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


DESCRIPTION:
Streamlines owner-occupancy sales requirements for condominiums.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        3160
THE SENATE                              S.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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                                     S.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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                                     S.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 dwelling units 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 dwelling unit" means "apartment" as defined in
 
14 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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                                     S.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 dwelling unit which,
 
 8 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 dwelling unit 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                                                     3160
                                     S.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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                                     S.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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                                     S.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                                                     3160
                                     S.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 price of each of the residential dwelling units;
 
12      (3)  A designation as to whether the residential dwelling
 
13           units are to be sold in fee simple or leasehold;
 
14      (4)  A statement that for a one hundred eighty-day period
 
15           following the initial date of sale of the condominium
 
16           project, at least fifty per cent of the residential
 
17           dwelling units being marketed shall be offered only to
 
18           prospective 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                                                     3160
                                     S.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 dwelling units
 
 8 shall designate at least fifty per cent of such dwelling units
 
 9 for sale to prospective owner-occupants pursuant to section
 
10 514A-105.  Such dwelling units shall constitute a proportionate
 
11 representation of all the residential dwelling units in the
 
12 project with regard to factors of square footage, number of
 
13 bedrooms and bathrooms, floor level, and whether or not such unit
 
14 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 selection, requirements.(a)  When the
 
23 chronological system is used, the developer or the developer's
 

 
Page 10                                                    3160
                                     S.B. NO.           
                                                        
                                                        

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

 
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                                     S.B. NO.           
                                                        
                                                        

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

 
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                                     S.B. NO.           
                                                        
                                                        

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

 
Page 13                                                    3160
                                     S.B. NO.           
                                                        
                                                        

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

 
Page 14                                                    3160
                                     S.B. NO.           
                                                        
                                                        

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

 
Page 15                                                    3160
                                     S.B. NO.           
                                                        
                                                        

 
 1 a conveyance in lieu of foreclosure.
 
 2      (b)  The affidavit shall include statements by the affiant
 
 3 affirming that[:
 
 4      (1)  If the affiant intends to secure financing from a
 
 5           financial institution, the financing shall be an owner-
 
 6           occupant mortgage loan;
 
 7      (2)  At any time after obtaining adequate financing or a
 
 8           commitment for adequate financing up until the
 
 9           expiration of the affidavit,] the affiant shall notify
 
10           the commission immediately upon any decision to cease
 
11           being an owner-occupant[; and
 
12      (3)  At closing of escrow the affiant shall file a claim for
 
13           an owner-occupant property tax exemption with the
 
14           appropriate county office].
 
15      (c)  The affidavit shall be personally executed by all the
 
16 prospective owner-occupants of the residential unit and shall not
 
17 be executed by an attorney-in-fact.
 
18      [(d)  The affidavit shall be reaffirmed as provided in
 
19 section 514A-105(c)]."
 
20      SECTION 7.  Section 514A-104.6, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "[[]§514A-104.6[]]  Prohibitions.(a)  No person who has
 
23 executed an owner-occupant affidavit shall sell or offer to sell,
 

 
Page 16                                                    3160
                                     S.B. NO.           
                                                        
                                                        

 
 1 lease or offer to lease, rent or offer to rent, assign or offer
 
 2 to assign, or convey the unit until at least three hundred sixty-
 
 3 five consecutive days have elapsed since the recordation of the
 
 4 purchase[.]; provided that a person who continues in the use of
 
 5 the premise as the individual's principal residence during this
 
 6 period, may convey or transfer the apartment into a trust for
 
 7 estate planning purposes.  Any contract or instrument entered
 
 8 into in violation of this part shall be subject to the remedies
 
 9 provided in section 514A-69.
 
10      (b)  No developer, employee or agent of a developer, or real
 
11 estate licensee shall violate or aid any other person in
 
12 violating this part.  [It is the affirmative duty of any
 
13 developer, employee or agent of a developer, and real estate
 
14 licensee to immediately report to the commission any person who
 
15 violates or attempts to violate this part.]"
 
