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THE SENATE

S.B. NO.

983

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO AGRICULTURAL PARKS.

 

 

 

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

SECTION 1. Section 166-8.5, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:

"(a) For the purpose of this section:

"Institutional lender" means a federal, state, or private lending institution licensed to do business in the State [of Hawaii] in making loans to qualified applicants under section 166-7 on the basis of a lease for security, in whole or in part, together with any other entity who acquires all or substantially all of an institutional lender’s loan portfolio.

"Making a loan" means the lending of new money [after June 28, 1999] or the renewal or extension of indebtedness owing by a qualified applicant to an institutional lender[.] after June 28, 1999.

"Security interest" means any interest created or perfected by a mortgage[, assignment] or assigned by way of a mortgage[,] or [by] a financing statement and encumbering a [lease,] leasehold interest in land demised by the lease[,] or personal property located at, affixed or to be affixed to, or growing or to be grown upon the demised land.

(b) Board action shall be required when an institutional lender acquires the lessee’s interest through a foreclosure sale, whether judicial or nonjudicial, or by way of an assignment in lieu of foreclosure, or when the institutional lender sells or causes the sale of the lessee’s interest in a lease by way of a foreclosure sale, whether judicial or nonjudicial. The institutional lender shall convey to the board a copy of the sale or assignment as recorded in the bureau of conveyances.

(c) Notwithstanding any provisions of this chapter or any law to the contrary, if any lease is subject to a security interest which is held by an institutional lender, and provided the institutional lender has given to the board a copy of such encumbrance as recorded in the bureau of conveyances, then:

[(1) If the lease is canceled for violation of any non-monetary lease term or condition, or if the lease is deemed terminated or rejected under bankruptcy laws, [then] in either event, the institutional lender shall be entitled to issuance of a new lease in its name for a term equal to the term of the lease remaining immediately prior to the cancellation, termination, or rejection, with all terms and conditions being the same as in the canceled, terminated, or rejected lease, except only for such liens, claims, and encumbrances, if any, which were superior to the institutional lender prior to the cancellation, termination, or rejection. If a lease is rejected or deemed rejected under bankruptcy law, the lease shall be deemed to be canceled and terminated for all purposes under state law;]

(1) If the lease is terminated under bankruptcy laws, then the institutional lender shall be entitled to a new lease in its name for a term equal to the term of the lease remaining immediately prior to the termination, with all terms and conditions being the same as in the terminated lease;

(2) If the lease is rejected or deemed rejected under bankruptcy laws, then the institutional lender shall be entitled to assignment of the lease in its name;

[(2)] (3) If the lessee’s interest under a lease is transferred to an institutional lender, including for purposes of this section by reason of the provisions of [paragraph (1)] paragraphs (1) and (2), by reason of acquisition of the lessee’s interest pursuant to a foreclosure sale, whether judicial or nonjudicial, [and] or by reason of an assignment in lieu of foreclosure, then:

(A) The institutional lender shall be liable for the obligations of the lessee under the lease [for the period of time] arising prior to and during [which] the time the institutional lender is the holder of the lessee’s interest but shall not be liable for any obligations of the lessee arising after the institutional lender has assigned the lease; and

(B) The provisions of subsection 166-6(a)(1) and (2) shall not apply to the lease or the demised land during such time the institutional lender holds the lease; provided, however, that [for non-monetary lease violations,] the institutional lender shall [first remedy the lease terms which caused the cancellation, termination, or rejection to the satisfaction of the board;] cure any breach or default; provided further that the [new lease issued to the institutional lender shall have a sunset date (one hundred twenty days from the effective date of issuance), when the] institutional lender shall either sell or assign the lease[,] within one hundred twenty days after the date the lease is transferred, or other date as determined by the Board, whichever is longer, after which date the provisions of subsection 166-6(a) shall become applicable to the new lease;

[(3)] (4) As long as there is a delinquent loan balance secured by a security interest, [the lease may not be canceled or terminated, except for cancellation by reason of default of the lessee, and] no increase over and above the fair market rent, based upon the actual use of the land demised and subject to the use restrictions imposed by the lease and applicable laws, may be imposed or become payable, [and no lands may be withdrawn from the lease, except by eminent domain proceedings beyond the control of the board,] except with prior written consent by the institutional lender and such consent shall not be unreasonably withheld; and

[(4)] (5) If the lease contains any provision requiring the payment of a premium to the lessor on assignment of the lease, any premium shall be assessed only after all amounts owing by any debt secured by a security interest held by [[]an[]] institutional lender shall have been paid in full."

SECTION 2. Statutory material to be repealed is bracketed. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:

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