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


DESCRIPTION:
Streamlines owner-occupancy sales requirements for condominiums.
(SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        3160
THE SENATE                              S.B. NO.           S.D. 1
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
 

 
Page 2                                                     3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 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, Hawaii Revised Statutes, are no longer relevant in
 
10 today's market.  Certain of the statutory requirements are
 
11 confusing and cumbersome and often inhibit sales and discourage
 
12 buyers, especially first-time homebuyers who are not familiar
 
13 with condominiums and related statutory requirements.  The
 
14 requirements are also difficult to monitor and regulate.
 
15 Accordingly, the legislature believes that changes to chapter
 
16 514A, Hawaii Revised Statutes, to facilitate the marketing and
 
17 sale of condominium apartments are warranted.
 
18      The purpose of this Act is to amend part VI of chapter 514A,
 
19 Hawaii Revised Statutes, in order to set forth sales and
 
20 marketing requirements that give priority to the sale of
 
21 residential condominium apartments to owner-occupants, without
 
22 hampering a developer's need to maintain flexibility in an ever-
 
23 changing market.
 

 
Page 3                                                     3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      SECTION 2.  Section 514A-101, Hawaii Revised Statutes, is
 
 2 amended as follows:
 
 3      1.  By adding a new definition to be appropriately inserted
 
 4 and to read:
 
 5      ""Initial date of sale" means the date of the first
 
 6 publication of the announcement or advertisement required
 
 7 pursuant to section 514A-102."
 
 8      2.  By amending the definition of "chronological system" to
 
 9 read:
 
10      ""Chronological system" means a system in which the
 
11 residential dwelling units designated for sale to prospective
 
12 owner-occupants are offered for sale to prospective
 
13 owner-occupants in the chronological order in which the
 
14 prospective owner-occupants deliver to the developer or the
 
15 designated real estate broker completed owner-occupant
 
16 affidavits, executed sales contracts[,] or reservations, and
 
17 earnest money deposits."
 
18      3.  By amending the definition of "owner-occupant" to read:
 
19      ""Owner-occupant" means any individual in whose name sole or
 
20 joint legal title is held in a residential dwelling unit which,
 
21 simultaneous to such ownership, serves as the individual's
 
22 principal residence, as defined by the state department of
 
23 taxation, for a period of not less than three hundred [and]
 

 
Page 4                                                     3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 sixty-five consecutive days; provided that the individual retains
 
 2 complete possessory control of the premises of the residential
 
 3 dwelling unit during this period.  An individual shall not be
 
 4 deemed to have complete possessory control of the premises if the
 
 5 individual rents, leases, or assigns the premises for any period
 
 6 of time to any other person in whose name legal title is not
 
 7 held[.]; except that an individual shall be deemed to have
 
 8 complete possessory control even when the individual conveys or
 
 9 transfers the apartment into a trust for estate planning purposes
 
10 and continues in the use of the premise as the individual's
 
11 principal residence during this period."
 
12      4.  By amending the definition of "residential unit" to
 
13 read:
 
14      ""Residential dwelling unit" means "apartment" as defined in
 
15 section 514A-3, but excludes:
 
16      (1)  Any apartment intended for commercial use; and
 
17      (2)  Any apartment designed and constructed for hotel or
 
18           resort use which is located on any parcel of real
 
19           property designated and governed by a county for hotel
 
20           or resort use pursuant to:
 
21           (A)  Section 46-4; or
 
22           (B)  Any other authority granted by law to a county."
 
23      SECTION 3.  Section 514A-102, Hawaii Revised Statutes, is
 

 
Page 5                                                     3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 6                                                     3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 7                                                     3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 8                                                     3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 9                                                     3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 10                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      "§514A-104  Unit selection, requirements.(a)  When the
 
 2 chronological system is used, the developer or the developer's
 
 3 real estate broker, as the case may be, shall offer the
 
 4 residential units that have been designated pursuant to section
 
 5 514A-103 as follows:
 
 6      (1)  For thirty days from the date of the first published
 
 7           announcement or advertisement required under section
 
 8           514A-102, the developer or developer's real estate
 
 9           broker shall offer the residential units that have been
 
10           designated pursuant to section 514A-103 to prospective
 
11           purchasers chronologically in the order in which they
 
12           submit to the developer or the developer's real estate
 
13           broker, a completed owner-occupant affidavit, an
 
14           executed sales contract[,] or reservation, and an
 
15           earnest money deposit in a reasonable amount designated
 
16           by the developer.  The developer or the developer's
 
17           real estate broker shall maintain at all times a
 
18           sufficient number of sales contracts and affidavits for
 
19           prospective owner-occupants to execute.  Prospective
 
20           purchasers who do not have the opportunity to select a
 
21           residential unit during the thirty-day period shall be
 
22           placed on a back-up reservation list in the order in
 
23           which they submit a completed owner-occupant affidavit
 

 
Page 11                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           and earnest money deposit in a reasonable amount
 
 2           designated by the developer.
 
 3      (2)  If two or more prospective owner-occupants intend to
 
 4           reside jointly in the same residential unit, only one
 
 5           residential unit designated pursuant to section
 
 6           514A-103 shall be offered to them or only one of them
 
 7           shall be placed on 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                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 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 that have been designated pursuant to section
 
 5 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                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 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[.], or advertisement.  Any person,
 
 6           including all prospective owner-occupants eligible for
 
 7           the lottery, shall be 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, only one of them shall be
 
18           entitled to enter the public lottery.
 
19      (4)  [At] After the public lottery, each prospective
 
20           owner-occupant purchaser, in the order in which they
 
21           are selected in the lottery, shall be given the
 
22           opportunity to select one of the residential units that
 
23           have been designated pursuant to section 514A-103,
 

 
Page 14                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 15                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 16                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      "[[]§514A-104.6[]]  Prohibitions.(a)  No person who has
 
 2 executed an owner-occupant affidavit shall sell or offer to sell,
 
 3 lease or offer to lease, rent or offer to rent, assign or offer
 
 4 to assign, or convey the unit until at least three hundred
 
 5 sixty-five consecutive days have elapsed since the recordation of
 
 6 the purchase[.]; provided that a person who continues in the use
 
 7 of the premise as the individual's principal residence during
 
 8 this period, may convey or transfer the apartment into a trust
 
 9 for estate planning purposes.  Any contract or instrument entered
 
10 into in violation of this part shall be subject to the remedies
 
11 provided in section 514A-69.
 
12      (b)  No developer, employee or agent of a developer, or real
 
13 estate licensee shall violate or aid any other person in
 
14 violating this part.  [It is the affirmative duty of any
 
15 developer, employee or agent of a developer, and real estate
 
16 licensee to immediately report to the commission any person who
 
17 violates or attempts to violate this part.]"
 
18      SECTION 8.  Section 514A-105, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "§514A-105  Sale of residential units[.]; developer
 
21 requirements.  [(a)  From the issuance of an effective date of
 
22 the first public report until the developer has complied with
 
23 section 514A-104, the developer shall offer all the residential
 

 
Page 17                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 units designated pursuant to section 514A-103 for sale only as
 
 2 set forth in section 514A-104; provided that notwithstanding this
 
 3 part, in the case of a project which includes one or more
 
 4 existing structures being converted to condominium status, each
 
 5 residential unit contained in the project shall first be offered
 
 6 for sale to any individual occupying the unit immediately prior
 
 7 to the conversion and who submits an owner-occupant affidavit and
 
 8 an earnest money deposit in a reasonable amount designated by the
 
 9 developer.
 
10      (b)  Each contract for the purchase of a designated
 
11 residential unit by an owner-occupant may be conditioned upon the
 
12 purchaser obtaining adequate financing, or a commitment for
 
13 adequate financing, by a date which is no earlier than fifty
 
14 calendar days after the developer's execution and acceptance of
 
15 the sales contract, and if the financing or commitment is not
 
16 obtained, the contract may be canceled by either the developer or
 
17 the purchaser.  If the sales contract is so canceled, the
 
18 developer shall re-offer the residential unit first to those
 
19 prospective owner-occupants on the back-up reservation list who
 
20 have not executed a sales contract for a residential unit in the
 
21 project in the order in which their names appear on that list.
 
22      (c)  Any prospective owner-occupant who executes an
 
23 affidavit as set forth in section 514A-104.5 and a sales contract
 

 
Page 18                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 19                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 20                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 21                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

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

 
Page 22                                                    3160
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 detailed written notification to the commission of which
 
 2 specified provisions will be waived, an explanation for each
 
 3 waived provision, and a statement from the affected government
 
 4 agency that the project is either an inapplicable project
 
 5 pursuant to subsection (a) or a project whereby a governmental
 
 6 agency has imposed eligibility or preference requirements.
 
 7 [This] A copy of this notification shall be filed [with the
 
 8 notification requirements of section 514A-102(b) and a copy
 
 9 simultaneously filed] with the affected governmental agency.
 
10 [Disclosure of the election to waive certain specific provisions
 
11 of this part shall be made through an additional statement in the
 
12 announcement pursuant to section 514A-102(a).]"
 
13      SECTION 10.  Statutory material to be repealed is bracketed.
 
14 New statutory material is underscored.
 
15      SECTION 11.  This Act shall take effect on July 1, 2000.