REPORT TITLE:
Homestead


DESCRIPTION:
Suspends the succession provision of homestead leases under
mortgage, for the duration of the loan.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        706
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO HOMESTEAD LEASES.



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 property because of the descendant provision contained in section
 
 4 171-99(e), Hawaii Revised Statutes.  This has resulted in
 
 5 homestead lessees having to live in substandard conditions,
 
 6 unable to secure loans to renovate or replace their dwellings.
 
 7 The purpose of this Act is to allow lenders to accept the leased
 
 8 property as security for loans by setting aside the succession
 
 9 provision of the lease for the duration of the loan.  
 
10      SECTION 2.  Section 171-99, Hawaii Revised Statutes, is
 
11 amended to read as follows:
 
12      "§171-99  Continuation of rights under existing homestead
 
13 leases, certificates of occupation, right of purchase leases and
 
14 cash freehold agreements.(a)  Issuance of land patents to
 
15 occupier or lessee of homestead lands.  A fee simple patent shall
 
16 be issued to every existing occupier under a certificate of
 
17 occupation issued heretofore, and to every lessee under a nine
 
18 hundred and ninety-nine year homestead lease issued heretofore,
 
19 of public lands, where the lands have been improved under the
 
20 certificate or lease, or have been used as a place of residence
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 by the occupier or lessee for an aggregate continuous period of
 
 2 not less than ten years upon payment to the board of land and
 
 3 natural resources of a fair market price, disregarding the value
 
 4 of the improvements made by the occupier or lessee, which price
 
 5 shall be determined by appraisal as provided for in this chapter;
 
 6 provided that the board may exclude from such patents areas
 
 7 required as roadways to other lots.
 
 8      (b)  Issuance of patent, lessee of right of purchase lease.
 
 9 The lessee of any existing right of purchase lease [shall], at
 
10 such time and under such conditions as are contained in the
 
11 lease, shall be entitled to a land patent from the board
 
12 conveying to the lessee a fee simple title to the land described
 
13 in the lessee's lease upon the payment of the fair market price
 
14 of the land as determined by appraisal as provided for in this
 
15 chapter[,]; provided the lessee has reduced to cultivation
 
16 twenty-five per cent of the premises and has resided thereon not
 
17 less than two years and has substantially performed all other
 
18 conditions of the lessee's lease.
 
19      (c)  Cash freeholds, agreement, patent, conditions.  At the
 
20 end of three years from the date of the payment of the first
 
21 installment, the holder of a freehold agreement is entitled to a
 
22 land patent for the premises described therein, if the following
 
23 conditions, in addition to those set forth herein, have been
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 substantially performed:
 
 2      (1)  Payment of the balance of the purchase price in equal
 
 3           installments, in one, two, and three years
 
 4           respectively, from the date of the freehold agreement
 
 5           with interest annually at the rate of four per cent;
 
 6           provided that the freeholder may pay the installment
 
 7           before it is due[,] and thereby stop the corresponding
 
 8           interest;
 
 9      (2)  Cultivation of not less than twenty-five per cent of
 
10           the area of the premises, and the planting and care of
 
11           not less than an average of ten timber, shade or fruit
 
12           trees per acre, if agricultural land, at any one time
 
13           before the end of the third year, or fencing in the
 
14           [same] premises if pastoral land within such time;
 
15           provided that if the premises are classed as pastoral-
 
16           agricultural land, the foregoing alternative conditions
 
17           shall apply respectively to the two kinds of land;
 
18      (3)  Maintenance by the freeholder of the freeholder's home
 
19           on the premises from the end of the first to the end of
 
20           the third year;
 
21      (4)  Conditions for the prevention of waste, the planting of
 
22           trees or the protection of trees growing or to be
 
23           planted on the premises, or for the destruction of
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           vegetable pests that may be on such premises or the
 
 2           prevention of the future introduction of such pests
 
 3           thereon;
 
 4      (5)  Payment of all taxes that may be due on account of the
 
 5           premises.
 
 6      The holder of a freehold agreement shall allow the land
 
 7 agents to enter and examine the premises at all reasonable times
 
 8 to see that the conditions are being performed.  The holder shall
 
 9 not assign or sublet, conditionally or otherwise, the holder's
 
10 interest or any part thereof, under the freehold agreement,
 
11 without the written consent of the board indorsed on the
 
12 agreement; and provided further that freeholders having the whole
 
13 interest in a freehold agreement [may], at any time when all the
 
14 conditions thereof to be performed by the freeholder up to such
 
15 time shall have been substantially performed, may surrender to
 
16 the government the interest by delivery of the freehold agreement
 
17 to the land agent, with the intention to surrender the [same]
 
18 interest clearly indorsed thereon[,] and signed by them and duly
 
19 attested.  The surrender shall release the freeholders from all
 
20 further duty or performance of the conditions of the instrument
 
21 surrendered.  But no such surrender shall be permitted if any
 
22 freeholders are under the age of eighteen years, unless the
 
23 minors are represented by statutory guardians; and provided
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 further that any freeholder over the age of eighteen may assign
 
 2 the freeholder's interest to the freeholder's cotenants.
 
