STAND. COM. REP. NO. 2416

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2333
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Government Operations and Housing, to
which was referred S.B. No. 2333 entitled: 

     "A BILL FOR AN ACT RELATING TO CONDOMINIUMS PROPERTY
     REGIMES,"

begs leave to report as follows:

     The purpose of this measure is to authorize an association
of apartment owners to assess the purchaser of a delinquent
apartment for unpaid common area assessments.

     Testimony in support of the measure was received from the
Mortgage Bankers Association, the Hawaii Bankers Association, and
the Hawaii Financial Services Association.

     Testimony in opposition to the measure was received from the
Real Estate Commission, the Community Associations Institute, the
Hawaii Council of Associations of Apartment Owners, and two
private citizens.

     Your Committee finds that due to the current stagnant
economic situation, many condominium owners have been unable to
meet payments for either their mortgage or maintenance expenses.
Mortgagees have lost significant amounts during this period.
Homeowners associations have, likewise, lost much during this
period.  Both are innocent victims of these economic times.
Homeowners associations and mortgage lenders have participated in
many hearings and discussions with the legislature over the
years.  Attempts to find a solution have been hampered because

 
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both parties are innocent victims.  While a solution has been
elusive, this measure is a good attempt at resolving the issue in
a creative and fair manner.

     The measure allows for the assessment of purchasers of
delinquent units for unpaid common expenses by the homeowners
association.  The assessment is limited to the amount accrued
within six months of the acquisition of title by the purchaser,
and is further limited to one per cent of the original amount of
the then existing first mortgage.  In order to make the
assessment, homeowners associations must file a lien action prior
to the purchaser acquiring title.

     Your Committee has amended the measure by replacing
subsection (g) with provisions that provide the following:

     (1)  When a condominium is in foreclosure, whether judicial
          or nonjudicial, the board of directors may specially
          assess that condominium for delinquent maintenance fee
          payments;

     (2)  The mortgagee in foreclosure shall not be obligated to
          make, nor be liable for payment of the association's
          special assessment for unpaid maintenance fees;

     (3)  The purchaser, who is not the mortgagee, shall be
          obligated to make and shall be liable for payment of
          the association's special assessment, provided the lien
          was filed prior to the acquisition of title to the
          delinquent condominium;

     (4)  The total amount of the special assessment shall under
          no circumstances exceed the total amount of the
          maintenance fees for the six months immediately
          preceding the completion of the foreclosure; and

     (5)  The special assessment shall not exceed the amount of
          the delinquent assessment for the condominium.

     The measure was further amended by:

     (a)  Deleting the annual reporting requirement imposed on
          the Department of Commerce and Consumer Affairs under
          Section 3, and eliminating the sunset provision in
          Section 4;

     (b)  Deleting language in the purpose section of this
          measure to reflect the amendments made above in
          paragraph (a); and

 
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     (c)  Adding the word "monthly" to subsection (h) of this
          measure to clarify the meaning of regular common
          assessments".

     Your Committee believes that the amended measure will help
resolve a complex and sensitive issue, which in many cases,
involves parties who would otherwise faithfully pay the agreed
upon fees had it not been for the State's prolonged economic
malaise.

     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of S.B. No. 2333, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B.
No. 2333, S.D. 1, and be referred to the Committee on Commerce
and Consumer Protection.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,



                                   ______________________________
                                   ROD TAM, Chair

 
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