§171-21  Rights of holder of security
interest.  Whenever any notice of breach or default is given to any party
under section 171-20, or under the terms of any lease, patent, license,
agreement, or other instrument issued or to be issued under this chapter, a
copy of the notice shall be delivered by the board of land and natural
resources to all holders of record of any security interest in the land or
interest covered by the lease, patent, license, agreement, or other instrument
whose security interest has been recorded with the board.  Should the board
seek to forfeit the privilege, interest, or estate created by the lease,
license, agreement, patent, or other instrument, each holder may, at its
option, cure or remedy the breach or default, if the same can be cured or
remedied, by the payment of money or, if such is not the case, by performing or
undertake in writing to perform all the terms, covenants, restrictions, or
conditions of any lease, patent, license, agreement, or other instrument
capable of performance by the holder, as determined by the board, within the
time period provided in section 171-20 or within such additional period as the
board may allow for good cause and add the cost thereof to the mortgage debt
and the lien of the mortgage.  Any lease, patent, license, agreement, or other
instrument transferred pursuant to this section shall not be subject to the
requirements in section 171-14.  Upon failure of the holder to exercise its
option, the board may:



(1)  Pay to the holder from any moneys at its
disposal, including the special land and development fund, which is made
available for that purpose, the amount of the mortgage debt, together with
interest and penalties, and secure an assignment of the debt and mortgage from
the holder, or if ownership of the interest or estate shall then have vested in
the holder by way of foreclosure or action in lieu thereof the board shall be
entitled to a conveyance of the interest or estate upon payment to the holder
of the amount of the mortgage debt, including interest and penalties, and all
reasonable expenses incurred by the holder in connection with the foreclosure
and preservation of its security interest, less appropriate credits, including
income received from the privilege, interest, or estate subsequent to the
foreclosure; or



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



Section 171-19 to the contrary notwithstanding, the
proceeds of any redisposition under paragraph (2) shall be applied:  first, to
reimburse the board for costs and expenses in connection with the
redisposition; second, to discharge in full any unpaid purchase price or other
indebtedness owing the State in connection with the privilege, interest, or
estate terminated; third, to the mortgagee to the extent of the value received
by the State upon redisposition which exceeds the fair market lease value of
the land as previously determined by the State's appraiser; and fourth, to the
owner of the privilege, interest, or estate.  Nothing contained in this section
shall be construed in a manner as to infringe upon or prejudice in any way the
rights of a holder of record having a security interest which shall have vested
prior to the effective date hereof, and to the extent that this section and
section 171-98 shall or may conflict and adversely affect such interests, the
same shall be of no force and effect. [L 1962, c 32, pt of §2; am L 1963, c
193, §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.