HB1861

SECTION 1. The legislature finds that housing insecurity deeply impacts families in the State, partially because nearly a quarter of all home purchases in Hawaii are made by out-of-state buyers. The legislature further finds that past public policy addressing housing insecurity focused primarily on building additional affordable housing without complementary measures addressing shrinking rental markets and increasing rental rates. While policies encouraging the building of more affordable housing units and ensuring those units remain affordable should continue, equal attention must be paid to providing tenants with protection from displacement or eviction. Adjusting for inflation, a renter in 2018 paid nearly $8,100 more per year than a renter in 1980; additional regulation of the rental market is required to ensure that housing units remain affordable and grounded in the State's local economy, rather than in national circuits of real estate investment and speculation.

The legislature also finds that implementing basic regulatory measures on rent increases can prevent rent-gouging, which in turn can prevent working families from losing their housing. Research shows that these anti-rent gouging measures have little negative impact on housing construction and can make regulated and non-regulated units more affordable. Anti-rent gouging measures have also been shown to promote resident stability, which is associated with physical, social, and psychological well-being.

The legislature additionally finds that many renters in Hawaii lose their housing through processes that never register as evictions because they happen at the end of a lease term, while other renters are subjected to retaliatory or discriminatory evictions. These no-cause evictions are highly disruptive to the lives of tenants, and are a cause of poverty and financial insecurity. Just cause eviction policies, including local ordinances and state laws, are a form of tenant protection that are designed to prevent these forms of displacement by establishing that landlords may only evict tenants for certain reasons, such as failure to pay rent. These policies also allow no-fault evictions but require the landlord to pay relocation benefits for the tenants. Just cause eviction policies are valuable tools to prevent displacement, particularly in places with overheated real estate markets, where landlords often evict existing tenants to renovate their buildings and attract wealthier renters at higher prices.

The purpose of this Act is to:

(1) Prohibit landlords from terminating certain tenancies without just cause;

(2) Require landlords, when terminating a tenancy based on no-fault just cause, to offer relocation assistance to the tenant or waiver of the final month's rent;

(3) Prohibit landlords from, over the course of any twelve-month period, increasing the gross rental rate for a dwelling unit more than three per cent plus the percentage change in the cost of living, as defined, or ten per cent, whichever is lower, of the lowest gross rental rate charged for the immediately preceding twelve months;

(4) Establish the Hawaii rent board to publish, oversee, and enforce annual rent adjustments and conduct rental arbitration hearings, mediations, and investigatory hearings on reports of alleged wrongful evictions; and

(5) Establish the rent stabilization special fund to fund and support the Hawaii rent board.

SECTION 2. Chapter 521, Hawaii Revised Statutes, is amended by adding four new sections to be appropriately designated and to read as follows:

"§521-A Termination of tenancy; holdover tenants; just cause; relocation assistance. (a) Notwithstanding any other law to the contrary, after a tenant has continuously and lawfully occupied a dwelling unit for twelve months, the landlord shall not terminate the tenancy without just cause, which shall be stated in the written notice to terminate the tenancy.

(b) If any additional adult tenants are added as parties to the rental agreement before an existing tenant has continuously and lawfully occupied the dwelling unit for twenty‑four months, then subsection (a) shall only apply if:

(1) All of the tenants have continuously and lawfully occupied the dwelling unit for twelve months or more; or

(2) One or more of the tenants have continuously and lawfully occupied the dwelling unit for twenty-four months or more.

(c) When terminating a tenancy for just cause, the landlord shall comply with all applicable notice requirements and, where applicable, shall provide the tenant reasonable time to remedy the noncompliance as required by this chapter.

(d) Subsection (a) shall not apply if the landlord has provided a written notice of an intent to terminate the tenancy at the end of the term of a fixed-term rental agreement; provided that the written notice shall be provided no later than forty-five days prior to the end of the term of the fixed-term rental agreement.

(e) For a tenancy for which just cause is required to terminate the tenancy under subsection (a), if the landlord issues a notice to terminate the tenancy based on no-fault just cause, the landlord shall, regardless of the tenant's income, at the landlord's option, do one of the following:

(1) Assist the tenant to relocate by providing direct payment to the tenant equal to one month of the tenant's rent that was in effect when the landlord issued the notice to terminate the tenancy; provided that the direct payment shall be provided within fifteen calendar days of service of the notice; or

(2) Waive the payment of rent for the final month of the tenancy, prior to the rent becoming due.

(f) If the landlord issues a notice to terminate a tenancy for no-fault just cause, the landlord shall notify the tenant of the tenant's right to relocation assistance or rent waiver pursuant to this section. If the landlord elects to waive the rent for the final month of the tenancy as provided under subsection (e)(2), the notice shall state the amount of the rent waived and that no rent is due for the final month of the tenancy.

