SB2802

SECTION 1. Section 521-44, Hawaii Revised Statutes, is amended to read as follows:

"§521-44 Security deposits. (a) As used in this section "security deposit" means money deposited by or for the tenant with the landlord to be held by the landlord to:

(1) Remedy tenant defaults for accidental or intentional damages resulting from failure to comply with section 521-51, for failure to pay rent due, or for failure to return all keys furnished by the landlord at the termination of the rental agreement;

(2) Clean the dwelling unit or have it cleaned at the termination of the rental agreement so as to place the condition of the dwelling unit in as fit a condition as that which the tenant entered into possession of the dwelling unit; and

(3) Compensate for damages caused by a tenant who wrongfully quits the dwelling unit.

(b) The landlord may require as a condition of a rental agreement a security deposit to be paid by or for the tenant for the items in subsection (a) and no others, in an amount not in excess of a sum equal to one month's rent. The landlord may not require or receive from or on behalf of a tenant at the beginning of a rental agreement any money other than the money for the first month's rent and a security deposit as provided in this section. The security deposit shall not be construed as payment of the last month's rent by the tenant, unless mutually agreed upon, in writing, by the landlord and tenant if the tenant gives forty-five days' notice of vacating the premises; in entering such agreement, the landlord shall not be deemed to have waived the right to pursue legal remedies against the tenant for any damages the tenant causes. Any such security deposit shall be held by the landlord for the tenant and the claim of the tenant to the security deposit shall be prior to the claim of any creditor of the landlord, including a trustee in bankruptcy, even if the security deposits are commingled.

(c) At the termination of a rental agreement in which the landlord required and received a security deposit if the landlord proposes to retain any amount of the security deposit for any of the purposes specified in subsection (a), the landlord shall so notify the tenant, in writing, unless the tenant had wrongfully quit the dwelling unit, together with the particulars of and grounds for the retention, including written evidence of the costs of remedying tenant defaults, such as estimates or invoices for material and services or of the costs of cleaning, such as receipts for supplies and equipment or charges for cleaning services. [~~The~~] Except as provided in this section, the security deposit, or the portion of the security deposit remaining after the landlord has claimed and retained amounts authorized under this section, if any, shall be returned to the tenant not later than fourteen days after the termination of the rental agreement. If the landlord does not furnish the tenant with the written notice and other information required by this subsection, within fourteen days after the termination of the rental agreement, the landlord shall not be entitled to retain the security deposit or any part of it, and the landlord shall return the entire amount of the security deposit to the tenant. A return of the security deposit or the furnishing of the written notice and other required information in compliance with the requirements of this subsection shall be presumptively proven if mailed to the tenant, at an address supplied to the landlord by the tenant, with acceptable proof of mailing and postmarked before midnight of the fourteenth day after the date of the termination of the rental agreement or if there is an acknowledgment by the tenant of receipt within the fourteen-day limit. All actions for the recovery of a landlord's complete or partial retention of the security deposit shall be instituted not later than one year after termination of the rental agreement.

(d) At the termination of a rental agreement, any security deposit returned to a tenant, or any portion thereof that represents deductions made by a landlord pursuant to this section, shall be in addition to simple interest equal to six per cent of the returned security deposit, calculated each year.

(e) Every landlord shall maintain security deposits subject to this section and any interest accruing thereto in a trust or separate account that is separate from any personal account maintained by the landlord and accessible only by mutual consent of the landlord and tenant; provided that any fee or cost related to the account shall be an expense of the landlord.

[~~(d)~~] (f) For the purposes of this section if a tenant is absent from the dwelling unit for a continuous period of twenty days or more without written notice to the landlord the tenant shall be deemed to have wrongfully quit the dwelling unit; provided that the tenant shall not be considered to be absent from the dwelling unit without notice to the landlord during any period for which the landlord has received payment of rent. In addition to any other right or remedy the landlord has with respect to such a tenant the landlord may retain the entire amount of any security deposit the landlord has received from or on behalf of such tenant.

[~~(e)~~] (g) The landlord shall not require the delivery of any postdated check or other negotiable instrument to be used for payment of rent.

[~~(f)~~] (h) If the landlord who required and received a security deposit transfers the landlord's interest in the dwelling unit, whether by sale, assignment, death, appointment of a receiver, or otherwise, the landlord's successor in interest is bound by this section. The original landlord shall provide an accounting of the security deposits received for each dwelling unit to the landlord's successor at or before the time of the transfer of the landlord's interest; within twenty days thereafter the landlord's successor shall give written notice to each tenant of the amount of the security deposit credited to the tenant. In the event the landlord's successor fails to satisfy the requirements of this subsection, it shall be presumed that the tenant has paid a security deposit equal to no less than one month's rent at the rate charged when the tenant originally rented the dwelling unit and the landlord's successor shall be bound by this amount in all further matters relating to the security deposit.

[~~(g)~~] (i) If the landlord and the tenant disagree about the right of the landlord to claim and retain the security deposit or any portion of it, either the landlord or the tenant may commence an action in the small claims division of the district court, as provided in chapter 633 and the rules of court thereunder, to adjudicate the matter.

[~~(h)~~] (j) In any action in the small claims division of the district court pursuant to subsection (g) where the court determines that:

(1) The landlord wrongfully and wilfully retained a security deposit or part of a security deposit, the court may award the tenant damages in an amount equal to three times the amount of the security deposit, or part thereof, wrongfully and wilfully retained and the cost of suit.

(2) The landlord wrongfully retained a security deposit or part of a security deposit, the court shall award the tenant damages in an amount equal to the amount of the security deposit, or part thereof, wrongfully retained and the cost of suit.

(3) The landlord was entitled to retain the security deposit or a part of it, the court shall award the landlord damages in an amount equal to the amount of the security deposit, or part thereof, in dispute and the cost of suit.

(4) In any such action, neither the landlord nor the tenant may be represented by an attorney, including salaried employees of the landlord or tenant."

SECTION 2. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2802
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII