person failing to sign.  The
 
 9 developer shall cancel the sales contract or reservation of any
 
10 person failing to make the reaffirmation pursuant to this
 
11 subsection and shall re-offer the residential unit first to those
 
12 prospective owner-occupants on the back-up reservation list who
 
13 have not executed a sales contract for a residential unit in the
 
14 project, in the order in which their names appear on that list.
 
15 If the sales contract has become binding upon the purchaser
 
16 pursuant to section 514A-62, the developer may exercise the
 
17 remedies provided for in the sales contract and any other
 
18 remedies provided by law.
 
19      (d)  Any prospective owner-occupant on the back-up
 
20 reservation list, at any time, may be offered any residential
 
21 unit in the project not subject to the designation required by
 
22 section 514A-103.
 
23      (e)  The developer, escrow agent, or any other party, at the
 

 
Page 19                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1 direction of the developer, shall mail twice to each owner-
 
 2 occupant by registered or certified mail, once by the sixtieth
 
 3 day and once by the two hundred seventieth day following the
 
 4 conveyance of the first unit to an owner-occupant listed on the
 
 5 final reservation list, a complete copy of the executed affidavit
 
 6 to inform them of their legal obligations and penalties as
 
 7 provided for in this part.
 
 8      The developer shall keep records of its notice mailings and
 
 9 the owner-occupant affidavits for a period of three years
 
10 starting from the date of its first mailing pursuant to this
 
11 subsection and the date of the conveyance of the first unit to an
 
12 owner-occupant listed on the final reservation list.  Failure of
 
13 the developer to give the notices required by this subsection
 
14 shall not affect title to the owner-occupant unit or the
 
15 obligations of the owner-occupant pursuant to this part.] (a)
 
16 The developer may go to sale using either a chronological system
 
17 or a lottery system at any time after an effective date for a
 
18 public report has been issued and for which the effective date
 
19 has not expired.
 
20      (b)  For a thirty-day period following the initial date of
 
21 sale of apartments in a condominium project, at least fifty per
 
22 cent of the apartments being sold shall be offered for sale only
 
23 to prospective owner-occupants; provided that notwithstanding
 

 
Page 20                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1 this part, in the case of a project that includes one or more
 
 2 existing structures being converted to condominium status, each
 
 3 residential apartment contained in the project first shall be
 
 4 offered for sale to any individual occupying the apartment
 
 5 immediately prior to the conversion and who submits an owner-
 
 6 occupant affidavit and an earnest money deposit in a reasonable
 
 7 amount designated by the developer.
 
 8      (c)  Each contract for the purchase of a residential
 
 9 apartment by an owner-occupant may be conditioned upon the
 
10 purchaser obtaining adequate financing, or a commitment for
 
11 adequate financing.  If the financing or commitment is not
 
12 obtained, the contract may be canceled by either the developer or
 
13 the purchaser.  If the sales contract is so canceled, the
 
14 developer shall re-offer the residential unit first to
 
15 prospective owner-occupants on the back-up reservation list
 
16 described in section 514A-103, in the order in which the names
 
17 appear on the reservation list; provided the prospective owner-
 
18 occupant has not executed a sales contract or reservation for a
 
19 residential apartment in the project.
 
20      (d)  At any time, any prospective owner-occupant on the
 
21 back-up reservation list may be offered any residential apartment
 
22 in the project that has not been sold or set aside for sale to
 
23 prospective owner-occupants."
 

 
Page 21                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1      SECTION 9.  Section 514A-108, Hawaii Revised Statutes, is
 
 2 amended as follows:
 
 3      1.  By amending subsection (a) to read:
 
 4      "(a)  This part shall not apply to any project developed
 
 5 pursuant to section 46-15 or 46-15.1, or chapter 53, 201G, or
 
 6 206[,]; provided that the developer of such a project may elect
 
 7 to be subject to this part through a written notification to the
 
 8 commission [with the notification requirements of section
 
 9 514A-102(b).  Disclosure of the election shall be made through an
 
10 additional statement in the announcement pursuant to section
 
11 514A-102(a)]."
 
12      2.  By amending subsection (d) to read:
 
13      "(d)  A developer of a project enumerated in subsection (a)
 
14 electing to be subject to this part or a project developed
 
15 pursuant to an affordable housing condition or provision by a
 
16 state or county governmental agency may elect to waive certain
 
17 specific provisions of this part that conflict with the
 
18 eligibility or preference requirements imposed by [such] the
 
19 governmental agency.  The developer of a project enumerated in
 
20 subsection (a) who exercises [such an] the election shall provide
 
21 detailed written notification to the commission of which
 
22 specified provisions will be waived, an explanation for each
 
23 waived provision, and a statement from the affected government
 

 
Page 22                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1 agency that the project is either an inapplicable project
 
 2 pursuant to subsection (a) or a project whereby a governmental
 
 3 agency has imposed eligibility or preference requirements.
 
 4 [This] A copy of this notification shall be filed [with the
 
 5 notification requirements of section 514A-102(b) and a copy
 
 6 simultaneously filed] with the affected governmental agency.
 
 7 [Disclosure of the election to waive certain specific provisions
 
 8 of this part shall be made through an additional statement in the
 
 9 announcement pursuant to section 514A-102(a).]"
 
10      SECTION 10.  Section 514A-106, Hawaii Revised Statutes, is
 
11 repealed.
 
12      ["§514A-106  Financial institutions and escrow companies,
 
13 obligations.  Any person subject to chapter 412 or 454, or who is
 
14 subject to any other law for the purpose of lending money upon
 
15 the security of real property shall:
 
16      (1)  Within forty-five days after receipt of an application
 
17           for credit from any individual for the purpose of
 
18           purchasing a residential unit designated for owner-
 
19           occupants under this part, notify the applicant of the
 
20           action on the application; and
 
21      (2)  Prior to making any commitment to extend credit to any
 
22           individual for the purpose of purchasing a residential
 
23           unit designated for owner-occupants under this part,
 

 
Page 23                                                    2310
                                     H.B. NO.           
                                                        
                                                        

 
 1           take all reasonable steps necessary to determine that
 
 2           the individual, in fact, intends to become an owner-
 
 3           occupant of such residential unit."]
 
 4      SECTION 11.  This Act shall not apply to any condominium
 
 5 project for which the announcement required under section
 
 6 514A-102, Hawaii Revised Statutes, was published prior to the
 
 7 effective date of this Act.
 
 8      SECTION 12.  Statutory material to be repealed is bracketed.
 
 9 New statutory material is underscored.
 
10      SECTION 13.  This Act shall take effect on July 1, 2000.
 
11 
 
12                           INTRODUCED BY:  _______________________