REPORT TITLE:
Public Lands


DESCRIPTION:
Provides flexibility in assigning leases to family members of a
deceased lease holder.  (HB755 SD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        755
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 2000                                S.D. 2
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO PUBLIC LANDS.



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 properties because of the descendant provision contained in
 
 4 section 171-99(e), Hawaii Revised Statutes.  This has resulted in
 
 5 homestead lessees having to live in substandard conditions and
 
 6 being unable to secure loans to renovate or replace their
 
 7 dwellings.  The legislature also finds that the descendant
 
 8 provisions contained in section 171-99(e), Hawaii Revised
 
 9 Statutes, are overly restrictive and can prevent the orderly
 
10 transfer of homestead leases.  Some homestead leases have
 
11 terminated due to the inability of the lessee to comply with
 
12 these descendant provisions.
 
13      The purpose of this Act is to:
 
14      (1)  Allow lenders to accept the leased property as security
 
15           for loans by setting aside the succession provision of
 
16           the lease for the duration of the loan; and
 
17      (2)  To make the leases more freely available to members of
 
18           the lessee's family.
 

 
Page 2                                                     755
                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1      SECTION 2.  Section 171-99, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "171-99  Continuation of rights under existing homestead
 
 4 leases, certificates of occupation, right of purchase leases, and
 
 5 cash freehold agreements.(a)  Issuance of land patents to
 
 6 occupier or lessee of homestead lands.  A fee simple patent shall
 
 7 be issued to every existing occupier under a certificate of
 
 8 occupation issued heretofore, and to every lessee under a nine
 
 9 hundred and ninety-nine year homestead lease issued heretofore,
 
10 of public lands, where the lands have been improved under the
 
11 certificate or lease, or have been used as a place of residence
 
12 by the occupier or lessee for an aggregate continuous period of
 
13 not less than ten years upon payment to the board of land and
 
14 natural resources of a fair market price, disregarding the value
 
15 of the improvements made by the occupier or lessee, which price
 
16 shall be determined by appraisal as provided for in this chapter;
 
17 provided that the board may exclude from [such] these patents
 
18 areas required as roadways to other lots.
 
19      (b)  Issuance of patent, lessee of right of purchase lease.
 
20 The lessee of any existing right of purchase lease [shall], at
 
21 [such] a time and under [such] conditions [as] that are contained
 
22 in the lease, shall be entitled to a land patent from the board
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 conveying to the lessee a fee simple title to the land described
 
 2 in the lessee's lease upon the payment of the fair market price
 
 3 of the land as determined by appraisal as provided for in this
 
 4 chapter[,]; provided that the lessee has reduced to cultivation
 
 5 twenty-five per cent of the premises and has resided thereon not
 
 6 less than two years and has substantially performed all other
 
 7 conditions of the lessee's lease.
 
 8      (c)  Cash freeholds, agreement, patent, conditions.  At the
 
 9 end of three years from the date of the payment of the first
 
10 installment, the holder of a freehold agreement is entitled to a
 
11 land patent for the premises described therein, if the following
 
12 conditions, in addition to those set forth herein, have been
 
13 substantially performed:
 
14      (1)  Payment of the balance of the purchase price in equal
 
15           installments, in one, two, and three years
 
16           respectively, from the date of the freehold agreement
 
17           with interest annually at the rate of four per cent;
 
18           provided that the freeholder may pay the installment
 
19           before it is due[,] and thereby stop the corresponding
 
20           interest;
 
21      (2)  Cultivation of not less than twenty-five per cent of
 
22           the area of the premises, and the planting and care of
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1           not less than an average of ten timber, shade, or fruit
 
 2           trees per acre, if agricultural land, at any one time
 
 3           before the end of the third year, or fencing in the
 
 4           [same] premises if pastoral land within [such] that
 
 5           time; provided that if the premises are classed as
 
 6           pastoral-agricultural land, the foregoing alternative
 
 7           conditions shall apply respectively to the two kinds of
 
 8           land;
 
