Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 1166 entitled:

begs leave to report as follows:

The purpose of this bill is to grant contractors 20 additional days to file a mechanic's lien if they have given the owner a "conditional lien release" but have not received full payment within the 45-day lien period.

Your Committee received testimony in support of this measure from the General Contractors Association of Hawaii and Subcontractors Association of Hawaii. Testimony in opposition of this measure was received from the Hawaii Bankers Association.

Your Committee finds that current law gives contractors 45 days after they complete construction of an improvement to file a mechanic's lien on the property in the event payment is not received. However, there was testimony that it is common practice for owners and lenders to request that contractors provide a "conditional lien release" prior to expiration of the 45-day lien period, to ensure that there are no unknown providers or subcontractors who have provided material or services and might file a lien after the contract amount is fully paid. A contractor that grants a "conditional lien release" and is not paid in full within the 45-day period cannot file a mechanic's lien and has no recourse against the property.

Your Committee has amended this bill by:

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1166, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1166, H.D. 1.