§516-35  Restrictions on sale and use of residential lots.  (a)  If state moneys are used for the purchase of the owner's basis, then for a period of ten years after the purchase from the corporation of the leased fee interest in a residential lot, the purchaser shall not transfer any interest in the property unless the purchaser has first notified the corporation in writing of the purchaser's intention to do so.

     The notice shall specify the purchaser's address and upon receipt of the notice, the corporation shall have the first option to purchase the land at the original purchase price of the leased fee from the corporation plus ten per cent a year from the date of said original purchase up to the time of repurchase or the fair market value at the time of repurchase, whichever is lower, plus the fair market value of the improvements; provided that title to a dwelling unit and the property or lease may pass to a family member by devise or through the laws of descent, notwithstanding any qualifications set forth in section 516-33 or the rules and regulations established by the corporation.

     At the time of the repurchase, the fair market value of the land and the improvements shall be determined by a qualified appraiser, selected by the purchaser from a list of three appraisers provided by the corporation, whose services shall be paid for by the corporation; provided that the appraisal is subject to review by the corporation prior to acceptance.  If the purchaser disagrees with the value, the purchaser may appoint the purchaser's own appraiser at the purchaser's own cost and any further disagreement on the value may be resolved by negotiation or otherwise.

     (b)  Within sixty days after the receipt of the notice the corporation shall in writing notify the purchaser at the address so specified whether it elects to exercise its option.  The date of election to purchase shall constitute the date of valuation for repurchase.  Nonpayment of the purchase price by the corporation within ninety days from the date of election shall constitute a default and shall void the election and terminate the right to exercise the option by the corporation.  If the corporation refuses, or fails within the sixty-day period to reply to the offer, the purchaser may sell the fee simple interest in the property, or lease the property for a period not to exceed one year, to any person, free from any price restrictions; provided that if the purchaser leases the property, the purchaser shall, upon expiration of the term of the lease, again comply with the requirements of subsection (a) whenever the expiration date of the term of the lease is within the ten-year period stated in subsection (a); further provided that if the purchaser notifies the corporation of the purchaser's intention to sell the property, but does not sell or lease the property within two years after the date the notice was received by the corporation, the purchaser must again comply with the requirements of subsection (a) if the ten-year period stated in subsection (a) has not expired.

     (c)  The corporation may lease, rent, or resell, any lot and improvements purchased by it under this part.

     (d)  Any original lease, deed, agreement of sale, mortgage, and other instruments of conveyance issued by the corporation under this part shall expressly contain the restriction on sale and use of the residential lot as prescribed by this section. [L 1967, c 307, §24; HRS §516-35; am L 1975, c 184, §2(15); am L 1976, c 242, §3; gen ch 1985; am L 1987, c 337, §16; am L 1988, c 104, §2; am L 2005, c 196, §26(b); am L 2006, c 180, §16]