HB654

SECTION 1. The legislature finds that it is necessary to protect the interests of nine hundred ninety-nine-year homestead lessees by defining intestate succession for the heirs of homestead leases and allowing for a period of reinstatement of the homestead lease for tenants-at-will who have cured arrearages in payment.

The purpose of this Act is to establish the order of intestate succession for decedent homestead lessees and authorize the board of land and natural resources to reinstate a nine hundred ninety-nine-year homestead lease that was canceled due to nonpayment of arrearages, provided that the tenant-at-will has continually occupied the land and has cured all arrearages.

SECTION 2. Section 171-99, Hawaii Revised Statutes, is amended to read as follows:

"§171-99 Continuation of rights under existing homestead leases, certificates of occupation, right of purchase leases, and cash freehold agreements. (a) Issuance of land patents to occupier or lessee of homestead lands. A fee simple patent shall be issued to every existing occupier under a certificate of occupation issued heretofore, and to every lessee under a nine hundred and ninety-nine year homestead lease issued heretofore, of public lands, where the lands have been improved under the certificate or lease[,] or have been used as a place of residence by the occupier or lessee for an aggregate continuous period of not less than ten years, upon payment to the board [~~of land and natural resources~~] of a [~~fair market~~] price[,] equal to the real property tax assessed value of the land, disregarding the value of the improvements made by the occupier or lessee[~~, which price shall be determined by appraisal as provided for in this chapter~~]; provided that the board may exclude from these patents areas required as roadways to other lots.

(b) Issuance of patent, lessee of right of purchase lease. The lessee of any existing right of purchase lease, at a time and under conditions that are contained in the lease, shall be entitled to a land patent from the board conveying to the lessee a fee simple title to the land described in the lessee's lease upon the payment of the [~~fair market price of the land as determined by appraisal as provided for in this chapter;~~] real property tax assessed value of the land without improvements; provided that the lessee has reduced to cultivation twenty-five per cent of the premises and has resided thereon not less than two years and has substantially performed all other conditions of the lessee's lease.

(c) Cash freeholds, agreement, patent, conditions. At the end of three years from the date of the payment of the first installment, the holder of a freehold agreement is entitled to a land patent for the premises described [~~therein,~~] in the freehold agreement, if the following conditions, in addition to those set forth [~~herein,~~] in the freehold agreement, have been substantially performed:

(1) Payment of the balance of the purchase price in equal installments, in one, two, and three years, respectively, from the date of the freehold agreement with interest annually at the rate of four per cent; provided that the freeholder may pay the installment before it is due and [~~thereby~~] stop the corresponding interest;

(2) Cultivation of not less than twenty-five per cent of the area of the premises, and the planting and care of not less than an average of ten timber, shade, or fruit trees per acre, if agricultural land, at any one time before the end of the third year, or fencing in the premises if pastoral land within that time; provided that if the premises are classed as pastoral-agricultural land, the foregoing alternative conditions shall apply respectively to the two kinds of land;

(3) Maintenance by the freeholder of the freeholder's home on the premises from the end of the first year to the end of the third year;

(4) Conditions for the prevention of waste, the planting of trees or the protection of trees growing or to be planted on the premises, or for the destruction of vegetable pests that may be on the premises or the prevention of the future introduction of pests thereon;

(5) Payment of all taxes that may be due on account of the premises.

The holder of a freehold agreement shall allow the land agents to enter and examine the premises at all reasonable times to see that the conditions are being performed. The holder shall not assign or sublet, conditionally or otherwise, the holder's interest or any part thereof, under the freehold agreement, without the written consent of the board indorsed on the agreement; and provided further that [~~freeholders~~] a freeholder having the whole interest in a freehold agreement, at any time when all the conditions thereof to be performed by the freeholder up to that time shall have been substantially performed, may surrender to the government the interest by delivery of the freehold agreement to the land agent, with the intention to surrender the interest clearly indorsed thereon and signed by [~~them~~] the freeholder and duly attested. The surrender shall release the [~~freeholders~~] freeholder from all further duty or performance of the conditions of the instrument surrendered[~~. But~~]; provided that no surrender shall be permitted if any [~~freeholders are~~] freeholder is under the age of eighteen years, unless the [~~minors are~~] minor is represented by statutory guardians; and provided further that any freeholder over the age of eighteen may assign the freeholder's interest to the freeholder's cotenants.

