Report Title:

Condominium Property Regimes

 

Description:

Authorizes the association of a condominium partially converted to fee simple to acquire the remaining fee interest in a bulk sale upon written approval of 75% of remaining condominium lessees; requires association to sell fee interest only to lessees of apartments to which the interest is appurtenant. (HB2413 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

2413

TWENTY-FIRST LEGISLATURE, 2002

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO CONDOMINIUM PROPERTY REGIMES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that it is necessary to amend the Hawaii Revised Statutes to address the powers of condominium associations in situations in which some lessees have already purchased their leased fee interests from the lessor.

The purpose of this Act is to empower condominium associations to purchase the remainder of the lessor's interest at the sole cost of the remaining lessees.

SECTION 2. Section 514C-22, Hawaii Revised Statutes, is amended to read as follows:

"[[]§514C-22[]] Power of association of apartment owners to negotiate, purchase, and sell lessor's interest. (a) The association of apartment owners may purchase the lessor's interest in the condominium project; provided that the declaration of condominium property regime shall either contain or be amended to include a provision authorizing the board of directors to effectuate such a purchase. If the lessor is also a condominium unit lessee, the lessor's lessee interest shall be disregarded in the computation of the percentage of condominium unit lessees needed to achieve the vote or written consent required to amend the declaration of condominium property regime.

(b) If the association of apartment owners is authorized to purchase the lessor's interest pursuant to this section, the following powers, in addition to any other existing powers, shall be conferred upon the association of apartment owners:

(1) To purchase or otherwise acquire, own, improve, use, and deal in and with the lessor's interest in the condominium apartment or any or all undivided interests of the lessor therein;

(2) To incur liabilities, borrow money, and secure any of its obligations by mortgage or pledge all or any portion of its property, assessments, and funds to effectuate acquisition of the lessor's interest;

(3) To assess, except as provided for under 514C-22(d), as a common expense, [the condominium unit lessees for] the expenses incurred in acquiring [the lessor's] and holding the leased fee interest, [or] and to service any debt associated therewith; and

(4) To sell the leased fee interest [appurtenant to] in a condominium [unit] apartment and acquired from the lessor by the association of apartment owners, to [any] the then condominium [unit] apartment lessee or subsequent purchaser of such unit.

(c) No condominium [unit] apartment lessee shall be compelled to purchase [the portion of] the leased fee interest [of the property appurtenant to the lessee's] in such condominium [unit] apartment and acquired from the lessor by the association of apartment owners, but may instead pay lease rent to the association of apartment owners together with the lessee's share of the common expenses incurred in acquiring the leased fee interest [to the land,] in the apartments in the project including any debt associated therewith.

(d) If some, but not all, lessees have purchased the leased fee interest in their apartments directly from the lessor, the association of apartment owners shall undertake any purchase of all of the remaining portion of the leased fee interest in the remaining apartments in the project in accordance with subsection (b); provided that:

(1) The lessees of apartments to which are appurtenant seventy-five per cent of the common interest appurtenant to the remaining leasehold apartments at the time the lessor offers to sell all of the remaining portion of the leased fee interest to the association of apartment owners give their written consent thereto;

(2) At least seventy-five per cent of the remaining lessees purchase their leased fee interests from the association of apartment owners in a simultaneous closing;

(3) All costs and expenses of acquiring and holding the leased fee interest and to service any debt associated therewith shall be separately assessed to the apartments of the remaining lessees in the same ratio that the common interest appurtenant to each remaining lessees’ apartment bears to the total common interest appurtenant to all of the remaining lessees’ apartments; and

(4) The association of apartment owners shall sell the leased fee interest in an apartment only to the lessee of such apartment, or to the permitted assigns or successors of such lessee.

(e) If the association of apartment owners acquires all of the remaining portion of the lessor's interest in accordance with section 514C-22(d), any debt associated therewith shall be secured only by the interests so acquired and by the common expense assessments upon the apartments to which such interest appertain.

(f) For purposes of this section, "remaining lessees" means the lessees of apartments in a condominium project that have not purchased the leased fee interest in their apartment."

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

SECTION 4. This Act shall take effect on July 1, 2050.