USA – HAWAII Law and Practice Contributed by: Jon Pang, Lisa Broulik and Matthew Cohen, Case Lombardi, A Law Corporation
cess may take between 12 and 18 months, subject to borrower defences and other delays that may arise. Moratorium Hawaiʻi instituted a moratorium on foreclosures of fed - eral-backed mortgages in partial conformity with the Federal CARES Act during the COVID-19 pandemic. The moratorium is no longer in effect, having expired in July 2021. Workout Lenders may choose to work out a defaulted loan to avoid the lengthy process of foreclosure. Hawaiʻi pre - sents a unique market for acquiring non-performing notes due to its limited inventory and strong property values, particularly in urban areas. 3.7 Subordinating Existing Debt to Newly Created Debt Agreements between lenders to subordinate existing secured debt to newly created debt are common, and title companies will insure the resulting priority. 3.8 Lenders’ Liability Under Environmental Laws CERCLA (see 2.7 Soil Pollution or Environmental Contamination ) specifically exempts secured lenders of contaminated property where the lenders have not exerted control over or participated in the manage - ment of the facility. A foreclosing lender is not con - sidered a manager of a facility as long as the lender does not exercise decision-making control over envi - ronmental compliance matters nor exercise control at a level similar to that of a facility manager. 3.9 Effects of a Borrower Becoming Insolvent Borrower insolvency generally does not void an oth - erwise valid security interest, but a security interest could be extinguished upon the bankruptcy court’s order to discharge the bankrupt borrower. If a secu - rity interest was created within the 90-day look-back window preceding the filing of a bankruptcy petition, the interest may also be deemed preferential, fraudu - lent or unperfected (note that the look-back period is longer for insider transactions). The filing of a bank - ruptcy petition also imposes an automatic stay in many cases, which may prevent lenders from enforc - ing their security interests without court approval. The
duration of a bankruptcy automatic stay depends on the type of bankruptcy petition filed and the specific circumstances of each case, but generally continues until the case is closed or dismissed, or the debtor is discharged. 3.10 Taxes on Loans Hawaiʻi’s hurricane relief fund (HHRF) was previously partially funded by a special mortgage recording fee (SMRF) on debt secured by a mortgage in the amount of one-tenth of 1% of the principal amount of the debt secured. The SMRF was repealed and replaced in 2025 with a temporary recording fee that is to be established by the HHRF board of directors and is intended to be assessed at a flat rate. Hawaiʻi’s land use philosophy and objectives are articulated at the state constitutional level. The Hawaiʻi Constitution mandates that the State of Hawaiʻi and its political subdivisions shall conserve and protect Hawaiʻi’s natural beauty and all natural resources, and shall promote the development and utilisation of these resources consistent with their conserva - tion. The Hawaiʻi Constitution also requires that the Hawaiʻi Legislature establish a commission, the Land Use Commission, to manage the natural resources owned or controlled by the state. Hawaiʻi State Planning Act 4. Planning and Zoning 4.1 Planning and Zoning Framework Hawaiʻi Constitution In furtherance of the Hawaiʻi Constitution, the Hawaiʻi Legislature adopted the Hawaiʻi State Planning Act to implement policies and plans to develop and use land in the state, which specifies that the state’s goals include achieving a strong viable economy, a desired physical environment and physical, social and economic well-being for individuals and families in Hawaiʻi. State Level Land use in Hawaiʻi is governed and regulated ini - tially at the state level and then at the county levels. The Hawaiʻi Legislature established a state-wide land use classification system classifying all lands into four
782 CHAMBERS.COM
Powered by FlippingBook