Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 2443, H.D. 2, entitled:

begs leave to report as follows:

The purpose of this measure is to establish a mechanism by which the Bureau of Conveyances may differentiate between legitimate and frivolous financing statements.

Testimony in support of the measure was received from the Attorney General, Department of Land and Natural Resources, and Hawaii's Commission to Promote Uniform Legislation.

Instruments filed at the Land Court or the Bureau of Conveyances that purport to affect property interests or title, but which have no basis in law or fact, have a disruptive effect on legitimate property interests and titles, are costly and time-consuming to expunge, and may interfere with a property owner's ability to transfer title or obtain title insurance and financing.

Act 241, Session Laws of Hawaii 2000, repealed the requirement under Article 9 of the Uniform Commercial Code that a financing statement contain the debtor's signature, thereby eliminating the most effective means of determining the validity of this type of document. To address this problem, this measure enables a party in interest in fixtures or personal property covered by a financing statement to request that the registrar of the Bureau of Conveyances demand from a secured party a copy of the security agreement that purportedly authorized the filing of the financing statement. If the secured party does not answer the demand by the registrar within thirty days, the financing statement is deemed unauthorized.

Your Committee has amended this measure by substantially replacing its contents with the contents of a similar measure, S.B. 2701, S.D. 1. As amended, this measure:

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2443, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2443, H.D. 2, S.D. 1, and be referred to the Committee on Judiciary.