(g) If the tenant fails to vacate the dwelling unit after the expiration of the notice to terminate the tenancy, the actual amount of any relocation assistance or rent waiver provided pursuant to this section shall be recoverable as damages in an action or proceeding to recover possession.

(h) Failure by a landlord to strictly comply with subsection (e) or (f) shall render the notice of to terminate the tenancy void.

§521-B Gross rental rates; limitations on increases; fees. (a) Subject to subsection (c), a landlord shall not, over the course of any twelve-month period, increase the gross rental rate for a dwelling unit by more than the lesser of:

(1) Three per cent plus the percentage change in the cost of living over the twelve-month period; or

(2) Ten per cent.

In determining the lowest gross rental rate pursuant to this section, any rent discounts, incentives, concessions, or credits offered by the landlord of the dwelling unit and accepted by the tenant shall be excluded. The monthly gross rental rate and any owner-offered discounts, incentives, concessions, charges, or credits shall be separately listed and identified in the rental agreement or any amendments to an existing rental agreement.

(b) If the same tenant remains in occupancy of the dwelling unit over any twelve-month period, the gross rental rate for the dwelling unit shall not be increased in more than two increments over that twelve-month period, subject to other restrictions of this section governing gross rental increase.

(c) Subsection (a) shall not apply to the initial rate agreed upon in a new rental agreement for which no tenant from the prior tenancy remains in lawful possession of the dwelling unit; provided that subsection (a) shall apply to any subsequent increase after the initial rate has been established in the rental agreement.

(d) A tenant shall not enter into a sublease that results in a total rent for the dwelling unit that exceeds the allowable gross rental rate authorized by subsection (a). Nothing in this section shall authorize a tenant to sublet or assign the tenant's interest in the dwelling unit where otherwise prohibited.

(e) The landlord shall provide written notice to the tenant of any increase in the rental rate thirty days prior to the effective date of the rate increase. The notification shall be in no less than twelve-point type and in the following form:

"Hawaii law limits the amount your rent can be increased. Hawaii law also provides that after all of the tenants have continuously and lawfully occupied the property for twelve months or more, or at least one of the tenants has continuously and lawfully occupied the property for twenty-four months or more, a landlord must provide a statement of cause in any notice to terminate a tenancy."

(f) For rental agreements entered into or renewed on or after January 1, , an annual fee of $ shall be assessed on all rental units covered by this section, to be paid into the rent stabilization special fund established under section 521-D.

(g) At the beginning of the rental agreement, and annually thereafter for as long as the tenancy persists, the landlord may impose a charge of up to fifty per cent of the fee required by subsection (f); provided that this charge shall not be included in the calculation of the gross rental rate and the amount shall be clearly set out as a separate charge.

(h) For purposes of this section, "percentage change in the cost of living" means the percentage change in the regional Consumer Price Index in which the dwelling unit is located, as published by the United States Bureau of Labor Statistics, from the month of the notice and twelve months prior to the notice. If a regional index is not available, the Consumer Price Index, for All Urban Consumers, All Items, for Urban Hawaii and United States, as determined by the department of business, economic development, and tourism, shall apply.

§521-C Hawaii rent board. (a) There is established the Hawaii rent board to publish, oversee, and enforce annual rent adjustments and conduct rental arbitration hearings, mediations, and investigatory hearings on reports of alleged wrongful evictions.

(b) The board shall consist of seven members, appointed by the governor, and an alternate for each specific member. The members shall consist of the following:

(1) Three landlords, one of whom shall be a landlord who owns residential rental property located on the islands of Hawaii, Kauai, Lanai, Maui, or Molokai;

(2) Three tenants, one of whom shall be a tenant renting a dwelling unit located on the islands of Hawaii, Kauai, Lanai, Maui, or Molokai; and

(3) One individual who is neither a landlord nor a tenant and who owns no residential rental property.

(c) All members shall be residents of the State and at least one member shall be of Native Hawaiian descent. At least three members shall be selected on the basis of their knowledge, experience, and expertise in landlord-tenant law or alternative dispute resolution.

(d) Board members shall disclose all present holdings and interests in real property, including interests in corporations, trusts, or other entities with real property holdings.

(e) Members shall be appointed for a term of four years; provided that the original members shall be for staggered terms, as determined by the governor.

(f) Members shall appoint a chairperson who shall be responsible for the administrative functions of the board.

(g) The board shall be solely funded and supported by the rent stabilization special fund, established pursuant to section 521-D. Members of the board shall serve without compensation but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

(h) Any action taken by the board shall be by a simple majority of the members of the board. All decisions of the board shall be reduced to writing and shall state separately the board's findings of fact and conclusions. Any vacancy on the board shall not impair the authority of the remaining members to exercise all the powers of the board. If a member is unavailable to vote, the specific alternate for that member shall be seated and vote as a substitute alternate.

