County tax debts become liens on property

(a) The director may record in the bureau of conveyances, State department of land and natural resources or in the case of a lien on a motor vehicle to file with the director, a certificate setting forth the amount of taxes due and unpaid, which have been assessed or as to which a notice of proposed assessment has been issued. The certificate shall identify the taxpayer, the taxpayer’s last known address, and the tax or taxes involved. The certificate shall include such further information, if any, as may be required by HRS Chapter 501, to procure a lien on registered land. The recording or filing of the certificate creates a lien in favor of the city upon all property and rights to property, whether real or personal, belonging to any person liable for the tax. The lien for the tax, including penalties and interest thereon, arises at the time of filing by the director of the certificate of tax lien. From and after the time the lien arises, it shall be a paramount lien upon the property and rights to property against all parties. The certificate, if recorded or filed with the director shall be entered of record as provided by law, and if recorded or filed in the bureau of conveyances, State department of land and natural resources, shall be recorded in the office of the registrar of conveyances. Any cost incurred in the filing of the certificate shall be a part of the lien for the tax therein set forth. (b) The lien imposed in subsection (a) shall not be valid as against: (1) A mortgagee or purchaser of real property, or the lien of a judgment creditor upon real property, whose interest arose before the recording by the director of the certificate provided for herein; and (2) A mortgagee or purchaser of a motor vehicle who becomes the legal owner or owner at a time when the tax lien and encumbrance record provided for by HRS § 286-46 does not show the lien. (c) As to tangible personal property, possession of which is held by a person liable for tax for the purpose of sale to the public in the ordinary course of the person’s business, the lien imposed in subsection (a) is extinguished as to any such property sold in the ordinary course of the business by or under the direction of the person to any purchaser for valuable consideration. As to securities, negotiable instruments and money, the lien imposed in subsection (a) is extinguished as to such property upon passage of title to a person without notice or knowledge of the existence of the lien, for an adequate and full consideration in money or money’s worth. (d) The director may issue a certificate of discharge of any part of the property subject to the lien imposed by this section, upon payment in partial satisfaction of such lien, of an amount not less than the value as determined by the director of the lien on the part to be so discharged, or if the director determines that the lien on the part to be discharged has no value. Any such discharge so issued shall be conclusive evidence of the discharge of the lien as therein provided. (e) The lien imposed in this section may be foreclosed in a court proceeding or by distraint under § 8-5.11 . (f) For the purposes of this section, the following definitions apply unless the context clearly indicates or requires a different meaning. Mortgagee and Purchaser. Do not mean or include any person to whom property or an interest in property is conveyed: (1) As security for or in satisfaction of an antecedent or preexisting debt of a debtor who is insolvent within the meaning of the Bankruptcy Reform Act of 1978, as amended; or (2) As trustee, assignee or agent for the benefit of one or more creditors, other than mortgage bondholders. Motor Vehicle. Any self-propelled vehicle to be operated on the public highways. Real Property. Includes a leasehold or other interest in real property and also any personal property sold or mortgaged with real property if affixed to the real property and described in the instrument of sale or mortgage.