16      SECTION 8.  Section 514A-105, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "§514A-105  Sale of residential units[.]; developer
 
19 requirements.  [(a)  From the issuance of an effective date of
 
20 the first public report until the developer has complied with
 
21 section 514A-104, the developer shall offer all the residential
 
22 units designated pursuant to section 514A-103 for sale only as
 
23 set forth in section 514A-104; provided that notwithstanding this
 

 
Page 17                                                    3160
                                     S.B. NO.           
                                                        
                                                        

 
 1 part, in the case of a project which includes one or more
 
 2 existing structures being converted to condominium status, each
 
 3 residential unit contained in the project shall first be offered
 
 4 for sale to any individual occupying the unit immediately prior
 
 5 to the conversion and who submits an owner-occupant affidavit and
 
 6 an earnest money deposit in a reasonable amount designated by the
 
 7 developer.
 
 8      (b)  Each contract for the purchase of a designated
 
 9 residential unit by an owner-occupant may be conditioned upon the
 
10 purchaser obtaining adequate financing, or a commitment for
 
11 adequate financing, by a date which is no earlier than fifty
 
12 calendar days after the developer's execution and acceptance of
 
13 the sales contract, and if the financing or commitment is not
 
14 obtained, the contract may be canceled by either the developer or
 
15 the purchaser.  If the sales contract is so canceled, the
 
16 developer shall re-offer the residential unit first to those
 
17 prospective owner-occupants on the back-up reservation list who
 
18 have not executed a sales contract for a residential unit in the
 
19 project in the order in which their names appear on that list.
 
20      (c)  Any prospective owner-occupant who executes an
 
21 affidavit as set forth in section 514A-104.5 and a sales contract
 
22 for the sale of one of the designated residential units shall be
 
23 required to reaffirm the person's intent to be an owner-occupant
 

 
Page 18                                                    3160
                                     S.B. NO.           
                                                        
                                                        

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

 
Page 19                                                    3160
                                     S.B. NO.           
                                                        
                                                        

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

 
Page 20                                                    3160
                                     S.B. NO.           
                                                        
                                                        

 
 1 project first shall be offered for sale to any individual
 
 2 occupying the apartment immediately prior to the conversion and
 
 3 who submits an owner-occupant affidavit and an earnest money
 
 4 deposit in a reasonable amount designated by the developer.
 
 5      (c)  Each contract for the purchase of a residential
 
 6 apartment by an owner-occupant may be conditioned upon the
 
 7 purchaser obtaining adequate financing, or a commitment for
 
 8 adequate financing.  If the financing or commitment is not
 
 9 obtained, the contract may be canceled by either the developer or
 
10 the purchaser.  If the sales contract is so canceled, the
 
11 developer shall re-offer the residential unit first to
 
12 prospective owner-occupants on the back-up reservation list
 
13 described in section 514A-103, in the order in which the names
 
14 appear on the reservation list; provided the prospective owner-
 
15 occupant has not executed a sales contract or reservation for a
 
16 residential apartment in the project.
 
17      (d)  At any time, any prospective owner-occupant on the
 
18 back-up reservation list may be offered any residential apartment
 
19 in the project that has not been sold or set aside for sale to
 
20 prospective owner-occupants."
 
21      SECTION 9.  Section 514A-108, Hawaii Revised Statutes, is
 
22 amended as follows:
 
23      1.  By amending subsection (a) to read:
 

 
Page 21                                                    3160
                                     S.B. NO.           
                                                        
                                                        

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

 
Page 22                                                    3160
                                     S.B. NO.           
                                                        
                                                        

 
 1 [This] A copy of this notification shall be filed [with the
 
 2 notification requirements of section 514A-102(b) and a copy
 
 3 simultaneously filed] with the affected governmental agency.
 
 4 [Disclosure of the election to waive certain specific provisions
 
 5 of this part shall be made through an additional statement in the
 
 6 announcement pursuant to section 514A-102(a).]"
 
 7      SECTION 10.  Statutory material to be repealed is bracketed.
 
 8 New statutory material is underscored.
 
 9      SECTION 11.  This Act shall take effect on July 1, 2000.
 
10 
 
11                           INTRODUCED BY:  _______________________