SB2079

SECTION 1. The legislature finds that motor vehicle ownership and title transfers in the State are governed by statutory requirements intended to ensure clear chains of ownership, protect the public, and safeguard personal privacy. However, motor vehicles are sometimes sold, gifted, donated, or otherwise transferred by individuals who are not the last registered owner of record and who, for various reasons, did not obtain or retain a valid certificate of title. In these circumstances, the absence of a valid certificate of title or the inability to locate or obtain a release from a prior registered owner may prevent a good-faith transferee from registering the vehicle, transferring title, or otherwise complying with the law, even when the vehicle is not stolen, subject to a lien, and has been in open and continuous possession.

The legislature further finds that while existing privacy protections appropriately limit the disclosure of personal information maintained by county motor vehicle agencies, these protections may unintentionally create situations in which a person seeking to comply with title and registration requirements has no reasonable administrative remedy and results in significant hardship, including the inability to lawfully register or insure a vehicle, transfer ownership, or resolve claims related to loss or damage, despite the transferee's willingness to pay applicable taxes, fees, and penalties.

The legislature further finds that numerous other states have established statutory surety bond mechanisms that allow a person in possession of a motor vehicle, under specified conditions and safeguards, to obtain a certificate of title when standard documentation is unavailable, while preserving the rights of prior owners, lienholders, and the State.

The legislature additionally finds that it was not the legislature's intent for motor vehicle title and registration laws to operate in a manner that makes compliance impossible for good-faith transferees, nor to create unintended barriers that frustrate equitable outcomes or discourage compliance with the law.

Accordingly, the purpose of this Act is to:

(1) Require the county director of finance to issue a temporary, three-year title to an applicant in cases where no prior title exists, the prior owner is unable to provide one, or the director is otherwise not satisfied as to the ownership of the vehicle;

(2) Require the applicant to provide a surety bond and certain documentation to the director;

(3) Allow for a right of action against the surety bond and temporary title; and

(4) Require the temporary title to convert to a full title after three years unless a suit has been instituted against the temporary title.

SECTION 2. Chapter 286, Hawaii Revised Statutes, is amended by adding a new section to part III to be appropriately designated and to read as follows:

"§286- Procedure to obtain temporary title; possession of vehicle without title. (a) In the event a person is in possession of a vehicle where no prior title exists, the prior owner is unable to provide one, or the director of finance is otherwise not satisfied as to the ownership of the vehicle, the person may apply for a temporary title from the director of finance. The applicant shall provide to the director of finance:

(1) An affidavit of ownership;

(2) A bill of sale or gift affidavit;

(3) A vehicle identification number inspection or other verification from the appropriate county police department confirming that the vehicle is not reported stolen; and

(4) A bond in a form as may be determined by the director of finance in an amount equal to twice the retail value of the vehicle.

Upon receipt and verification of the items listed in paragraphs (1) through (4), the director of finance shall provide to the applicant a temporary title for the vehicle that shall be valid for three years.

(b) The bond required pursuant to subsection (a)(4) and the deposit thereof shall be conditioned to protect the director of finance and any subsequent purchaser of the vehicle or person acquiring any lien thereon or the successor in interest of any person against any loss or damage on account of any defect in or undisclosed encumbrance upon the right, title, and interest of the applicant in and to the vehicle. Any interested person shall have a right of action to recover on any bond for any breach of the conditions for which the same was deposited. The aggregate liability of the surety to all persons shall in no event exceed the amount of the bond and interest thereon, plus reasonable attorneys' fees to be allowed by the court incurred to procure the recovery under the bond. The bond shall (unless suit has been instituted thereon) be returned and surrendered at the end of three years, and the director of finance shall issue the applicant a full title to the vehicle."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

Report Title:

Vehicle Title; Surety Bond; Director of Finance; Ownership

Description:

Requires the county Director of Finance to issue a temporary, three-year title to an applicant in cases where no prior title exists, the prior owner is unable to provide one, or the Director is otherwise not satisfied as to the ownership of the vehicle. Requires the applicant to provide a surety bond and certain documentation to the Director. Allows for a right of action against the surety bond and temporary title. Requires the temporary title to convert to a full title after three years unless a suit has been instituted against the temporary title.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

THE SENATE	S.B. NO.	2079
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII