Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Tourism and Intergovernmental Affairs, to which was referred H.B. No. 16, H.D. 2, entitled:

begs leave to report as follows:

The purpose of this measure is to permit owners of time share interests to receive compensation for referring prospective purchasers to a developer, sales agent, or resale agent, and to exempt the owner from licensure under chapter 467, Hawaii Revised Statutes.

Testimony in support of this measure was received from American Resort Development Association, The Bay Club Ownership Resort, Hilton Grand Vacations Club, and Pahio Resorts, Inc. The Department of Commerce and Consumer Affairs (DCCA) submitted comments.

Your Committee finds that word-of-mouth referrals can be a very effective sales tool, but that under current law, this act of referral may be considered a real estate brokerage activity.

Your Committee has heard the concerns expressed by DCCA, however, that the proposed measure would create inconsistencies between real estate and time share laws, and does not include any oversight provisions to protect consumers.

Your Committee finds these concerns to be well taken and has amended this measure to clarify the limitations on the owner's role and the responsibility of the developer, sales agent, or resale agent to correct any misrepresentations; to require a written receipt that identifies the value of the compensation given for the referral; and to make technical corrections.

As affirmed by the record of votes of the members of your Committee on Tourism and Intergovernmental Affairs that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 16, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 16, H.D. 2, S.D. 1, and be referred to the Committee on Commerce, Consumer Protection and Housing.