 9      (3)  Maintenance by the freeholder of the freeholder's home
 
10           on the premises from the end of the first to the end of
 
11           the third year;
 
12      (4)  Conditions for the prevention of waste, the planting of
 
13           trees or the protection of trees growing or to be
 
14           planted on the premises, or for the destruction of
 
15           vegetable pests that may be on [such] the premises or
 
16           the prevention of the future introduction of [such]
 
17           pests thereon;
 
18      (5)  Payment of all taxes that may be due on account of the
 
19           premises.
 
20      The holder of a freehold agreement shall allow the land
 
21 agents to enter and examine the premises at all reasonable times
 
22 to see that the conditions are being performed.  The holder shall
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 not assign or sublet, conditionally or otherwise, the holder's
 
 2 interest or any part thereof, under the freehold agreement,
 
 3 without the written consent of the board indorsed on the
 
 4 agreement; and provided further that freeholders having the whole
 
 5 interest in a freehold agreement [may], at any time when all the
 
 6 conditions thereof to be performed by the freeholder up to [such]
 
 7 that time shall have been substantially performed, may surrender
 
 8 to the government the interest by delivery of the freehold
 
 9 agreement to the land agent, with the intention to surrender the
 
10 [same] interest clearly indorsed thereon[,] and signed by them
 
11 and duly attested.  The surrender shall release the freeholders
 
12 from all further duty or performance of the conditions of the
 
13 instrument surrendered.  But no [such] surrender shall be
 
14 permitted if any freeholders are under the age of eighteen years,
 
15 unless the minors are represented by statutory guardians; and
 
16 provided further that any freeholder over the age of eighteen may
 
17 assign the freeholder's interest to the freeholder's cotenants.
 
18      (d)  Right of purchase lease; termination, forfeiture, or
 
19 surrender.  Upon the termination of a right of purchase lease by
 
20 lapse of time, or upon the forfeiture or surrender of the lease
 
21 or a freehold agreement, the board [may], in its discretion and
 
22 within the limit of its authority, may open the premises or any
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 part thereof for disposition in the manner or for [such] the uses
 
 2 as provided in this chapter.  Before the disposition, the fair
 
 3 market value thereof shall be established by appraisal.  The
 
 4 value attributable to the improvements in the appraisal shall be
 
 5 paid to the surrendering lessees or freeholders, upon resale of
 
 6 the premises, and the director of finance shall pay the amount of
 
 7 the valuation upon the requisition of the board out of [such] the
 
 8 funds.
 
 9      (e)  [Interests, descent, certificate of occupation or
 
10 homestead lease.  In case of the death of any occupier or lessee
 
11 under an existing certificate of occupation or existing homestead
 
12 lease, all the interest of the occupier or lessee, any
 
13 conveyance, devise, or bequest to the contrary notwithstanding,
 
14 in land held by the decedent by virtue of such certificate of
 
15 occupation or homestead lease shall vest in the relations of the
 
16 decedent as follows:
 
17      (1)  In the widow, widower, or reciprocal beneficiary;
 
18      (2)  If there is no widow, widower, or reciprocal
 
19           beneficiary, then in the children;
 
20      (3)  If there are no children, then in the widows, widowers,
 
21           or reciprocal beneficiaries of the children;
 
22      (4)  If there are no such widows, widowers, or reciprocal
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1           beneficiaries, then in the grandchildren;
 
 2      (5)  If there are no grandchildren, then in the parents or
 
 3           surviving parent;
 
 4      (6)  If there are no parents or surviving parent, then in
 
 5           the sisters and brothers;
 
 6      (7)  If there are no sisters and brothers, then in the
 
 7           widowers, widows, or reciprocal beneficiaries of the
 
 8           sisters and brothers;
 
 9      (8)  If there are no such widowers, widows, or reciprocal
 
10           beneficiaries, then in the nieces and nephews;
 
11      (9)  If there are no nieces or nephews, then in the
 
12           widowers, widows, or reciprocal beneficiaries of the
 
13           nieces and nephews;
 
14     (10)  If there are no such widowers, widows, or reciprocal
 
15           beneficiaries, then in the grandchildren of the sisters
 
16           and brothers;
 
17     (11)  If there are no grandchildren of any sister or brother,
 
18           then in the State.
 