(i) The board may contract for services to assist in performing the functions of the board.

(j) The board shall be within the department of commerce and consumer affairs for administrative and budgetary reasons only. All members of the board shall be exempt from chapters 76 and 89.

(k) No later than twenty days prior to the convening of each regular session, the board shall submit a report to the governor and legislature that includes a description of the activities of the board, including the outcome of any arbitration, mediation, or investigatory hearings.

§521-D Rent stabilization special fund. (a) There is established a rent stabilization special fund into which shall be deposited all fees collected pursuant to section 521-B(f).

(b) Moneys in the rent stabilization special fund shall be used to fund and support the activities of the Hawaii rent board established pursuant to section 521-C."

SECTION 3. Section 521-8, Hawaii Revised Statutes, is amended by adding three new definitions to be appropriately inserted and to read as follows:

""At-fault just cause" means the termination of a tenancy for any of the following on the part of a tenant:

(1) Failing to pay rent;

(2) Breaching the tenant's obligations under section 521‑52;

(3) Committing any act, or causing any condition to exist, within the dwelling unit or upon the premises, which act or condition constitutes a nuisance as defined in section 712-1270;

(4) Committing waste or failing to maintain the premises as described in section 521-51;

(5) For tenants with a written rental agreement that terminated on or after January 1, , and after a written request or demand from the landlord, refusing to execute a written extension or renewal of the rental agreement for an additional term of similar duration with similar provisions; provided that those terms do not violate this chapter or any other provision of law;

(6) Engaging in criminal activity within the dwelling unit or upon the premises;

(7) Engaging in any criminal activity or terroristic threatening, on or off the premises, that is directed at the landlord;

(8) Assigning or subletting the dwelling unit or premises in violation of the rental agreement;

(9) Refusing to allow the landlord to access the dwelling unit as provided in section 521-53(a); or

(10) Failure by the tenant to deliver possession of the dwelling unit to the landlord after providing the landlord with written notice of the tenant's intention to terminate the rental agreement as provided by section 521-71(b).

"Just cause" means the termination of a tenancy for either at-fault just cause or no-fault just cause.

"No-fault just cause" means the termination of a tenancy for any of the following on the part of the landlord:

(1) Intending to occupy the dwelling unit or intending for the landlord's spouse, domestic partner, children, grandchildren, parents, or grandparents to occupy the dwelling unit; provided that for rental agreements entered into on or after July 1, , this paragraph shall only apply if the tenant agrees in writing to the termination of the tenancy, or if a provision of the rental agreement allows for the landlord to terminate the tenancy if the landlord or the landlord's spouse, domestic partner, children, grandchildren, parents, or grandparents unilaterally decide to occupy the dwelling unit; provided further that the addition of a provision allowing the landlord to terminate the tenancy as described in this paragraph to a new or renewed rental agreement or fixed-term lease shall constitute a similar provision as described in paragraph (5) of the definition of "at-fault just cause";

(2) Withdrawing of the dwelling unit from the rental market;

(3) Complying with an order by a government agency or court that necessitates the vacating of the dwelling unit for habitability or other reasons; provided that if the government agency or court finds that the tenant is at fault for the condition or conditions triggering the order to vacate, the tenant shall not be entitled to relocation assistance as outlined in section 521-A(e);

(4) Intending to demolish or substantially remodel the residential property. For purposes of this definition, "substantially remodel" means the replacement or substantial modification of any structural, electrical, plumbing, or mechanical system that requires a permit from a government agency, or the abatement of hazardous materials, including lead-based paint, mold, or asbestos, in accordance with applicable federal, state, and local laws, that cannot be reasonably accomplished in a safe manner with the tenant in place and that requires the tenant to vacate the dwelling unit for at least thirty days. "Substantially remodel" does not include cosmetic improvements alone, including painting, decorating, and minor repairs, or other work that can be performed safely without having the dwelling unit vacated;

(5) Converting of the dwelling unit to a condominium property regime under chapter 514B; or

(6) Changing the use of the dwelling unit to transient vacation rentals."

SECTION 4. Section 521-21, Hawaii Revised Statutes, is amended to read as follows:

1. By amending subsection (a) to read:

"(a) The landlord and tenant may agree to any consideration, not otherwise prohibited by law, as rent. In the absence of such agreement, and subject to section [~~521-71(e)~~] 521-71(g), in the case of holdover tenants, or section 521-B, the tenant shall pay to the landlord the fair rental value for the dwelling unit."

