RELATING TO VEHICLE TITLES.

SB2079

THE SENATE

S.B. NO.

2079

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to vehicle titles
.

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 motor vehicle
ownership and title transfers in the State are governed by statutory
requirements intended to ensure clear chains of ownership, protect the public,
and safeguard personal privacy.
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However,
motor vehicles are sometimes sold, gifted, donated, or otherwise transferred by
individuals who are not the last registered owner of record and who, for
various reasons, did not obtain or retain a valid certificate of title.
�
In these circumstances, the absence of a
valid certificate of title or the inability to locate or obtain a release from
a prior registered owner may prevent a good-faith transferee from registering
the vehicle, transferring title, or otherwise complying with the law, even when
the vehicle is not stolen, subject to a lien, and has been in open and
continuous possession.

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The
legislature further finds that while existing privacy protections appropriately
limit the disclosure of personal information maintained by county motor vehicle
agencies, these protections may unintentionally create situations in which a
person seeking to comply with title and registration requirements has no
reasonable administrative remedy and results in significant hardship, including
the inability to lawfully register or insure a vehicle, transfer ownership, or
resolve claims related to loss or damage, despite the transferee's willingness
to pay applicable taxes, fees, and penalties.

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The
legislature further finds that numerous other states have established statutory
surety bond mechanisms that allow a person in possession of a motor vehicle,
under specified conditions and safeguards, to obtain a certificate of title
when standard documentation is unavailable, while preserving the rights of
prior owners, lienholders, and the State.

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The
legislature additionally finds that it was not the legislature's intent for
motor vehicle title and registration laws to operate in a manner that makes
compliance impossible for good-faith transferees, nor to create unintended
barriers that frustrate equitable outcomes or discourage compliance with the
law.

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Accordingly,
the purpose of this Act is to:

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(1)
�
Require
the county director of finance to issue a temporary, three-year title to an
applicant in cases where
no prior title exists, the prior owner is
unable to provide one, or the director is otherwise not satisfied as to the
ownership of the vehicle;

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(2)
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Require
the applicant to provide a surety bond and certain documentation to the
director;

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(3)
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Allow
for a right of action against the surety bond and temporary title; and
�

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(4)
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Require
the temporary title to convert to a full title after three years unless a suit
has been instituted against the temporary title.

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SECTION
2.
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Chapter 286, Hawaii Revised Statutes,
is amended by adding a new section to part III to be appropriately designated
and to read as follows:

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"
�
286-
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Procedure to obtain temporary title; possession of vehicle without
title.
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(a)
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In the event a person is in possession of a
vehicle where no prior title exists, the prior owner is unable to provide one,
or the director of finance is otherwise not satisfied as to the ownership of
the vehicle, the person may apply for a temporary title from the director of
finance.
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The applicant shall provide to
the director of finance:

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(1)
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An affidavit of ownership;

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(2)
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A bill of sale or gift affidavit;

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(3)
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A vehicle identification number
inspection or other verification from the appropriate county police department
confirming that the vehicle is not reported stolen; and

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(4)
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A bond in a form as may be
determined by the director of finance in an amount equal to twice the retail
value of the vehicle.

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Upon
receipt and verification of the items listed in paragraphs (1) through (4), the
director of finance shall provide to the applicant a temporary title for the
vehicle that shall be valid for three years.

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(b)
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The bond required pursuant to subsection (a)(4)
and the deposit thereof shall be conditioned to protect the director of finance
and any subsequent purchaser of the vehicle or person acquiring any lien
thereon or the successor in interest of any person against any loss or damage
on account of any defect in or undisclosed encumbrance upon the right, title,
and interest of the applicant in and to the vehicle.
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Any interested person shall have a right of
action to recover on any bond for any breach of the conditions for which the
same was deposited.
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The aggregate
liability of the surety to all persons shall in no event exceed the amount of
the bond and interest thereon, plus reasonable attorneys' fees to be allowed by
the court incurred to procure the recovery under the bond.
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The bond shall (unless suit has been
instituted thereon) be returned and surrendered at the end of three years, and
the director of finance shall issue the applicant a full title to the vehicle.
"

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SECTION
3.
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New statutory material is
underscored.

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SECTION
4.
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This Act shall take effect upon its
approval.

INTRODUCED BY:

_____________________________

Report Title:

Vehicle
Title; Surety Bond; Director of Finance; Ownership

Description:

Requires
the county Director of Finance to issue a temporary, three-year title to an
applicant in cases where
no prior title exists, the prior owner is
unable to provide one, or the Director is otherwise not satisfied as to the
ownership of the vehicle.
�
Requires the
applicant to provide a surety bond and certain documentation to the
Director.
�
Allows for a right of action
against the surety bond and temporary title.
�

Requires the temporary title to convert to a full title after three
years unless a suit has been instituted against the temporary title.

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