19      All the successors, except the State, shall be subject to
 
20 the performance of the unperformed conditions of the certificate
 
21 of occupation, or the homestead lease in like manner as the
 
22 decedent would have been subject to the performance if the
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 decedent had continued alive; provided that if a widow, widower,
 
 2 or reciprocal beneficiary, in whom the interest shall have
 
 3 vested, shall thereafter marry again and decease leaving a
 
 4 widower, widow, or reciprocal beneficiary and a child or children
 
 5 of the first marriage surviving, the interest of the deceased
 
 6 shall vest in such child or children; and provided further that
 
 7 in case two or more persons succeed together to the interest of
 
 8 any occupier or lessee, according to the foregoing provisions,
 
 9 they shall hold the same by joint tenancy so long as two or more
 
10 shall survive, but upon the death of the last survivor, the
 
11 estate shall descend as provided above.] Assignment; certificate
 
12 of occupation or homestead lease.  No existing certificate of
 
13 occupation or existing homestead lease, or fractional interest
 
14 thereof, shall be transferable or assignable except by
 
15 conveyance, devise, bequest, or intestate succession and with the
 
16 prior approval of the board of land and natural resources;
 
17 provided that transfer or assignment by conveyance, devise, or
 
18 bequest shall be limited to a member or members of the occupier's
 
19 or lessee's family.
 
20      For the purposes of this section, "family" means the spouse,
 
21 reciprocal beneficiary, children, parents, siblings,
 
22 grandparents, grandchildren, nieces, and nephews of the occupier
 

 
 
 
Page 9                                                     755
                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 or lessee.
 
 2      All the successors shall be subject to the performance of
 
 3 the unperformed conditions of the certificate of occupation or
 
 4 the homestead lease.
 
 5      (f)  Option of cotenant to compel others to buy or sell.  In
 
 6 case two or more persons become cotenants under any existing
 
 7 right of purchase lease, certificate of occupation, or homestead
 
 8 lease by inheritance or otherwise, any one or more of [such] the
 
 9 persons, less than the whole number, may file in the office of
 
10 the land agent an offer to the remainder of the persons to buy
 
11 their interest in the premises or to sell them their own interest
 
12 therein at a stated price, according to the proportion of the
 
13 respective interest in question, and may deposit with the land
 
14 agent the amount of the offered price in money, with a fee of
 
15 $10.  The land agent shall thereupon notify the persons to whom
 
16 the offer is made of the nature of the offer and order them to
 
17 file with the land agent their answer within sixty days whether
 
18 they will buy or sell according to the offer.  If the persons to
 
19 whom the offer is made file with the land agent within sixty days
 
20 of the time of their receiving the notification, their answer
 
21 stating that they will sell their interest according to the terms
 
22 of the offer, the land agent shall indorse the fact of the sale
 

 
 
 
Page 10                                                    755
                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 with the amount of the consideration on the lease and pay to
 
 2 [such] the persons the amount of the consideration deposited with
 
 3 the land agent according to their individual interest; and the
 
 4 interest of [such] the persons shall thereupon vest in the
 
 5 persons making the offer.  The fact of the transfer shall be
 
 6 properly recorded in the official records of the land agent and
 
 7 indorsed upon the lease held by the lessee.
 