2. By amending subsection (d) to read:

"(d) [~~When~~] Subject to section 521-B, when the tenancy is from month to month, the amount of rent for such tenancy shall not be increased by the landlord without written notice given forty-five consecutive days prior to the effective date of the increase."

SECTION 5. Section 521-71, Hawaii Revised Statutes, is amended to read as follows:

"§521-71 Termination of tenancy; [~~landlord's remedies for holdover tenants.~~] notice. (a) [~~When the tenancy is month-to-month~~] Notwithstanding any law to the contrary, when terminating a tenancy subject to section 521-A for at-fault just cause, the landlord [~~may terminate the rental agreement by notifying~~] shall notify the tenant, in writing, at least forty-five days in advance of the anticipated termination. When the landlord provides notification of termination, the tenant may vacate at any time within the last forty-five days of the period between the notification and the termination date, but the tenant shall notify the landlord of the date the tenant will vacate the dwelling unit and shall pay a prorated rent for that period of occupation.

(b) When the tenancy is month-to-month the tenant may terminate the rental agreement by notifying the landlord, in writing, at least twenty-eight days in advance of the anticipated termination. When the tenant provides notice of termination, the tenant shall be responsible for the payment of rent through the twenty-eighth day.

(c) [Before a landlord terminates a month-to-month tenancy where the landlord contemplates voluntary demolition of the dwelling units, conversion to a condominium property regime under chapter 514B, or changing the use of the building to transient vacation rentals,] Notwithstanding any law to the contrary, when terminating a tenancy subject to section 521-A for no-fault just cause, the landlord shall provide notice to the tenant at least one hundred twenty days in advance of the anticipated demolition or anticipated termination. If notice is revoked or amended and reissued, the notice period shall begin from the date it was reissued or amended. Any notice provided, revoked, or amended and reissued shall be in writing. When the landlord provides notification of termination pursuant to this subsection, the tenant may vacate at any time within the one‑hundred-twenty-day period between the notification and the termination date, but the tenant shall notify the landlord of the date the tenant will vacate the dwelling unit and shall pay a prorated rent for that period of occupation.

(d) When the tenancy is less than month-to-month and not subject to section 521-A, the landlord [~~or the tenant~~] may terminate the rental agreement by notifying the [~~other~~] tenant at least ten days before the anticipated termination. The tenant may terminate a rental agreement for a tenancy that is less than month-to-month at any time by notifying the landlord at least ten days before the anticipated termination.

(e) When the tenancy is month-to-month and not subject to section 521-A, the landlord may terminate the rental agreement by notifying the tenant, in writing, at least forty-five days in advance of the anticipated termination. When the landlord provides notification of termination, the tenant may vacate at any time within the last forty-five days of the period between the notification and the termination date, but the tenant shall notify the landlord of the date the tenant will vacate the dwelling unit and shall pay a prorated rent for that period of occupation.

(f) Before a landlord terminates a month-to-month tenancy not subject to section 521-A where the landlord contemplates voluntary demolition of the dwelling units, conversion to a condominium property regime under chapter 514B, or changing the use of the building to transient vacation rentals, the landlord shall provide notice to the tenant at least one hundred twenty days in advance of the anticipated demolition or anticipated termination. If notice is revoked or amended and reissued, the notice period shall begin from the date it was reissued or amended. Any notice provided, revoked, or amended and reissued shall be in writing. When the landlord provides notification of termination pursuant to this subsection, the tenant may vacate at any time within the one hundred twenty day period between the notification and the termination date, but the tenant shall notify the landlord of the date the tenant will vacate the dwelling unit and shall pay a prorated rent for that period of occupation.

[~~(e)~~] (g) Whenever the term of the rental agreement expires, whether by passage of time, by mutual agreement, by the giving of notice as provided in subsection (a), (b), (c), [or] (d), (e), or (f) or by the exercise by the landlord of a right to terminate given under this chapter, if the tenant continues in possession after the date of termination without the landlord's consent, the tenant may be liable to the landlord for a sum not to exceed twice the monthly rent under the previous rental agreement, computed and prorated on a daily basis, for each day the tenant remains in possession. The landlord may bring a summary proceeding for recovery of the possession of the dwelling unit at any time during the first sixty days of holdover. Should the landlord fail to commence summary possession proceedings within the first sixty days of the holdover, in the absence of a rental agreement, a month-to-month tenancy at the monthly rent stipulated in the previous rental agreement shall prevail beginning at the end of the first sixty days of holdover.

[~~(f)~~] (h) Any notice of termination initiated for the purposes of evading the obligations of the landlord under [~~subsections~~] subsection 521-21(d) or (e) shall be void."

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date; provided that any contract in effect prior to the effective date of this Act that is subsequently renewed or extended on or after the effective date of this Act shall comply with the requirements of this Act.

SECTION 7. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2022.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1861
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII