REPORT TITLE:
Condominiums; Priority Lien


DESCRIPTION:
Grants limited priority to condominium association liens for
unpaid common expenses.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           641
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO CONDOMINIUMS. 


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

 1      SECTION 1.  The legislature finds that the current system of
 
 2 lien priority for condominium associations unfairly requires non-
 
 3 delinquent apartment owners to bear the entire burden of unpaid
 
 4 common expense assessments accrued by a delinquent owner, in
 
 5 cases in which there is a mortgage lien that is recorded prior to
 
 6 the recordation of the association's notice of lien and the
 
 7 foreclosure sale proceeds are insufficient to pay the claims of
 
 8 both the mortgagee and the association.  
 
 9      The purpose of this Act is to grant the condominium
 
10 association's lien for unpaid common expenses a limited priority
 
11 over mortgage liens. 
 
12      SECTION 2.  Section 514A-90, Hawaii Revised Statutes, is
 
13 amended by amending subsection (a) to read as follows:
 
14      "(a)  All sums assessed by the association of apartment
 
15 owners but unpaid for the share of the common expenses chargeable
 
16 to any apartment constitute a lien on the apartment prior to all
 
17 other liens, except:
 
18      (1)  [liens] Liens for taxes and assessments lawfully
 
19           imposed by governmental authority against the
 

 
Page 2                                                     
                                     S.B. NO.           641
                                                        
                                                        

 
 1           apartment[,]; and
 
 2      (2)  [all] All sums unpaid on any mortgage of record [which]
 
 3           that was recorded prior to the recordation of a notice
 
 4           of a lien by the association of apartment owners[,] and
 
 5           costs and expenses, including attorneys' fees, provided
 
 6           in such mortgages[.];
 
 7 provided that the association of apartment owners' lien shall be
 
 8 prior to any mortgages recorded after the effective date of this
 
 9 Act to the extent of any unpaid common expense assessments based
 
10 on the annual budget, adopted under section 514A-83.6, which
 
11 would have become due in the absence of acceleration during the
 
12 six months immediately preceding the commencement of any legal
 
13 proceeding to collect amounts due to the association or the
 
14 mortgagee under the mortgage including but not limited to
 
15 foreclosure by the association pursuant to this section.  The
 
16 lien of the association of apartment owners may be foreclosed by
 
17 action by the manager or board of directors, acting on behalf of
 
18 the apartment owners, in like manner as a mortgage of real
 
19 property.  In any [such] foreclosure, the apartment owner shall
 
20 be required to pay a reasonable rental for the apartment, if so
 
21 provided in the bylaws, and the plaintiff in the foreclosure
 
22 shall be entitled to the appointment of a receiver to collect the
 
23 [same.] rental.  The manager or board of directors, acting on
 

 
Page 3                                                     
                                     S.B. NO.           641
                                                        
                                                        

 
 1 behalf of the apartment owners, [may,] unless prohibited by the
 
 2 declaration, may bid on the apartment at foreclosure sale[,] and
 
 3 acquire and hold, lease, mortgage, and convey the [same.]
 
 4 apartment.  Action to recover a money judgment for unpaid common
 
 5 expenses shall be maintainable without foreclosing or waiving the
 
 6 lien securing the [same.] expenses owed."
 
 7      SECTION 3.  Statutory material to be repealed is bracketed.
 
 8 New statutory material is underscored.
 
 9      SECTION 4.  This Act shall take effect upon its approval.
 
10 
 
11 INTRODUCED BY:  ______________________   ________________________