STAND. COM. REP. NO.621-02

Honolulu, Hawaii

, 2002

RE: H.B. No. 2413

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.B. No. 2413 entitled:

"A BILL FOR AN ACT RELATING TO CONDOMINIUM PROPERTY REGIMES,"

begs leave to report as follows:

The purpose of this bill is to authorize an association of apartment owners (AOAOs) of a condominium that has been partially converted to fee simple ownership, to purchase the remaining fee interest through a bulk sale. This bill:

(1) Allows AOAOs of a partially converted condominium, to purchase under a bulk sale, the remaining portion of the lessor's interest with the approval of 75 percent of all remaining lessees who have not yet purchased the fee interest in their apartment;

(2) Allows AOAOs to assess the costs and expenses of acquiring the lessor's interest to the remaining lessees; and

(3) Requires AOAOs to sell the remaining portion of the lessor's interest only to lessees of apartments to which the interest is appurtenant or to their permitted assigns, heirs, or successors.

 

 

The Hawaii Council of Associations of Apartment Owners and one individual testified in support of this measure. The Community Associations Institute supported the intent of this measure and suggested amendments.

Your Committee finds that individual leased fee sales were common in the early 1900s. As a result, many condominiums currently in existence are "partially converted" whereby a portion of apartments are owned in fee and others in leasehold. In today's market, individual leased fee sales are less common among lessors. Many lessors prefer to sell entire properties through bulk sales thereby making it difficult for individual apartment owners to acquire their leased fee interests.

Under current law, an AOAO may purchase the leased fee interest in the land upon approval of 75 percent of the condominium's lessees. Apartment owners who already own their fee interest have no incentive to approve such a purchase. Obtaining the requisite number of votes is unduly burdensome when more than 25 percent of the apartment owners in a partially converted condominium own their fee.

Your Committee finds that although this bill is a "win-win" measure for lessors and lessees, further discussion is warranted in light of the numerous suggested amendments. Therefore, your Committee has amended this measure by changing its effective date to July 1, 2050.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2413, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2413, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,

 

____________________________

KENNETH T. HIRAKI, Chair