Hawaii Revised Statutes 514E-28 – Requirements for surety bonds and letters of credit
Terms Used In Hawaii Revised Statutes 514E-28
- Association: means the time share owners association. See Hawaii Revised Statutes 514E-1
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Blanket lien: means any mortgage, deed of trust, option to purchase, master lease, vendor's lien or interest under a contract or agreement of sale, or any other lien or encumbrance that (i) affects more than one time share interest either directly or by reason of affecting an entire time share unit or the property upon which the time share unit to be used by the purchasers is located, and (ii) secures or evidences the obligation to pay money or to sell or convey the property and that authorizes, permits, or requires the foreclosure and sale or other defeasance of the property affected; provided that for the purpose of this chapter, the following shall not be considered blanket liens:
(1) The lien of current real property taxes;
(2) Taxes and assessments levied by public authority and that are not yet due and payable;
(3) A lien for common expenses under chapter 514B or a lien on an individual time share unit for similar expenses in favor of a homeowners or community association;
(4) An apartment lease or condominium conveyance document conveying or demising a single condominium unit or a lease of a single cooperative apartment; and
(5) Any lien for costs or trustee's fees charged by a trustee holding title to time share units pursuant to a trust created under § 514E-19; provided that the costs or trustee's fees are not yet due and payable. See Hawaii Revised Statutes 514E-1
- Developer: means any person that creates a time sharing plan or is in the business of selling time share units. See Hawaii Revised Statutes 514E-1
- Director: means the director of commerce and consumer affairs. See Hawaii Revised Statutes 514E-1
- Lien: A claim against real or personal property in satisfaction of a debt.
- Time share unit: means the actual and promised accommodations, and related facilities, which are the subject of a time share plan. See Hawaii Revised Statutes 514E-1
Any surety bond or irrevocable letter of credit furnished to the director pursuant to § 514E-19 must be in an amount which is not less than one hundred ten per cent of the remaining principal balance of every indebtedness secured by a blanket lien related to the time share unit. Any such bond must be issued by a surety authorized to do business in the State and having sufficient net worth to be acceptable to the director. Any such letter of credit must be irrevocable and must be drawn upon a bank, savings and loan association, or other financial institution authorized to do business in the State and having a sufficient net worth to be acceptable to the director. The bond or irrevocable letter of credit shall provide for payment (up to the limit of such bond or letter of credit) of all amounts secured by the blanket lien, including costs, expenses, and legal fees of the lienholder, if for any reason the blanket lien is enforced. The beneficiary of any such letter of credit and the obligee of any such bond shall be the director on behalf of the owners. The bond or irrevocable letter of credit may be reduced periodically in proportion to the reduction of the remaining principal balance of the indebtedness secured by the blanket liens. Upon being furnished with a surety bond or irrevocable letter of credit satisfying the foregoing requirements, the developer shall prepare and the director shall execute and acknowledge a document in recordable form accepting such surety bond or irrevocable letter of credit and identifying the time share units to which it applies.