Bill Text: HI HB25 | 2013 | Regular Session | Amended
Bill Title: Foreclosure Actions; Junior Lienholders; Condominium Associations
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2013-06-26 - Act 197, 6/25/2013 (Gov. Msg. No. 1300). [HB25 Detail]
Download: Hawaii-2013-HB25-Amended.html
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
25 |
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TWENTY-SEVENTH LEGISLATURE, 2013 |
H.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO SUSPENSION OF FORECLOSURE ACTIONS BY JUNIOR LIENHOLDERS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature recognizes that once a foreclosure action is initiated in the circuit courts, all junior lienholders, including an association, are prohibited from initiating or continuing with a nonjudicial foreclosure.
During the pendency of a judicial foreclosure action in circuit court which can take years to resolve, and prior to the appointment of a foreclosure commissioner, the property in an association can fall into a state of disrepair and negatively impact not only the neighboring properties but the community at large. In addition, the association's fiscal solvency is burdened by being unable to collect maintenance fees from the empty and not foreclosed unit, a cost which is then shared by the other homeowners.
In order to minimize property damage and allow associations an opportunity to remain fiscally viable during a pending foreclosure, this Act allows the associations to commence or continue with a nonjudicial foreclosure until the circuit court appoints a commissioner.
SECTION 2. Section 667-37, Hawaii Revised Statutes, is amended to read as follows:
"§667-37 Judicial
action of foreclosure before public sale. This part shall not prohibit the
foreclosing mortgagee, or any other creditor having a recorded lien on the
mortgaged property before the recordation of the notice of default under
section 667-23, from filing an action for the judicial foreclosure of the
mortgaged property in the circuit court of the circuit where the mortgaged
property is located; provided that the action is filed before the public sale
is held. [The power of sale foreclosure process
shall be stayed during the pendency of the circuit court foreclosure action.]"
SECTION 3. Section 667-57, Hawaii Revised Statutes, is amended as follows:
"§667-57 Suspension of foreclosure actions by junior lienholders. (a) Upon initiation of a foreclosure action pursuant to part IA or part II by a foreclosing mortgagee, no junior lienholder, except for an association, shall be permitted to initiate or continue a nonjudicial foreclosure until the foreclosure initiated by the foreclosing mortgagee has been concluded by a judgment issued by a court pursuant to section 667-1.5, the recording of an affidavit after public sale pursuant to section 667-33, or the filing of an agreement under the mortgage foreclosure dispute resolution provisions of section 667-81.
(b) Upon initiation of a foreclosure action pursuant
to part II by a foreclosing mortgagee, no junior lienholder, except for an
association, shall be permitted to initiate or continue a nonjudicial
foreclosure during the pendency of a stay pursuant to section 667-83; provided
that a junior lienholder may initiate or continue with a nonjudicial
foreclosure if[:
(1) The] the
junior lien foreclosure was initiated before the foreclosure action by the
foreclosing mortgagee[; or
(2) The junior lienholder is an
association and has not been provided notice of the foreclosure action,
pursuant to section 667-21.5, or has not received written notification of a
case opening pursuant to section 667-79]."
SECTION 4. Section 667-83, Hawaii Revised Statutes, is amended by amending subsection (a) as follows:
"(a) The written notification of a case opening under section 667-79 shall operate as a stay of the foreclosure proceeding and may be recorded; provided that:
(1) The written notification shall not act
as a stay on a foreclosure proceeding by an association [unless the
association has been provided notice pursuant to sections 667-5.5, 667-21.5, or 667-79]; and
(2) The written notification shall not act as a stay on a foreclosure proceeding for the purpose of the date by which the default must be cured pursuant to section 667-22(a)(6)."
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect upon its approval.
Report Title:
Foreclosure Actions; Junior Lienholders; Condominium Associations
Description:
Allows a condominium association, as a junior lienholder, to commence or continue a nonjudicial foreclosure action on a property subject to a judicial foreclosure. Removes requirement to stay power of sale foreclosure process pending a circuit court foreclosure action. (HB25 HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
