Prevents the foreclosure of liens imposed on certain dwelling units for failure to pay assessment, fee, or fines.

A BILL FOR AN ACT

SECTION 1. Recently, nationwide there has been an increase of nonjudicial foreclosures of dwellings by homeowners associations of condominiums, cooperative housing corporations, and planned community developments for failure to pay dues or assessments. In many cases, the amount owed is minimal in comparison to the value of the dwelling being foreclosed upon.

The purpose of this Act is to require any foreclosure action on a dwelling unit in a condominium, cooperative housing corporation, or planned community for failure to pay dues or assessments to proceed through a judicial foreclosure. Further, no judgment of foreclosure may be entered unless the judgment amount meets a certain per cent of the assessed value of the dwelling.

SECTION 2. Chapter 507, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

§507-   Definitions. As used in this part, unless the context clearly indicates otherwise:

"Declaration" means any document providing for the assessment of costs, dues, fees, fines, or penalties against a dwelling, including, but not limited to, the following:

"Dwelling" means a condominium, a unit in a cooperative housing corporation, or a unit in a planned community that is the primary residence of its owner.

§507-   Foreclosure of a lien on a dwelling. (a) Any articles of incorporation, bylaw, or declaration notwithstanding, any lien attached to a dwelling as a result of the failure to pay an assessment, dues, fees, fine, or penalty imposed on the dwelling or the owners thereof by a declaration shall be executed upon pursuant to section 667-1 and not through any power of sale, alternate power of sale, or other nonjudicial procedure.

(b) The circuit court shall not enter a judgment of foreclosure of the dwelling unless the amount of the judgment awarded amounts to more than per cent of the assessed value of the dwelling for real property tax purposes. The amount awarded may be collected through attachment and execution pursuant to chapter 651, garnishment pursuant to chapter 652, or other remedy, in law or equity, that the court may deem proper."

SECTION 3. This Act shall not apply to any foreclosure proceeding commenced prior to its effective date; however, this Act shall apply to all condominiums, cooperative housing corporations, and planned community associations existing as of the effective date of this Act and all condominiums, cooperative housing corporations, and planned community associations created thereafter.

SECTION 4. This Act shall take effect on July 1, 2005.