STAND. COM. REP. 591

Honolulu, Hawaii

, 2003

RE: H.B. No. 1511

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committees on Consumer Protection and Commerce and Judiciary, to which was referred H.B. No. 1511 entitled:

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

beg leave to report as follows:

The purpose of this bill is to ensure that persons who purchased the leased fee interest in a condominium unit through a bulk sale conducted in good faith by a condominium association, purchased clear title to that leased fee interest. Specifically, this bill:

(1) Applies to any bulk sale, purchase, or conveyance of the leased fee interest in a condominium project that:

(A) Occurred prior to the June 25, 2002, the effective date of amendments to chapter 514C, Hawaii Revised Statutes (HRS), Lease to Fee Conversions for Condominiums and Cooperative Housing Associations, in Act 199, Session Laws of Hawaii 2002; and

(B) Was conducted by an association of apartment owners in the good faith belief that the purchase, conveyance, or allocation was valid or in compliance with the law;

 

(2) Provides that these conveyances, including mortgages in connection with the conveyance, are valid notwithstanding the association's incapacity or power to undertake the conveyance; and

(3) Provides the association with immunity from liability for any failure to comply with the requirements of chapter 514C-22, HRS, in the bulk sale, unless the noncompliance was knowing and intentional or the result of gross negligence or willful misconduct.

The Hawaii Council of Associations of Apartment Owners (HCAAO) submitted testimony in support of this bill and offered amendments.

Your Committees believe that this bill will provide stability to the condominium sector of Hawaii’s real estate market by ensuring that the fee interests transferred in bulk sales, and the mortgages, common expenses, and other obligations connected with these interests, are valid, enforceable, and transferrable.

Your Committees have amended this bill by:

    1. Removing, as requested by HCAAO, a new subsection that would have been added to the law, and which was redundant of other provisions added by the bill;
    2. Changing the effective date of this bill to July 1, 2050, to allow the stakeholders to continue their discussions; and
    3. Making other technical, nonsubstantive amendments for purposes of clarity and style.

As affirmed by the records of votes of the members of your Committees on Consumer Protection and Commerce and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1511, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1511, H.D. 1, and be placed on the calendar for Third Reading.

 

Respectfully submitted on behalf of the members of the Committees on Consumer Protection and Commerce and Judiciary,

 

____________________________

ERIC G. HAMAKAWA, Chair

____________________________

KENNETH T. HIRAKI, Chair