Property Mortgage Laws in Hawaii

The State of Hawaii is generally referred to as a title theory state wherein the property’s title stays in security until the payment of the loan on the property is taken care off in full. A mortgage is the document that keeps the title of the property secure. The mortgage, in Hawaii, usually contains the same information as the deed of trust and functions in the same way in non-judicial foreclosure. A judicial foreclosure process also exists in Hawaii.

A non-judicial foreclosure is the process primarily followed to foreclose on a property in Hawaii. No court action is needed in this method, but it does require a foreclosure by sale notice. To foreclose upon the property to take care the loan that has been defaulted upon, an attorney can use the power of sale clause which is usually included in the mortgage at time it is signed at inception.

This being a non-judicial process, very austere requirements for notices are in place, and the insertion of the power of sale clause in the mortgage is vital to follow this method of foreclosure.

POWER OF SALE REQUIREMENTS

A lender needs to publish the foreclosure sale notice in a general circulation newspaper within the county where the property is situated for three consecutive weeks, at least once every week. The last of these would need to appear within fourteen days prior to the sale.

The foreclosure notice has to be served to the borrower and other interested parties and also needs to be posted at the property that is to be foreclosed upon at least twenty one days prior to the sale.

Lenders in Hawaii can also choose to follow a judicial foreclosure process which takes place through a court, and it is the court that pronounces the final judgment on the foreclosure. This procedure is referred to as foreclosure by action. The property then sells as part of a sale that has been publicly notified, by the sheriff. A complaint, along with a lis pendens, needs to be filed in court. A lis pendens is a lawful document that is used to present a notice to the public about the property that is going to be foreclosed on.

LEGAL INSTRUMENTS

The documents are referred to as a mortgage, and in the case of a commercial transaction, a security agreement. The security agreement is, at times, combined with the mortgage document. A mortgage is to be filed to verify the loan in question and its repayment terms, which are mentioned in the note.

TIME PERIOD

It usually takes about 60 to 90 days to get into effect a non-judicial foreclosure that is not contested; this does depend on the time required by various notices. If the action is contested by the borrower in the court, if the sale is sought to be postponed or if the borrower files for bankruptcy, the process can be delayed.

RIGHT OF REDEMPTION

A statutory right of redemption through which a foreclosed property can be reclaimed by the owner upon payment of the unpaid loan and costs does not exist in Hawaii. The borrower, however, can cure defaults on the property till three days before the scheduled foreclosure sale by paying all the arrears, fees and costs.

DEFICIENCY JUDGMENTS

If a property is sold for less than the amount on the loan in question that the mortgage secures, at the public sale the lender can obtain a deficiency judgment.

STATUTES

Non-judicial foreclosures in Hawaii are governed by the laws found in Chapter 667 et. seq., Hawaii Revised Statutes.