How are mortgage liens treated in Hawaii?

Hawaii is generally known as atitle theory state where the property title remains in trust until payment in full occurs for the underlying loan. The document that secures the title is usually called a mortgage. In Hawaii, the mortgage serves the same purpose and generally contains the same terms as adeed of trust and serves the same function in anon-judicial foreclosure. Hawaii also has ajudicial foreclosure procedure.

How are Hawaii mortgages foreclosed?

The primary method of foreclosure in Hawaii involves what is known asnon-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly calledforeclosure by sale. When themortgage is initially signed it will usually contain a provision called apower of sale clause, which upon default allows an attorney to foreclose on the property in order to satisfy the underlying defaulted loan that is sometimes referred to as anote. Because this is a non-judicial remedy, there are very stringent notice requirements and the legal documents are required to contain thepower of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:

1. The lender publish a notice of foreclosure sale once per week for three (3) successive weeks in a newspaper of general circulation in the county in which the property is located. The last publication cannot be less than fourteen (14) days before the sale.
2. Notice of foreclosure as described above must be served on borrower and all interested parties and be posted at the premises to be foreclosed not less than twenty one (21) days before the sale.

In Hawaii, the lenders can also go to court in what is known as ajudicial foreclosure proceeding where the court must issue a final judgment of foreclosure. This process is called foreclosure by action. The property is then sold as part of a publicly noticed sale by thesheriff. A complaint is filed in court along with what is known alis pendens. Alis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

What are the legal instruments that establish a Hawaii mortgage?

The documents are known as themortgage or in a commercial transaction, asecurity agreement. Sometimes the mortgage document is combined with thesecurity agreement. Amortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in thenote.

How long does it take to foreclose a property in Hawaii?

Depending on the timing of the various required notices, it usually takes approximately 60-90 days to effectuate an uncontestednon-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and adjournments of sales, or files forbankruptcy.

Is there a right of redemption in Hawaii?

Hawaii has nostatutory right of redemption, which would allow a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. The borrower may cure any default up until three (3) days before the foreclosure sale by payment of all arrearages, costs and fees to include attorney’s fees.

Are deficiency judgments permitted in Hawaii?

Yes, adeficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures.

What statutes govern Hawaii foreclosures?

The laws that govern Hawaii non-judicial foreclosures are found in Chapter 667 et. seq., Hawaii Revised Statutes. To view these statutes on the Web, you can visit:

http://www.capitol.Hawaii.gov