§206-10  Restrictions on sale and use ofresidential lots by purchaser.  (a)  For a period of five years after thedate of purchase of any lot under this chapter (which date shall be deemed tobe the date of the agreement of sale or deed under which the lot was originallypurchased or agreed to be purchased) the lot shall not be sold by the originalpurchaser thereof unless the same, together with the improvements thereon hasfirst been offered in writing to the board of land and natural resources under theoption reserved by this chapter and the board has either refused or failedwithin the time required by this section to exercise the option.

(b)  Any original purchaser intending to sellsuch lot and improvements within the five-year period shall first notify theboard in writing of the original purchaser's intention.  The notice shallspecify the original purchaser's address and shall expressly offer to sell suchproperty to the board at a price which shall not exceed the sum of (1) theoriginal cost of the land, and (2) the replacement value, less depreciation atthe rates used for real property tax purposes, of all buildings andimprovements thereon, to be determined by three appraisers; one appointed bythe board, one appointed by the owner, and the third by the two appraisers soappointed, the cost to be borne equally by the parties.  Within thirty daysafter the receipt of the notice, the board shall in writing notify the originalpurchaser at the address so specified whether it elects to exercise theoption.  If the board refuses, or fails within the thirty-day period, to replyto the offer, the original purchaser may sell the property to any other personfree from any price restrictions, provided that if the board elects topurchase, the board shall thereupon use its best efforts to redispose of it assoon as practicable subject to the lien of any mortgage, to a qualified andresponsible person who will assume the obligation of mortgage and debt securedthereby.

(c)  The board may resell any lot andimprovements so purchased at a price not to exceed the actual cost thereof tothe board, with the addition of a reasonable amount to cover overhead andestimated and actual expenses.

(d)  Any original deed or original agreement ofsale from the board to any original purchaser of a residence lot shall containa covenant running with the land (and shall, whether or not the condition iscontained in the instrument, be subject to the requirement) that the originalpurchaser shall erect on the lot, within two years following the date ofpurchase, a suitable residence building to conform to the terms set forth inthe instrument, with a proviso that the board may, on application of theoriginal purchaser, extend the period from time to time for good cause shown. Other reasonable restrictions designed to prevent the lots from becoming slumareas may be established by the board for any development project and includedin the agreement of sale or deeds as covenants running with the land for a termof twenty-one years.

(e)  No residence lot shall be used for anypurpose other than residence purposes for a period of twenty-one yearsfollowing the date of the first sale of such lot by the board; provided that inthe event the lot is zoned or rezoned by governmental authority fornonresidence purposes, the restriction shall be relaxed to the extent permittedby the zoning laws or regulations.

(f)  Subsections (a) and (b) of this sectionshall not be applicable to a sale under foreclosure by a mortgagee of any lot,or to the transfer of title by a mortgagee after foreclosure or otherwise toany agency of the United States government pursuant to the terms of anyinsurance or guarantee of mortgage loan by such agency, or to any subsequentpurchaser. [L 1961, c 6, pt of §10; am L 1965, c 157, pt of §4; Supp, pt of§98J-10; HRS §206-10; gen ch 1985]