Bill Text: HI SB2149 | 2014 | Regular Session | Introduced

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Bill Title: Fraudulent records; civil actions and administrative procedures

Spectrum: Moderate Partisan Bill (Democrat 5-1)

Status: (Introduced - Dead) 2014-02-11 - The committee on JDL deferred the measure. [SB2149 Detail]

Download: Hawaii-2014-SB2149-Introduced.html

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THE SENATE	S.B. NO.	2149
TWENTY-SEVENTH LEGISLATURE, 2014
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO FRAUDULENT RECORDS.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  This legislature recognizes that in recent years the Federal Bureau of Investigations have seen an uptake of fraudulent filings of financial statements and liens on the property of elected officials, judicial officers and other people in various counties and states across the country for the purposes of harassment and intimidation.  The legislature also recognizes that in many cases it is a long and expensive process to remove invalid liens from property records, or to restore valid liens on a property title improperly removed. Therefore, it is the intention of this legislature to establish avenues where administrative processes can be implemented to facilitate valid title records are maintained.

     SECTION 2.  Chapter 490, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "Section 490- Fraudulent records.

(a) Notwithstanding whether or not a criminal action is pending under HRS §708-875, Filing Fraudulent or Otherwise Improper Financing Statements, no person shall cause to be communicated to the filing office for filing a record the person knows or reasonably should know:

(1) Is not authorized or permitted under HRS §490;9-509 or §490;9-708, of this Chapter; and 

(2) Is not related to a valid existing or potential commercial or financial transaction, an existing agricultural or other lien, or a judgment of a court of competent jurisdiction; and

(3) Is filed with the intent to harass or defraud the person identified as debtor in the record or any other person.

     (b) A person who violates subsection (a) shall be liable in a civil action to each injured person for:

(1) The greater of the actual damages caused by the violation or up to $10,000 in lieu of actual damages;

(2) Reasonable attorney's fees;
(3) court costs and other related expenses of bringing an action, including reasonable investigative expenses; and

(4) In the discretion of the court, exemplary damages in an amount determined by the court or jury.

     (c) A person identified as debtor in a filed record the person believes was caused to be communicated to the filing office in violation of subsection (a) may, under penalty of perjury, file with the Lieutenant Governor an affidavit to that effect. The Lieutenant Governor shall adopt and make available a form affidavit for use under this section.

(d) Upon receipt of an affidavit filed under this section, or upon administrative action by the Lieutenant Governor, the Lieutenant Governor shall communicate to the secured party of record on the record to which the affidavit or administrative action relates and to the person that communicated the record to the filing office, if different and known to the office, a request for additional documentation supporting the effectiveness of the record. The Lieutenant Governor shall review all such documentation received within thirty days after the first request for additional documentation is sent. The Lieutenant Governor may terminate the record effective thirty days after the first request for additional documentation is sent if it has a reasonable basis for concluding that the record was communicated to the filing office in violation of subsection (a).
The Lieutenant Governor may refer the matter to the Attorney General or any county or city prosecutor with regard to a filed record if it has reason to believe, from information contained in the record or obtained from the person that communicated the record to the filing office, that the record was communicated to the filing office in violation of subsection (a).

     (e) The Lieutenant Governor may give heightened scrutiny to a record that indicates that the debtor is a transmitting utility or that indicates that the transaction to which the record relates is a manufactured-home transaction or a public-finance transaction.

     (f) The Lieutenant Governor shall not charge a fee to file an affidavit under this section and shall not return any fee paid for filing a record terminated under this section.

(g) The Lieutenant Governor shall promptly communicate to the secured party of record a notice of the termination of a record under subsection (d).  A secured party of record that believes in good faith that the record was not communicated to the filing office in violation of subsection (a) may file an action to require that the record be reinstated by the filing office.

     (h) A person that communicated a record to the filing office that the filing office rejected in reliance on Section §490;9-516(b), who believes in good faith that the record was not communicated to the filing office in violation of section §490;9-516(b), may file an action to require that the record be accepted by the filing office.

(i) If a court or tribunal in an action under this section determines that a record terminated under this section or rejected in reliance on section 9-516(b)should be reinstated or accepted, the court or tribunal shall provide a copy of its order to that effect to the Lieutenant Governor. On receipt of an order reinstating a terminated record, the Lieutenant Governor shall refile the record along with a notice indicating that the record was refiled pursuant to this section and its initial filing date. On receipt of an order requiring that a rejected record be accepted, the Lieutenant Governor shall promptly file the record along with a notice indicating that the record was filed pursuant to this section and the date on which it was communicated for filing. A rejected record that is filed pursuant to an order of a court or tribunal shall have the effect described in Section §490;9-516(d) for a record the filing office refuses to accept for a reason other than one set forth in Section §490;9-516(b).

(j) A terminated record that is refiled under subsection (i) is effective as a filed record from the initial filing date. If the period of effectiveness of a refiled record would have lapsed during the period of termination, the secured party may file a continuation statement within thirty days after the record is refiled and the continuation statement shall have the same effect as if it had been filed during the six month period described in section §490;9-515(d). A refiled record shall be considered never to have been ineffective against all persons and for all purposes except that it shall not be effective as against a purchaser of the collateral that gave value in reasonable reliance on the absence of the record from the files.

(k) Neither the filing office nor any of its employees shall incur liability for the termination or failure to terminate a record under this section or for the refusal to accept a record for filing in the lawful performance of the duties of the office or employee.

(l) This section does not apply to a record communicated to the filing office by a regulated financial institution or by a representative of a regulated financial institution except that the Lieutenant Governor may request from the secured party of record on the record or from the person that communicated the record to the filing office, if different and known to the office, additional documentation supporting that the record was communicated to the filing office by a regulated financial institution or by a representative of a regulated financial institution. The term "regulated financial institution" means a financial institution subject to regulatory oversight or examination by a state or federal agency and includes banks, savings banks, savings associations, building and loan associations, credit unions, consumer finance companies, industrial banks, industrial loan companies, insurance companies, investment companies, investment funds, installment sellers, mortgage servicers, sales finance companies, and leasing companies.

(m) Except for sub-section (b) of this section, this section applies where a record was communicated within two years preceding the effective date of this section.

(n) This section does not exclude, alter or amend any remedy or cause of action or provide any defense as may be provided elsewhere by law."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect upon its approval.

 

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Fraudulent records; civil actions and administrative procedures

 

 

Description:

Makes made part of the Commercial Code and provides for civil actions and administrative procedures to clear a title of a fraudulent lien or reinstate on a title a valid lien. Complements the Penal Code provisions for fraudulent filings.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.