Condos; Time Shares

Postpones requirement that developer of time share plans situated
within condominium projects provide purchaser with a public
report prior to making sales, provided that developer has
obtained preliminary permit from the director of the department
of commerce and consumer affairs.  (SD1)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                S.D. 1
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  In Hawaii, many time share plans are situated
 2 within condominium projects.  Therefore, developers of time share
 3 plans are required to adhere to the requirements of both chapter
 4 514E, Hawaii Revised Statutes, relating to time sharing plans,
 5 and the requirements of chapter 514A, Hawaii Revised Statutes,
 6 relating to condominium property regimes, in order to offer time
 7 share interests for sale.  As a result, time share developers
 8 must provide prospective purchasers with both a disclosure
 9 statement, which is required under chapter 514E, and a public
10 report, which is required under chapter 514A, Hawaii Revised
11 Statutes, as part of the sales process.   
12      The legislature finds that time share developers of projects
13 located in condominium projects should be able to commence sales,
14 so long as they have obtained a preliminary permit for time share
15 plans.  The preliminary permit would allow such developers to be
16 exempt from the requirements of sections 514A-31 and 514A-62,
17 Hawaii Revised Statutes, which require a developer to provide
18 purchasers with a public report prior to making offers of sales.

Page 2                                                     658
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1 The requirement that a developer obtain an effective date for,
 2 and provide a purchaser with, a public report, would not be
 3 overridden.  This requirement, however, would be delayed.  As
 4 such, consumers would ultimately be provided with a public report
 5 for which an effective date has been issued as a condition to
 6 closing the sale of the time share interest, and would continue
 7 to have the rescission rights contemplated under section 514A-62,
 8 Hawaii Revised Statutes.
 9      The exemption is intended to apply only to the sale of time
10 share interests in a condominium project and would not permit
11 developers to sell whole apartments in the project.  Whole
12 apartments in the project may only be offered for sale to
13 prospective purchasers when an effective date for a public report
14 has been issued by the real estate commission.
15      The purpose of this Act, therefore, is to permit developers
16 of time share plans under chapter 514E, Hawaii Revised Statutes,
17 whose plans are located within condominium projects, to take
18 advantage of the alternative registration procedures contained in
19 chapter 514E, Hawaii Revised Statutes.
20      SECTION 2.  Chapter 514A, Hawaii Revised Statutes, is
21 amended by adding a new section to be appropriately designated
22 and to read as follows:

Page 3                                                     658
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1      "514A-     Public reports for purchasers of time share
 2 interests.  (a)  Notwithstanding sections 514A-31 and 514A-62, a
 3 developer may offer for sale and enter into binding sales
 4 contracts with purchasers for time share interests in apartments
 5 in a condominium project without having obtained and provided to
 6 such purchasers a public report for which an effective date has
 7 been issued by the commission; provided that the developer holds
 8 a valid preliminary permit from the director of the department of
 9 commerce and consumer affairs to commence sales of interests in
10 the time share plan pursuant to chapter 514E.
11      (b)  The closing of a sale of any time share interest in an
12 apartment in a condominium project shall not occur until the
13 developer has obtained the issuance of an effective date for a
14 final public report or a contingent final public report for the
15 condominium project, the final public report or the contingent
16 final public report has been provided to the purchaser, and the
17 purchaser's right of rescission has expired or has been waived in
18 accordance with section 514A-62.
19      (c)  This section shall apply only to the sale of time share
20 interests in time share plans situated within condominium
21 projects under a valid preliminary permit under chapter 514E and
22 in no event shall this section permit a developer to offer to

Page 4                                                     658
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1 sell whole condominium apartments in the condominium project to
 2 prospective purchasers until an effective date for a public
 3 report for the project has been issued by the commission."
 4      SECTION 3.  New statutory material is underscored.
 5      SECTION 4.  This Act shall take effect on June 31, 2050.