§514E-19 - Protection of purchasers from blanket liens. - Hawaii Statutes

     §514E-19  Protection of purchasers from blanket liens.  (a)  An escrow for the sale of a time share interest in a time share ownership plan may close only if the requirements of any one of the following alternatives for protecting the purchaser have been satisfied:

     (1)  The time share interest is conveyed to the purchaser free and clear of any blanket liens.

     (2)  The time share unit is conveyed to a trustee:

         (A)  Free and clear of any blanket liens under a trust meeting the requirements of sections 514E-22 and 23; or

         (B)  Under a lien payment trust meeting the requirements of sections 514E-22, 23, 24, and 25.

     (3)  (A)  The time share interest is conveyed to the purchaser subject only to blanket liens:

              (i)  Where every person holding an interest in the blanket lien has executed and recorded a nondisturbance agreement; or

             (ii)  For which the director's acceptance of a surety bond or an irrevocable letter of credit meeting the requirements of section 514E-28 has been recorded with respect to that time share unit; and

         (B)  If legal or equitable title will be held by anyone other than the purchaser, a notice of time share plan is recorded.

     (4)  The requirements of any alternative arrangements accepted by the director have been met.

     (b)  An escrow for the sale of a time share interest in a time share use plan may close only if the requirements of any one of the following alternatives for protecting purchasers have been satisfied:

     (1)  The time share unit is conveyed to a trustee:

         (A)  Free and clear of any blanket liens under a trust meeting the requirements of sections 514E-22 and 23; or

         (B)  Under a lien payment trust meeting the requirements of sections 514E-22, 23, 24, and 25.

     (2)  A notice of time share plan is recorded and either:

         (A)  Every person holding an interest in a recorded blanket lien against any time share interests in that time share unit executes and records a nondisturbance agreement; or

         (B)  The director's acceptance of a surety bond or an irrevocable letter of credit meeting the requirements of section 514E-28 is recorded.

     (3)  The requirements of any alternative arrangements accepted by the director have been met.

     (c)  [Subsection effective until June 30, 2008.  For subsection effective July 1, 2008, see below.]  A time share interest in any time share plan which satisfies the escrow and blanket lien protection requirements of this chapter shall not be deemed a risk capital security under chapter 485, and the offer or sale of a time share interest therein shall not be deemed the offer or sale of a security.

     (c)  A time share interest in any time share plan which satisfies the escrow and blanket lien protection requirements of this chapter shall not be deemed a risk capital security under chapter 485A, and the offer or sale of a time share interest therein shall not be deemed the offer or sale of a security. [L 1982, c 186, §7; am L 2006, c 229, §15]