Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Tourism and Culture, to which was referred H.B. No. 16 entitled:

begs leave to report as follows:

The purpose of this bill is to exempt an owner of a time share interest who refers a prospective purchaser to a developer, sales agent, or resales agent of a time share plan from the requirement of being a licensed real estate broker or salesperson if the person receives a fee of not more than $1,000.

Testimony in support of this measure was received from the American Resort Development Association, American Resort Development Association of Hawaii, Hilton Grand Vacations Club, and Resort Condominium International (RCI). The Department of Commerce and Consumer Affairs Real Estate Commission provided testimony that opposes this bill because this act of referral may be considered real estate brokerage activity under Hawaii's broker licensing law, Chapter 467.

However, your Committee realizes that it has become an accepted practice in the time share industry to encourage owners of time share interests to refer their friends, family, and other contacts to a developer for purposes of purchasing a time share interest and receive some form of incentive for the referral. This bill seeks to permit this activity without all such owners having to be licensed under Hawaii's broker licensing laws, provided that compensation does not exceed $1,000 a year.

Discussion revealed that the owners are not compensated with cash but usually in the form of credit towards their maintenance fee, and that they would still have to pay the general excise tax on such awards. It was also not clear if only $1,000 total compensation could be collected, or whether this would apply on a per project/developer basis. To that end, your Committee has amended this bill to clarify that compensation is non-monetary and is applicable per project within a twelve-month calendar period.

As affirmed by the record of votes of the members of your Committee on Tourism and Culture that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 16, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 16, H.D. 1, and be referred to the Committee on Consumer Protection and Commerce.