 3      (d)  Right of purchase lease; termination, forfeiture, or
 
 4 surrender.  Upon the termination of a right of purchase lease by
 
 5 lapse of time, or upon the forfeiture or surrender of the lease
 
 6 or a freehold agreement, the board [may], in its discretion and
 
 7 within the limit of its authority, may open the premises or any
 
 8 part thereof for disposition in the manner or for such uses as
 
 9 provided in this chapter.  Before the disposition, the fair
 
10 market value thereof shall be established by appraisal.  The
 
11 value attributable to the improvements in the appraisal shall be
 
12 paid to the surrendering lessees or freeholders, upon resale of
 
13 the premises, and the director of finance shall pay the amount of
 
14 the valuation upon the requisition of the board out of such
 
15 funds.
 
16      (e)  Interests, descent; certificate of occupation or
 
17 homestead lease.  In case of the death of any occupier or lessee
 
18 under an existing certificate of occupation or existing homestead
 
19 lease, all the interest of the occupier or lessee, any
 
20 conveyance, devise, or bequest to the contrary notwithstanding,
 
21 in land held by the decedent by virtue of such certificate of
 
22 occupation or homestead lease shall vest in the relations of the
 
23 decedent as follows:
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (1)  In the widow, widower, or reciprocal beneficiary;
 
 2      (2)  If there is no widow, widower, or reciprocal
 
 3           beneficiary, then in the children;
 
 4      (3)  If there are no children, then in the widows, widowers,
 
 5           or reciprocal beneficiaries of the children;
 
 6      (4)  If there are no such widows, widowers, or reciprocal
 
 7           beneficiaries, then in the grandchildren;
 
 8      (5)  If there are no grandchildren, then in the parents or
 
 9           surviving parent;
 
10      (6)  If there are no parents or surviving parent, then in
 
11           the sisters and brothers;
 
12      (7)  If there are no sisters and brothers, then in the
 
13           widowers, widows, or reciprocal beneficiaries of the
 
14           sisters and brothers;
 
15      (8)  If there are no such widowers, widows, or reciprocal
 
16           beneficiaries, then in the nieces and nephews;
 
17      (9)  If there are no nieces or nephews, then in the
 
18           widowers, widows, or reciprocal beneficiaries of the
 
19           nieces and nephews;
 
20     (10)  If there are no such widowers, widows, or reciprocal
 
21           beneficiaries, then in the grandchildren of the sisters
 
22           and brothers;
 
23     (11)  If there are no grandchildren of any sister or brother,
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           then in the State.
 
 2      All the successors, except the State, shall be subject to
 
 3 the performance of the unperformed conditions of the certificate
 
 4 of occupation, or the homestead lease, in [like] the same manner
 
 5 as the decedent would have been subject to the performance if the
 
 6 decedent had continued alive; provided that if a widow, widower,
 
 7 or reciprocal beneficiary, in whom the interest shall have
 
 8 vested, shall thereafter marry again and decease leaving a
 
 9 widower, widow, or reciprocal beneficiary and a child or children
 
10 of the first marriage surviving, the interest of the deceased
 
11 shall vest in such child or children; and provided further that
 
12 in case two or more persons succeed together to the interest of
 
13 any occupier or lessee, according to the foregoing provisions,
 
14 they shall hold the [same] interest by joint tenancy so long as
 
15 two or more shall survive, but upon the death of the last
 
16 survivor, the estate shall descend as provided above.
 
17      (f)  Option of cotenant to compel others to buy or sell.  In
 
18 case two or more persons become cotenants under any existing
 
19 right of purchase lease, certificate of occupation, or homestead
 
20 lease by inheritance or otherwise, any one or more of such
 
21 persons, less than the whole number, may file in the office of
 
22 the land agent an offer to the remainder of the persons to buy
 
23 their interest in the premises or to sell them their own interest
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 therein at a stated price, according to the proportion of the
 
 2 respective interest in question, and may deposit with the land
 
 3 agent the amount of the offered price in money, with a fee of
 
 4 $10.  The land agent shall thereupon notify the persons to whom
 
 5 the offer is made of the nature of the offer and order them to
 
 6 file with the land agent their answer within sixty days whether
 
 7 they will buy or sell according to the offer.  If the persons to
 
 8 whom the offer is made file with the land agent, within sixty
 
 9 days of the time of their receiving the notification, their
 
10 answer stating that they will sell their interest according to
 
11 the terms of the offer, the land agent shall indorse the fact of
 
12 the sale with the amount of the consideration on the lease and
 
13 pay to such persons the amount of the consideration deposited
 
14 with the land agent according to their individual interest; and
 
15 the interest of such persons shall thereupon vest in the persons
 
16 making the offer.  The fact of the transfer shall be properly
 
17 recorded in the official records of the land agent and indorsed
 
18 upon the lease held by the lessee.
 
