Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 373 entitled:

begs leave to report as follows:

The purpose of this measure is to establish the time in which a nonjudicial power of sale foreclosure becomes effective for acquiring title and paying common expenses of an apartment, pursuant to a foreclosure of a lien by the association of apartment owners.

Testimony in support of this measure was received from the Mortgage Bankers Association of Hawaii, Community Associations Institute, and Hawaii Council of Associations of Apartment Owners.

Under existing law, a lien is statutorily placed on an apartment for the nonpayment of common expenses in favor of the association of apartment owners. In a mortgage foreclosure proceeding, the mortgagee of record or other purchaser of the apartment is deemed to acquire title and is required to pay the apartment's share of common expenses and assessments beginning at effective dates. Current law does not cover the situation of a nonjudicial power of sale by an association of apartment owners for unpaid assessments of common expenses, which is addressed by this measure.

Your Committee has amended this measure with regard to the date upon which the title to the property is deemed transferred for purposes of paying the assessments by:

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 S.B. No. 373, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 373, S.D. 1, and be placed on the calendar for Third Reading.