STAND. COM. REP. NO.349-02

Honolulu, Hawaii

, 2002

RE: H.B. No. 2443

H.D. 1




Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committee on Water and Land Use, to which was referred H.B. No. 2443 entitled:


begs leave to report as follows:

The purpose of this bill is to prevent the filing of frivolous financing statements by allowing the Bureau of Conveyances (Bureau) to reject documents that are not authorized by the debtors.

The State Attorney General (AG) testified in support of this bill. Opposing this measure were the Hawaii's Commission to Promote Uniform Legislation (Commission) and the Hawaii Bankers Association. The Department of Land and Natural Resources submitted comments.

Your Committee finds that there was a basic disagreement as to the cause of the problem as well as the specific statute to amend to resolve it. Some maintained that Act 241, Session Laws of Hawaii 2000, deleted a signature requirement, which was the most effective means for the Bureau to recognize when frivolous financing statements were filed. On the other hand, others testified that the State might incur liability problems if the Bureau were to be charged with the responsibility of recognizing and preventing the filing of frivolous financing statements.

Based on language jointly drafted by the Commission and AG, your Committee has amended this bill by:

(1) Amending chapter 507D (Nonconsensual Common Law Liens), Hawaii Revised Statutes (HRS), instead of chapter 490 (Uniform Commercial Code), HRS;

(2) Inserting a new definition of "financing statement" in section 507D-2, HRS;

(3) Establishing a process for any party to request the Registrar to determine the validity of the filing;

(4) Amending the title of the bill to correct a typographic error. As amended, the title reads: "RELATING TO THE PREVENTION OF THE FILING OF FRIVOLOUS FINANCING STATEMENTS;" and

(5) Making other technical, nonsubstantive amendments to correct clerical errors.

As affirmed by the record of votes of the members of your Committee on Water and Land Use that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2443, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2443, H.D. 1, and be referred to the Committee on Judiciary and Hawaiian Affairs.

Respectfully submitted on behalf of the members of the Committee on Water and Land Use,