19      If, however, the persons to whom the offer is made fail to
 
20 answer within sixty days from the time of their being notified of
 
21 the offer or within sixty days from the time the notice of the
 
22 offer mailed to their last known place or places of abode, or
 
23 shall answer within sixty days that they will buy the interest of
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 the persons making the offer on the terms offered, but fail
 
 2 within sixty days after the notification to deposit the amount
 
 3 representing the value of the interest according to the terms
 
 4 offered, their interest shall vest in the persons making the
 
 5 offer and the amount of the consideration shall be paid by the
 
 6 land agent of them individually or their respective
 
 7 representatives upon application.  In such case, the fact of the
 
 8 transfer shall be recorded and indorsed as above provided.
 
 9      In the event that any funds held by the land agent hereunder
 
10 [may] are not [be] paid to the persons to whom properly payable,
 
11 because of the inability of the land agent to locate such
 
12 persons, the funds [shall], after the expiration of one year,
 
13 shall be deposited in the department of budget and finance of the
 
14 State and there abide the claim of any person thereto lawfully
 
15 entitled; provided that no claim to the funds shall be allowed
 
16 unless the claim is made within five years after the deposit.
 
17 Payment of any claim duly filed may be made if the department of
 
18 budget and finance and the board concur in finding the claim
 
19 valid and proper, but if the claimant fails to obtain concurrency
 
20 of the department of budget and finance and the board within
 
21 sixty days of the filing of the claimant's claim, the claimant
 
22 may present a petition to the circuit court of the first judicial
 
23 circuit in that behalf, notice whereof shall be given to the
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 attorney general, who may appear and defend on behalf of the
 
 2 State, and if the court renders a judgment in favor of the
 
 3 claimant, the department of budget and finance shall pay the
 
 4 amount due without interest.
 
 5      But if the persons to whom the offer is made [shall], within
 
 6 sixty days from the time of the notification, shall make answer
 
 7 to the land agent that they will buy the interest of the offering
 
 8 parties and shall deposit within sixty days with the land agent
 
 9 the amount required for the purpose according to the terms of the
 
10 offer, the land agent shall indorse and record the fact of the
 
11 sale as above provided, and pay to the offering parties the
 
12 amount according to their individual interest; and the interest
 
13 of the offering parties shall thereupon vest in the answering
 
14 parties.  In such case, the consideration money deposited by the
 
15 offering parties shall be returned to them.
 
16      (g)  Forfeiture; existing certificate of occupation or
 
17 homestead lease.  The violation of any of the conditions of any
 
18 existing certificate of occupation or homestead lease shall be
 
19 sufficient cause for the board, upon failure of the occupier or
 
20 lessee within a reasonable period of time to remedy the default,
 
21 after notice thereof in the manner provided in section 171-20, to
 
22 take possession of the demised premises without demand or
 
23 previous entry, with or without legal process, and thereby,
 

 
Page 11                                                    706
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 subject to section 171-21, terminate the estate created.
 
 2      (h)  Forfeiture; cash freeholds.  In the case of default in
 
 3 the payment of any of the installments due on any cash freehold
 
 4 agreement for thirty days after the [same] installments are due,
 
 5 or failure of performance of any other conditions, the board may
 
 6 take possession of the premises, upon failure of the freeholder
 
 7 within a reasonable period of time to remedy the default, after
 
 8 notice thereof in the manner provided in section 171-20, without
 
 9 demand or previous entry, with or without legal process, and
 
10 thereby subject to section 171-21, terminate the estate created.
 
11      (i)  Mortgage of homestead leases.  Whenever an existing
 
12 homestead lease is mortgaged pursuant to section 171-22, the
 
13 consent to mortgage from the board of land and natural resources
 
14 may contain a condition exempting the lease from subsection (e)
 
15 for the duration of the mortgage."
 
16      SECTION 3.  Statutory material to be repealed is bracketed.
 
17 New statutory material is underscored.
 
18      SECTION 4.  This Act shall take effect upon its approval.