STAND. COM. REP. NO. 582

Honolulu, Hawaii

, 2025

RE: H.B. No. 421

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

Your Committee on Housing, to which was referred H.B. No. 421 entitled:

"A BILL FOR AN ACT RELATING TO CONTRACTORS,"

begs leave to report as follows:

The purpose of this measure is to:

(1) Repeal the leasing restriction on owner-builders who obtain an owner-builder exemption to act as their own contractor and who build or improve residential or farm buildings or structures on property they own or lease and do not offer the buildings or structures for sale; and

(2) Require an owner or a lessee to provide signed written notice that the residential structure for lease or sublease was built or improved by an individual who is not a licensed contractor.

Your Committee received testimony in support of this measure from the Hawaiʻi Association of REALTORS and Grassroot Institute of Hawaii. Your Committee received testimony in opposition to this measure from the Contractors License Board and Contractors Association of Kauaʻi. Your Committee received comments on this measure from the Regulated Industries Complaints Office.

Your Committee finds that under existing law, an owner-builder who has an owner-builder permit to act as their own general contractor cannot sell or lease, or offer to sell or lease, a structure that was built under an owner-builder exemption until one year after completion. Your Committee further finds that Hawaii is one of only seven states in the country that imposes this type of restriction. The existing restriction on leasing means that property owners who could offer units in Hawaii's rental market are unable to do so during this one-year period. This measure will complement many of the strategies now being used to ease the State's housing shortage by eliminating this lease restriction.

Your Committee has amended this measure by:

(1) Changing the effective date to July 1, 3000, to encourage further discussion; and

(2) Making a technical, nonsubstantive amendment for the purposes of clarity, consistency, and style.

As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 421, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 421, H.D. 1, and be referred to your Committee on Consumer Protection & Commerce.

Respectfully submitted on behalf of the members of the Committee on Housing,

____________________________

LUKE A. EVSLIN, Chair