Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 112

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Government Operations and Housing, to
which was referred S.B. No. 112 entitled: 


begs leave to report as follows:

     The purpose of this measure is to require a mortgage holder
or court appointed receiver or commissioner of a property during
foreclosure proceedings to pay the association of apartment
owners the current common expenses chargeable to the apartment,
if rent is being collected.

     Testimony in support of this measure was received from the
Hawaii Association of Realtors, Hawaii Council of Associations of
Apartment Owners, Community Associations Institute, a member of
the Association of Apartment Owners of the Villa on Eaton Square,
and sixteen individuals.  Oral testimony in favor of this measure
was received from a member of the Marco Polo Condominium
Association.  Testimony opposed to this measure was received from
American Savings Bank and the Hawaii Bankers Association.

     Your Committee finds that maintenance fees are the primary
source of income for condominium associations.  These fees are
needed to maintain, repair, and operate a condominium.

     Your Committee finds that oftentimes a tenant is utilizing
services the association provides, such as electric, water, and
recreational amenities, yet the mortgage holder or foreclosure

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receiver or commissioner does not pay the maintenance fees for
the unit.

     Your Committee finds that association losses can run from
$3,500 to $7,000 or more per foreclosure.  In a long foreclosure,
a receiver or commissioner may collect $5,000 or more from a
tenant and none of the money goes to the association.

     Your Committee finds that this measure will provide some
financial relief to condominium owners who are currently
subsidizing the common expenses of units in foreclosure when a
court-appointed receiver or commissioner is collecting the rent
but not paying the current common expenses to the association of
apartment owners.

     As affirmed by the record of votes of the members of your
Committee on Government Operations and Housing that is attached
to this report, your Committee is in accord with the intent and
purpose of S.B. No. 112 and recommends that it pass Second
Reading and be placed on the calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Government
                                   Operations and Housing,

                                   ROD TAM, Chair

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