REPORT TITLE:
Homestead


DESCRIPTION:
Suspends the succession provision of homestead leases under
mortgage, for the duration of the loan.  HB706 HD1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        706
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO HOMESTEAD LEASES.



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

 1      SECTION 1.  The legislature finds that existing homestead
 
 2 lessees are unable to secure financing to improve their leasehold
 
 3 property because of the descendant provision contained in Section
 
 4 171-99(e), Hawaii Revised Statutes.  This has resulted in
 
 5 homestead lessees having to live in substandard conditions,
 
 6 unable to secure loans to renovate or replace their dwellings.
 
 7 The purpose of this Act is to allow lenders to accept the leased
 
 8 property as security for loans by setting aside the succession
 
 9 provision of the lease for the duration of the loan.  
 
10      SECTION 2.  Section 171-99, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "171-99  Continuation of rights under existing homestead
 
13 leases, certificates of occupation, right of purchase leases and
 
14 cash freehold agreements.(a)  Issuance of land patents to
 
15 occupier or lessee of homestead lands.  A fee simple patent shall
 
16 be issued to every existing occupier under a certificate of
 
17 occupation issued heretofore, and to every lessee under a nine
 
18 hundred and ninety-nine year homestead lease issued heretofore,
 
19 of public lands, where the lands have been improved under the
 
20 certificate or lease, or have been used as a place of residence
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 by the occupier or lessee for an aggregate continuous period of
 
 2 not less than ten years upon payment to the board of land and
 
 3 natural resources of a fair market price, disregarding the value
 
 4 of the improvements made by the occupier or lessee, which price
 
 5 shall be determined by appraisal as provided for in this chapter;
 
 6 provided that the board may exclude from such patents areas
 
 7 required as roadways to other lots.
 
 8      (b)  Issuance of patent, lessee of right of purchase lease.
 
 9 The lessee of any existing right of purchase lease shall, at such
 
10 time and under such conditions as are contained in the lease, be
 
11 entitled to a land patent from the board conveying to the lessee
 
12 a fee simple title to the land described in the lessee's lease
 
13 upon the payment of the fair market price of the land as
 
14 determined by appraisal as provided for in this chapter, provided
 
15 the lessee has reduced to cultivation twenty-five per cent of the
 
16 premises and has resided thereon not less than two years and has
 
17 substantially performed all other conditions of the lessee's
 
18 lease.
 
19      (c)  Cash freeholds, agreement, patent, conditions.  At the
 
20 end of three years from the date of the payment of the first
 
21 installment, the holder of a freehold agreement is entitled to a
 
22 land patent for the premises described therein, if the following
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 conditions, in addition to those set forth herein, have been
 
 2 substantially performed:
 
 3      (1)  Payment of the balance of the purchase price in equal
 
 4           installments, in one, two, and three years
 
 5           respectively, from the date of the freehold agreement
 
 6           with interest annually at the rate of four per cent;
 
 7           provided that the freeholder may pay the installment
 
 8           before it is due, and thereby stop the corresponding
 
 9           interest;
 
10      (2)  Cultivation of not less than twenty-five per cent of
 
11           the area of the premises, and the planting and care of
 
12           not less than an average of ten timber, shade or fruit
 
13           trees per acre, if agricultural land, at any one time
 
14           before the end of the third year, or fencing in the
 
15           same if pastoral land within such time; provided that
 
16           if the premises are classed as pastoral-agricultural
 
17           land, the foregoing alternative conditions shall apply
 
18           respectively to the two kinds of land;
 
19      (3)  Maintenance by the freeholder of the freeholder's home
 
20           on the premises from the end of the first to the end of
 
21           the third year;
 
22      (4)  Conditions for the prevention of waste, the planting of
 
23           trees or the protection of trees growing or to be
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           planted on the premises, or for the destruction of
 
 2           vegetable pests that may be on such premises or the
 
 3           prevention of the future introduction of such pests
 
 4           thereon;
 
 5      (5)  Payment of all taxes that may be due on account of the
 
 6           premises.
 
 7      The holder of a freehold agreement shall allow the land
 
 8 agents to enter and examine the premises at all reasonable times
 
 9 to see that the conditions are being performed.  The holder shall
 
10 not assign or sublet, conditionally or otherwise, the holder's
 
11 interest or any part thereof, under the freehold agreement,
 
12 without the written consent of the board indorsed on the
 
13 agreement; and provided further that freeholders having the whole
 
14 interest in a freehold agreement may at any time when all the
 
15 conditions thereof to be performed by the freeholder up to such
 
16 time shall have been substantially performed, surrender to the
 
17 government the interest by delivery of the freehold agreement to
 
18 the land agent with the intention to surrender the same clearly
 
19 indorsed thereon, and signed by them and duly attested.  The
 
20 surrender shall release the freeholders from all further duty or
 
21 performance of the conditions of the instrument surrendered.  But
 
22 no such surrender shall be permitted if any freeholders are under
 
23 the age of eighteen years unless the minors are represented by
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 statutory guardians; and provided further that any freeholder
 
 2 over the age of eighteen may assign the freeholder's interest to
 
 3 the freeholder's cotenants.
 
 4      (d)  Right of purchase lease; termination, forfeiture, or
 
 5 surrender.  Upon the termination of a right of purchase lease by
 
 6 lapse of time, or upon the forfeiture or surrender of the lease
 
 7 or a freehold agreement, the board may in its discretion and
 
 8 within the limit of its authority open the premises or any part
 
 9 thereof for disposition in the manner or for such uses as
 
10 provided in this chapter.  Before the disposition the fair market
 
11 value thereof shall be established by appraisal.  The value
 
12 attributable to the improvements in the appraisal shall be paid
 
13 to the surrendering lessees or freeholders, upon resale of the
 
14 premises, and the director of finance shall pay the amount of the
 
15 valuation upon the requisition of the board out of such funds.
 
16      (e)  Interests, descent; certificate of occupation or
 
17 homestead lease.  In case of the death of any occupier or lessee
 
18 under an existing certificate of occupation or existing homestead
 
19 lease, all the interest of the occupier or lessee, any
 
20 conveyance, devise, or bequest to the contrary notwithstanding,
 
21 in land held by the decedent by virtue of such certificate of
 
22 occupation or homestead lease shall vest in the relations of the
 
23 decedent as follows:
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (1)  In the widow, widower, or reciprocal beneficiary;
 
 2      (2)  If there is no widow, widower, or reciprocal
 
 3           beneficiary, then in the children;
 
 4      (3)  If there are no children, then in the widows, widowers,
 
 5           or reciprocal beneficiaries of the children;
 
 6      (4)  If there are no such widows, widowers, or reciprocal
 
 7           beneficiaries, then in the grandchildren;
 
 8      (5)  If there are no grandchildren, then in the parents or
 
 9           surviving parent;
 
10      (6)  If there are no parents or surviving parent, then in
 
11           the sisters and brothers;
 
12      (7)  If there are no sisters and brothers, then in the
 
13           widowers, widows, or reciprocal beneficiaries of the
 
14           sisters and brothers;
 
15      (8)  If there are no such widowers, widows, or reciprocal
 
16           beneficiaries, then in the nieces and nephews;
 
17      (9)  If there are no nieces or nephews, then in the
 
18           widowers, widows, or reciprocal beneficiaries of the
 
19           nieces and nephews;
 
20     (10)  If there are no such widowers, widows, or reciprocal
 
21           beneficiaries, then in the grandchildren of the sisters
 
22           and brothers;
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1     (11)  If there are no grandchildren of any sister or brother,
 
 2           then in the State.
 
 3      All the successors, except the State, shall be subject to
 
 4 the performance of the unperformed conditions of the certificate
 
 5 of occupation, or the homestead lease, in like manner as the
 
 6 decedent would have been subject to the performance if the
 
 7 decedent had continued alive; provided that if a widow, widower,
 
 8 or reciprocal beneficiary, in whom the interest shall have
 
 9 vested, shall thereafter marry again and decease leaving a
 
10 widower, widow, or reciprocal beneficiary and a child or children
 
11 of the first marriage surviving, the interest of the deceased
 
12 shall vest in such child or children; and provided further that
 
13 in case two or more persons succeed together to the interest of
 
14 any occupier or lessee, according to the foregoing provisions,
 
15 they shall hold the same by joint tenancy so long as two or more
 
16 shall survive, but upon the death of the last survivor, the
 
17 estate shall descend as provided above.
 
18      (f)  Option of cotenant to compel others to buy or sell.  In
 
19 case two or more persons become cotenants under any existing
 
20 right of purchase lease, certificate of occupation, or homestead
 
21 lease by inheritance or otherwise, any one or more of such
 
22 persons less than the whole number may file in the office of the
 
23 land agent an offer to the remainder of the persons to buy their
 

 
Page 8                                                     706
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 interest in the premises or to sell them their own interest
 
 2 therein at a stated price according to the proportion of the
 
 3 respective interest in question, and may deposit with the land
 
 4 agent the amount of the offered price in money, with a fee of
 
 5 $10.  The land agent shall thereupon notify the persons to whom
 
 6 the offer is made of the nature of the offer and order them to
 
 7 file with the land agent their answer within sixty days whether
 
 8 they will buy or sell according to the offer.  If the persons to
 
 9 whom the offer is made file with the land agent within sixty days
 
10 of the time of their receiving the notification, their answer
 
11 stating that they will sell their interest according to the terms
 
12 of the offer, the land agent shall indorse the fact of the sale
 
13 with the amount of the consideration on the lease and pay to such
 
14 persons the amount of the consideration deposited with the land
 
15 agent according to their individual interest; and the interest of
 
16 such persons shall thereupon vest in the persons making the
 
17 offer.  The fact of the transfer shall be properly recorded in
 
18 the official records of the land agent and indorsed upon the
 
19 lease held by the lessee.
 
20      If, however, the persons to whom the offer is made fail to
 
21 answer within sixty days from the time of their being notified of
 
22 the offer or within sixty days from the time the notice of the
 
23 offer mailed to their last known place or places of abode, or
 

 
Page 9                                                     706
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 shall answer within sixty days that they will buy the interest of
 
 2 the persons making the offer on the terms offered, but fail
 
 3 within sixty days after the notification to deposit the amount
 
 4 representing the value of the interest according to the terms
 
 5 offered, their interest shall vest in the persons making the
 
 6 offer and the amount of the consideration shall be paid by the
 
 7 land agent of them individually or their respective
 
 8 representatives upon application.  In such case the fact of the
 
 9 transfer shall be recorded and indorsed as above provided.
 
10      In the event that any funds held by the land agent hereunder
 
11 may not be paid to the persons to whom properly payable, because
 
12 of the inability of the land agent to locate such persons, the
 
13 funds shall, after the expiration of one year, be deposited in
 
14 the department of budget and finance of the State and there abide
 
15 the claim of any person thereto lawfully entitled; provided that
 
16 no claim to the funds shall be allowed unless the claim is made
 
17 within five years after the deposit.  Payment of any claim duly
 
18 filed may be made if the department of budget and finance and the
 
19 board concur in finding the claim valid and proper, but if the
 
20 claimant fails to obtain concurrency of the department of budget
 
21 and finance and the board within sixty days of the filing of the
 
22 claimant's claim, the claimant may present a petition to the
 
23 circuit court of the first judicial circuit in that behalf,
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 notice whereof shall be given to the attorney general, who may
 
 2 appear and defend on behalf of the State, and if the court
 
 3 renders a judgment in favor of the claimant, the department of
 
 4 budget and finance shall pay the amount due without interest.
 
 5      But if the persons to whom the offer is made shall, within
 
 6 sixty days from the time of the notification, make answer to the
 
 7 land agent that they will buy the interest of the offering
 
 8 parties and shall deposit within sixty days with the land agent
 
 9 the amount required for the purpose according to the terms of the
 
10 offer, the land agent shall indorse and record the fact of the
 
11 sale as above provided, and pay to the offering parties the
 
12 amount according to their individual interest; and the interest
 
13 of the offering parties shall thereupon vest in the answering
 
14 parties.  In such case the consideration money deposited by the
 
15 offering parties shall be returned to them.
 
16      (g)  Forfeiture; existing certificate of occupation or
 
17 homestead lease.  The violation of any of the conditions of any
 
18 existing certificate of occupation or homestead lease shall be
 
19 sufficient cause for the board upon failure of the occupier or
 
20 lessee within a reasonable period of time to remedy the default
 
21 after notice thereof in the manner provided in section 171-20 to
 
22 take possession of the demised premises without demand or
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 previous entry, with or without legal process, and thereby,
 
 2 subject to section 171-21, terminate the estate created.
 
 3      (h)  Forfeiture; cash freeholds.  In the case of default in
 
 4 the payment of any of the installments due on any cash freehold
 
 5 agreement for thirty days after the same are due, or failure of
 
 6 performance of any other conditions, the board may take
 
 7 possession of the premises, upon failure of the freeholder within
 
 8 a reasonable period of time to remedy the default after notice
 
 9 thereof in the manner provided in section 171-20 without demand
 
10 or previous entry, with or without legal process, and thereby
 
11 subject to section 171-21, terminate the estate created.
 
12      (i)  Mortgage of homestead leases.  Whenever an existing
 
13 homestead lease is mortgaged pursuant to Section 171-22, Hawaii
 
14 Revised Statutes, the consent to mortgage from the board of land
 
15 and natural resources may contain a condition exempting the lease
 
16 from Section 171-99(e), Hawaii Revised Statutes, for the duration
 
17 of the mortgage."
 
18      SECTION 3.  Statutory material to be repealed is bracketed.
 
19 New statutory material is underscored.
 
20      SECTION 4.  This Act shall take effect upon its approval.