§171-21  Rights of holder of securityinterest.  Whenever any notice of breach or default is given to any partyunder section 171-20, or under the terms of any lease, patent, license,agreement, or other instrument issued or to be issued under this chapter, acopy of the notice shall be delivered by the board of land and naturalresources to all holders of record of any security interest in the land orinterest covered by the lease, patent, license, agreement, or other instrumentwhose security interest has been recorded with the board.  Should the boardseek to forfeit the privilege, interest, or estate created by the lease,license, agreement, patent, or other instrument, each holder may, at itsoption, cure or remedy the breach or default, if the same can be cured orremedied, by the payment of money or, if such is not the case, by performing orundertake in writing to perform all the terms, covenants, restrictions, orconditions of any lease, patent, license, agreement, or other instrumentcapable of performance by the holder, as determined by the board, within thetime period provided in section 171-20 or within such additional period as theboard may allow for good cause and add the cost thereof to the mortgage debtand the lien of the mortgage.  Any lease, patent, license, agreement, or otherinstrument transferred pursuant to this section shall not be subject to therequirements in section 171-14.  Upon failure of the holder to exercise itsoption, the board may:

(1)  Pay to the holder from any moneys at itsdisposal, including the special land and development fund, which is madeavailable for that purpose, the amount of the mortgage debt, together withinterest and penalties, and secure an assignment of the debt and mortgage fromthe holder, or if ownership of the interest or estate shall then have vested inthe holder by way of foreclosure or action in lieu thereof the board shall beentitled to a conveyance of the interest or estate upon payment to the holderof the amount of the mortgage debt, including interest and penalties, and allreasonable expenses incurred by the holder in connection with the foreclosureand preservation of its security interest, less appropriate credits, includingincome received from the privilege, interest, or estate subsequent to theforeclosure; or

(2)  If the property cannot be reasonably reassignedwithout loss to the State, then terminate the outstanding privilege, interest,or estate without prejudice to any other right or remedy for arrears of rent orfor any preceding or other breach or default, and use its best efforts toredispose of the affected land to a qualified and responsible person free andclear of the mortgage and the debt thereby secured; provided that a reasonabledelay by the board in instituting or prosecuting any right or remedy it mayhave under this section shall not operate as a waiver of the right or todeprive it of the remedy when it may still hope otherwise to resolve theproblems created by the breach or default involved.

Section 171-19 to the contrary notwithstanding, theproceeds of any redisposition under paragraph (2) shall be applied:  first, toreimburse the board for costs and expenses in connection with theredisposition; second, to discharge in full any unpaid purchase price or otherindebtedness owing the State in connection with the privilege, interest, orestate terminated; third, to the mortgagee to the extent of the value receivedby the State upon redisposition which exceeds the fair market lease value ofthe land as previously determined by the State's appraiser; and fourth, to theowner of the privilege, interest, or estate.  Nothing contained in this sectionshall be construed in a manner as to infringe upon or prejudice in any way therights of a holder of record having a security interest which shall have vestedprior to the effective date hereof, and to the extent that this section andsection 171-98 shall or may conflict and adversely affect such interests, thesame shall be of no force and effect. [L 1962, c 32, pt of §2; am L 1963, c193, §65; am L 1965, c 239, §12; Supp, §103A-21; am L 1967, c 234, §6; HRS§171-21; am L 1981, c 160, §2; am L 1986, c 215, §2; am L 1999, c 160, §20]

 

Case Notes

 

  Person seeking to enforce mechanic's lien is not within term"holder of record of any security interest."  51 H. 87, 451 P.2d 809.