 8      If, however, the persons to whom the offer is made fail to
 
 9 answer within sixty days from the time of their being notified of
 
10 the offer or within sixty days from the time the notice of the
 
11 offer mailed to their last known place or places of abode, or
 
12 shall answer within sixty days that they will buy the interest of
 
13 the persons making the offer on the terms offered, but fail
 
14 within sixty days after the notification to deposit the amount
 
15 representing the value of the interest according to the terms
 
16 offered, their interest shall vest in the persons making the
 
17 offer and the amount of the consideration shall be paid by the
 
18 land agent of them individually or their respective
 
19 representatives upon application.  In such case, the fact of the
 
20 transfer shall be recorded and indorsed as above provided.
 
21      In the event that any funds held by the land agent hereunder
 
22 [may] are not [be] paid to the persons to whom properly payable,
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 because of the inability of the land agent to locate [such] those
 
 2 persons, the funds [shall], after the expiration of one year,
 
 3 shall be deposited in the department of budget and finance of the
 
 4 State and there abide the claim of any person thereto lawfully
 
 5 entitled; provided that no claim to the funds shall be allowed
 
 6 unless the claim is made within five years after the deposit.
 
 7 Payment of any claim duly filed may be made if the department of
 
 8 budget and finance and the board concur in finding the claim
 
 9 valid and proper, but if the claimant fails to obtain concurrency
 
10 of the department of budget and finance and the board within
 
11 sixty days of the filing of the claimant's claim, the claimant
 
12 may present a petition to the circuit court of the first judicial
 
13 circuit in that behalf, notice whereof shall be given to the
 
14 attorney general, who may appear and defend on behalf of the
 
15 State, and if the court renders a judgment in favor of the
 
16 claimant, the department of budget and finance shall pay the
 
17 amount due without interest.
 
18      But if the persons to whom the offer is made [shall], within
 
19 sixty days from the time of the notification, shall make answer
 
20 to the land agent that they will buy the interest of the offering
 
21 parties and shall deposit within sixty days with the land agent
 
22 the amount required for the purpose according to the terms of the
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 offer, the land agent shall indorse and record the fact of the
 
 2 sale as above provided, and pay to the offering parties the
 
 3 amount according to their individual interest; and the interest
 
 4 of the offering parties shall thereupon vest in the answering
 
 5 parties.  In such case, the consideration money deposited by the
 
 6 offering parties shall be returned to them.
 
 7      (g)  Forfeiture; existing certificate of occupation or
 
 8 homestead lease.  The violation of any of the conditions of any
 
 9 existing certificate of occupation or homestead lease shall be
 
10 sufficient cause for the board, upon failure of the occupier or
 
11 lessee within a reasonable period of time to remedy the default,
 
12 after notice thereof in the manner provided in section 171-20, to
 
13 take possession of the demised premises without demand or
 
14 previous entry, with or without legal process, and thereby,
 
15 subject to section 171-21, terminate the estate created.
 
16      (h)  Forfeiture; cash freeholds.  In the case of default in
 
17 the payment of any of the installments due on any cash freehold
 
18 agreement for thirty days after the [same] installments are due,
 
19 or failure of performance of any other conditions, the board may
 
20 take possession of the premises, upon failure of the freeholder
 
21 within a reasonable period of time to remedy the default, after
 
22 notice thereof in the manner provided in section 171-20, without
 

 
 
 
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                                     H.B. NO.           H.D. 2
                                                        S.D. 2
                                                        

 
 1 demand or previous entry, with or without legal process, and
 
 2 thereby subject to section 171-21, terminate the estate created.
 
 3      (i)  Mortgage of homestead leases.  Whenever an existing
 
 4 homestead lease is mortgaged pursuant to section 171-22, the
 
 5 consent to mortgage from the board of land and natural resources
 
 6 may contain a condition exempting the lease from subsection (e)
 
 7 for the duration of the mortgage."
 
 8      SECTION 3.  Statutory material to be repealed is bracketed.
 
 9 New statutory material is underscored.
 
10      SECTION 4.  This Act shall take effect upon its approval.