RELATING TO REAL PROPERTY.

SB2041

THE SENATE

S.B. NO.

2041

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to real property
.

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

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SECTION 1.
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The
legislature finds that the State utilizes two systems for recording legal
documents pertaining to the ownership of property, the regular system (via the
bureau of conveyances) and the land court.
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In general, property is recorded in either the regular system or the
land court; however, in some circumstances property is recorded in both
systems.
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The regular system and the land
court have different requirements for recording documents.
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The land court creates barriers to access in
the form of delay and increased expenses resulting from the complicated
procedures and requirements in the land court.
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No new properties have been registered in the land court since 1989,
which indicates sharp public preference for the regular system.

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The legislature further finds that the
regular system is a "race-notice" land registration system and does
not make any independent determination about the priority or ownership of
interests in the property.
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This is one
of the reasons why the regular system is preferred by the public.
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On the other hand, the land court system is a
"Torrens" system of land registration, which means one must
"race" to the land court to record a document ahead of another
possible prior claimant to the property.

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The legislature also finds that Act 120,
Session Laws of Hawaii 2009, amended chapter 501, Hawaii Revised Statutes, in
an attempt to ease the backlog in the bureau of conveyances.
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Among other things, the amendments allowed
owners of interest in land registered in the land court system to transfer the
interest to the regular system.

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Accordingly, the purpose of this Act is to:

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(1)
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Simplify
the land registration process by repealing the land court system and
transitioning all recorded documents to the regular system;

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(2)
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Establish
a working group to recommend reforms to effectively eliminate the land court;

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(3)
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Require
the working group to submit a report to the legislature; and

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(4)
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Appropriate
funds.

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SECTION 2.
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The subpart entitled "Land Court; Personnel", of chapter 501,
Hawaii Revised Statutes, consisting of sections 501-1 to 501-13, Hawaii Revised
Statutes, is repealed.

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SECTION 3.
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No later than January 1, 2029, the administrative judge of the circuit
court of the first circuit, subject to the direction of the chief justice as
provided by section 601-2(b), Hawaii Revised Statutes, and assistant registrar
of the bureau of conveyances, shall confer and determine the dates that:

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(1)
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No
new applications for registration of title shall be made in the land court; and

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(2)
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No
new certificates of title and memorials of newly recorded documents shall be
issued by the land court.

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SECTION 4.
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(a)
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There is established within
the judiciary for administrative purposes a working group to recommend the
implementation of specific reforms to effectively eliminate the land court.

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(b)
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The working group shall consist of the following individuals:

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(1)
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A
member of the judiciary, to be designated by the chief justice, who shall serve
as chair of the working group;

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(2)
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A
member of the senate, to be designated by the senate president;

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(3)
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A
member of the house of representatives, to be designated by the speaker of the
house of representatives;

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(4)
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The
chairperson of the board of land and natural resources, or the chairperson's
designee;

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(5)
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The
attorney general, the attorney general's deputy, or the attorney general's
designee;

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(6)
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The
state land surveyor, or the state land surveyor's designee;

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(7)
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One
or more members of the Hawaii State Bar Association, to be designated by its
president, whom the chair shall invite to participate;

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(8)
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A
representative from a bank, mortgage, or lending company doing business in
Hawaii, whom the chair shall invite to participate;

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(9)
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A
large landowner or estate landowner of real property located in Hawaii, such as
Kamehameha Schools, whom the chair shall invite to participate;

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(10)
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A
representative from the Hawaii association of realtors, whom the chair shall
invite to participate; and

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(11)
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A
representative from the Hawaii land title association, whom the chair shall
invite to participate.

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(c)
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The working group shall submit a report of its findings and
recommendations, including any proposed legislation, to the legislature no
later than twenty days prior to the convening of the regular session of
2028.
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The report shall identify and analyze
operational issues with the land court and bureau of conveyances and shall make
a recommendation to implement specific reforms to effectively eliminate the
land court.

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SECTION 5.
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All rights, powers, functions, and duties of the land court are
transferred to the bureau of conveyances.

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All officers and employees whose functions
are transferred by this Act shall be transferred with their functions and shall
continue to perform their regular duties upon their transfer, subject to the
state personnel laws and this Act.

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No officer or employee of the State having
tenure shall suffer any loss of salary, seniority, prior service credit,
vacation, sick leave, or other employee benefit or privilege as a consequence
of this Act, and such officer or employee may be transferred or appointed to a
civil service position without the necessity of examination; provided that the
officer or employee possesses the minimum qualifications for the position to
which transferred or appointed; and provided that subsequent changes in status may
be made pursuant to applicable civil service and compensation laws.

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An officer or employee of the State who
does not have tenure and who may be transferred or appointed to a civil service
position as a consequence of this Act shall become a civil service employee
without the loss of salary, seniority, prior service credit, vacation, sick
leave, or other employee benefits or privileges and without the necessity of
examination; provided that such officer or employee possesses the minimum
qualifications for the position to which transferred or appointed.

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If an office or position held by an officer
or employee having tenure is abolished, the officer or employee shall not
thereby be separated from public employment, but shall remain in the employment
of the State with the same pay and classification and shall be transferred to
some other office or position for which the officer or employee is eligible
under the personnel laws of the State as determined by the head of the
department or the governor.

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SECTION 6.
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All appropriations, records, equipment, machines, files, supplies,
contracts, books, papers, documents, maps, and other personal property
heretofore made, used, acquired, or held by the land court relating to the functions
transferred to the department of land and natural resources shall be
transferred with the functions to which they relate.

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SECTION 7.
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There is appropriated out of the general revenues of the State of Hawaii
the sum of $ or so
much thereof as may be necessary for fiscal year 2026-2027 for the land court
to inform registered owners of any interest in property registered or pending in
land court of the requirement for deregistration of property.

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The sum appropriated shall be expended by
the land court for the purposes of this Act.

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SECTION 8.
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This Act shall take effect upon its approval; provided that:

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(1)
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Section
2 shall take effect on July 1, ; and

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(2)
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Section
7 shall take effect on July 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

Judiciary;
Department of Land and Natural Resources; Land Court; Bureau of Conveyances;
Real Property; Repeal; Working Group; Report; Appropriation

Description:

Repeals
the Land Court.
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Transfers functions of
the Land Court to the Bureau of Conveyances.
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Establishes a working group to recommend the implementation of specific
reforms to effectively eliminate the Land Court.
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Requires a report to the Legislature.
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Appropriates funds.

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