HRS §514E-19
Protecting time share buyers from existing liens
A time share sale can close only if the buyer is protected from liens already on the property. The law lists several ways to do this, like giving the buyer clear title or using a trust. It also says these sales are not treated as securities.
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The statute, as written — Protection of purchasers from blanket liens
(a) An escrow for the sale of a time share interest in a time share ownership plan may close only if the requirements of any one of the following alternatives for protecting the purchaser have been satisfied: (1) The time share interest is conveyed to the purchaser free and clear of any blanket liens; (2) The time share unit is conveyed to a trustee: (A) Free and clear of any blanket liens under a trust meeting the requirements of sections 514E-22 and 514E-23; or (B) Under a lien payment trust meeting the requirements of sections 514E-22, 514E-23, 514E-24, and 514E-25; (3) (A) The time share interest is conveyed to the purchaser subject only to blanket liens: (i) Where every person holding an interest in the blanket lien has executed and recorded a nondisturbance agreement; or (ii) For which the director's acceptance of a surety bond or an irrevocable letter of credit meeting the requirements of section 514E-28 has been recorded with respect to that time share unit; and (B) If legal or equitable title will be held by anyone other than the purchaser, a notice of time share plan is recorded; or (4) The requirements of any alternative arrangements accepted by the director have been met. (b) An escrow for the sale of a time share interest in a time share use plan may close only if the requirements of any one of the following alternatives for protecting purchasers have been satisfied: (1) The time share unit is conveyed to a trustee: (A) Free and clear of any blanket liens under a trust meeting the requirements of sections 514E-22 and 514E-23; or (B) Under a lien payment trust meeting the requirements of sections 514E-22, 514E-23, 514E-24, and 514E-25; (2) A notice of time share plan is recorded and either: (A) Every person holding an interest in a recorded blanket lien against any time share interests in that time share unit executes and records a nondisturbance agreement; or (B) The director's acceptance of a surety bond or an irrevocable letter of credit meeting the requirements of section 514E-28 is recorded; or (3) The requirements of any alternative arrangements accepted by the director have been met. (c) A time share interest in any time share plan which satisfies the escrow and blanket lien protection requirements of this chapter shall not be deemed a risk capital security under chapter 485A, and the offer or sale of a time share interest therein shall not be deemed the offer or sale of a security.
Sections this one refers to
§514E-22 Trust requirements for time share units
§514E-28 Rules for surety bonds and letters of credit
LawTrove is not legal advice. The summary above is a computer-generated restatement — the authoritative text is the official version linked above.