STAND. COM. REP. NO. 845

Honolulu, Hawaii

RE: S.B. No. 1131

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

Sir:

Your Committee on Judiciary, to which was referred S.B. No. 1131, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TIME SHARE PLANS,"

begs leave to report as follows:

The purpose and intent of this measure is to amend the definitions of "time share interest" and "time share plan" to include any fractional ownership plan for a joint homeownership limited liability company, or any other entity.

Your Committee finds that a time share plan is a shared ownership model of vacation real estate in which multiple purchasers own allotments of usage, typically in one-week increments, in the same property. Because of its fractional ownership structure, time share plans are popular in vacation locales where owners may want only occasional control of a property, such as for vacation stays.

Your Committee further finds that, while the State regulates time share plans under chapter 514E, Hawaii Revised Statutes (HRS), a new form of time share, the joint homeownership limited liability company, does not currently fall within the scope of the State's time share laws. Under this new scheme, buyers can purchase shares in a limited liability company that owns a property and the buyers can then use the property as a second home. The result of these vacation homes masquerading as joint homeownership limited liability companies has resulted in the evasion of county taxes and state regulations to the detriment of communities, particularly on Maui. Your Committee finds that despite its new form, the joint homeownership limited liability company is substantively a time share plan. Therefore, this measure will require that joint homeownership limited liability companies are appropriately regulated under chapter 514E, HRS.

As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1131, S.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Judiciary,

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KARL RHOADS, Chair