(d) Right of purchase lease; termination, forfeiture, or surrender. Upon the termination of a right of purchase lease by lapse of time, or upon the forfeiture or surrender of the lease or a freehold agreement, the board, in its discretion and within the limit of its authority, may open the premises or any part thereof for disposition in the manner or for the uses as provided in this chapter. Before the disposition, the fair market value thereof shall be established by appraisal. [The value attributable to the improvements in the appraisal shall be paid to the surrendering lessees or freeholders, upon resale of the premises, and the director of finance shall pay the amount of the valuation upon the requisition of the board out of the funds.] Upon resale of the premises and requisition of the board, the director of finance shall pay to the surrendering lessee or freeholder from the proceeds of the sale the appraised value of the improvements.

(e) Assignment; certificate of occupation or homestead lease. No existing certificate of occupation or existing homestead lease, or fractional interest thereof, shall be transferable or assignable except by conveyance, devise, bequest, or intestate succession and with the prior approval of the board [~~of land and natural resources~~]; provided that transfer or assignment by conveyance, devise, or bequest shall be limited to a member or members of the occupier's or lessee's family.

For the purposes of this section, "family" means the spouse, reciprocal beneficiary, children, parents, siblings, grandparents, grandchildren, nieces, nephews, a parent's siblings, children of a parent's siblings, and grandchildren of a parent's siblings, of the occupier or lessee.

In the event of intestate succession, the interest of the decedent shall vest in relations of the decedent in the following order:

(1) In the widow or widower;

(2) If there is no widow or widower, then in the children;

(3) If there are no children, then in the widows or widowers of the children;

(4) If there are no widows or widowers of the children, then in the grandchildren;

(5) If there are no grandchildren, then in the parents or surviving parent;

(6) If there is no surviving parent, then in the sisters and brothers;

(7) If there are no sisters or brothers, then in the widows or widowers of the sisters and brothers;

(8) If there are no widows or widowers of the sisters and brothers, then in the nieces and nephews;

(9) If there are no nieces or nephews, then in the widows or widowers of the nieces and nephews;

(10) If there are no widows or widowers of the nieces and nephews, then in the grandchildren of the sisters and brothers; and

(11) If there are no grandchildren of the sisters and brothers, then in the State.

All the successors shall be subject to the performance of the unperformed conditions of the certificate of occupation or the homestead lease.

(f) Option of cotenant to compel others to buy or sell. In case two or more persons become cotenants under any existing right of purchase lease, certificate of occupation, or homestead lease by inheritance or otherwise, any one or more of the persons, less than the whole number, may file in the office of the land agent an offer to the remainder of the persons to buy their interest in the premises or to sell them their own interest therein at a stated price, according to the proportion of the respective interest in question, and may deposit with the land agent the amount of the offered price in money, with a fee of $10. The land agent shall thereupon notify the persons to whom the offer is made of the nature of the offer and order them to file with the land agent their answer within sixty days whether they will buy or sell according to the offer. If the persons to whom the offer is made file with the land agent, within sixty days of the time of their receiving the notification, their answer stating that they will sell their interest according to the terms of the offer, the land agent shall indorse the fact of the sale with the amount of the consideration on the lease and pay to the persons the amount of the consideration deposited with the land agent according to their individual interest; and the interest of the persons shall thereupon vest in the persons making the offer. The fact of the transfer shall be properly recorded in the official records of the land agent and indorsed upon the lease held by the lessee.

If, however, the persons to whom the offer is made fail to answer within sixty days from the time of their being notified of the offer or within sixty days from the time the notice of the offer [[]is[]] mailed to their last known place or places of abode, or [~~shall~~] answer within sixty days that they will buy the interest of the persons making the offer on the terms offered, but fail within sixty days after the notification to deposit the amount representing the value of the interest according to the terms offered, their interest shall vest in the persons making the offer, and the amount of the consideration shall be paid by the land agent [of] to them individually or their respective representatives upon application. In such case, the fact of the transfer shall be recorded and indorsed as above provided.

In the event that any funds held by the land agent hereunder are not paid to the persons to whom the funds are properly payable[,] because of the inability of the land agent to locate those persons, the funds, after the expiration of one year, shall be deposited in the department of budget and finance [~~of the State~~] and there abide the claim of any person thereto lawfully entitled; provided that no claim to the funds shall be allowed unless the claim is made within five years after the deposit. Payment of any claim duly filed may be made if the department of budget and finance and the board concur in finding the claim valid and proper, but if the claimant fails to obtain concurrency of the department of budget and finance and the board within sixty days of the filing of the claimant's claim, the claimant may present a petition to the circuit court of the first judicial circuit in that behalf, notice [~~whereof~~] of which shall be given to the attorney general, who may appear and defend on behalf of the State, and if the court renders a judgment in favor of the claimant, the department of budget and finance shall pay the amount due without interest.

But if the persons to whom the offer is made, within sixty days from the time of the notification, [~~shall~~] make answer to the land agent that they will buy the interest of the offering parties and [~~shall~~] deposit within sixty days with the land agent the amount required for the purpose according to the terms of the offer, the land agent shall indorse and record the fact of the sale, as above provided, and pay to the offering parties the amount according to their individual interest; and the interest of the offering parties shall thereupon vest in the answering parties. In such case, the consideration money deposited by the offering parties shall be returned to them.

(g) Forfeiture; existing certificate of occupation or homestead lease. The violation of any of the conditions of any existing certificate of occupation or homestead lease shall be sufficient cause for the board, upon failure of the occupier or lessee within a reasonable period of time to remedy the default, after notice thereof in the manner provided in section 171-20, to take possession of the demised premises without demand or previous entry, with or without legal process, and thereby, subject to section 171-21, terminate the estate created.

(h) Forfeiture; cash freeholds. In the case of default in the payment of any of the installments due on any cash freehold agreement for thirty days after the installments are due, or failure of performance of any other conditions, the board may take possession of the premises, upon failure of the freeholder within a reasonable period of time to remedy the default, after notice thereof in the manner provided in section 171-20, without demand or previous entry, with or without legal process, and thereby, subject to section 171-21, terminate the estate created.

(i) Mortgage of homestead leases. Whenever an existing homestead lease is mortgaged pursuant to section 171-22, the consent to mortgage from the board [~~of land and natural resources~~] may contain a condition exempting the lease from subsection (e) for the duration of the mortgage.

(j) Reinstatement. A person who has continually occupied land while holding the land under a certificate of occupation, nine hundred ninety-nine-year homestead lease, right of purchase lease, or cash freehold agreement, that became a tenant-at-will on the property when the certificate, lease, or agreement was canceled, terminated, or forfeited due to the nonpayment of an outstanding arrearage may submit an application to the board for reinstatement of the certificate of occupation, nine hundred ninety-nine-year homestead lease, right of purchase lease, or cash freehold agreement. The board, in its discretion, may reinstate the certificate of occupancy, nine hundred ninety-nine-year homestead lease, right of purchase lease, or cash freehold agreement:

(1) Provided that the outstanding arrearage is cured to the satisfaction of the board; and

(2) Under terms and conditions that the board may prescribe, including but not limited to any repayment period, term, encumbrance, designated tenant, tenancy, rent, or other consideration.

Reinstatements as provided by this subsection shall not be available after December 31, 2008."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	654
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII