THE SENATE                           S.C.R. NO.            173
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                    SENATE  CONCURRENT


 1        WHEREAS, condominiums property regimes fill a significant
 2   portion of Hawai`i's housing needs; and
 4        WHEREAS, condominium associations are often unable to
 5   collect maintenance fees that remain unpaid prior to and during
 6   foreclosure proceedings, and that financial institutions refuse
 7   to pay for any outstanding maintenance fees even though
 8   secondary mortgage lenders will reimburse them for up to six
 9   months of delinquent maintenance fees; and
11        WHEREAS, the Legislature has considered legislation that
12   would grant condominiums associations a lien for unpaid common
13   expenses with a limited six-month priority over mortgage liens,
14   such as that delineated in Senate Bill No. 36, S.D. 2; and
16        WHEREAS, fifteen other jurisdictions use the same or
17   similar type of six-month lien priority law:  Alaska, Colorado,
18   Connecticut, Florida, Minnesota, Nevada, Vermont, New Jersey,
19   West Virginia, Pennsylvania, Rhode Island, Massachusetts,
20   Oregon, Washington, and Washington, D.C.; now, therefore,
22        BE IT RESOLVED by the Senate of the Twentieth Legislature
23   of the State of Hawaii, Regular Session of 1999, the House of
24   Representatives concurring, that the Legislative Reference
25   Bureau is requested to study the issue of the impact in Hawaii
26   of a six-month priority lien law; and
28        BE IT FURTHER RESOLVED that the Legislative Reference
29   Bureau is specifically requested to study the following issues:
31        (1)  Whether the enactment of such a law would affect the
32             ability of banks and lenders such as Freddie Mac,
33             Veteran's Administration, Federal Housing
34             Administration, and Fannie Mae to continue to insure
35             Hawaii mortgages;

Page 2                                                     
                                  S.C.R. NO.            173

 1        (2)  Review and detail the methods, including percentages,
 2             used by the jurisdiction cited above to underwrite
 3             loans in their respective jurisdictions;
 5        (3)  Determine if the enactment of the priority lien law
 6             in the jurisdictions cited above has had a negative
 7             impact on homeowners, banks, and lenders in those
 8             jurisdictions and, if so, describe the impacts; and 
10        (4)  Examine the methods of reducing these types of losses
11             incurred by condominium associations, such as
12             California's "Second Trustee" system;
14   and
16        BE IT FURTHER RESOLVED that in conducting its research,
17   the Bureau is requested to contact the following organizations:
18   Hawaii Council of Associations of Apartment Owners, the
19   Community Associations Institute, Mortgage Bankers Association
20   of Hawaii, Hawaii Bankers Association, other financial
21   institutions, property management companies, and Department of
22   Commerce and Consumer Protection; and 
24        BE IT FURTHER RESOLVED that the Legislative Reference
25   Bureau report its findings and conclusions and an overview of
26   the Hawai`i foreclosure law to the Legislature no later than
27   twenty days before the convening of the Regular Session of
28   2000; and
30        BE IT FURTHER RESOLVED that certified copies of this
31   Concurrent Resolution be transmitted to the Acting Director of
32   the Legislative Reference Bureau, the President of the Board of
33   Directors of the Hawaii Council of Associations of Apartment
34   Owners, the President of the Board of the Community
35   Associations Institute, the President of the Mortgage Bankers
36   Association of Hawaii, and the President of the Hawaii Bankers
37   Association, and the Director of the Department of Commerce and
38   Consumer Protection.
42                         OFFERED BY:  ____________________________