HomeMy WebLinkAbout2005-10-24_Request_Change_re_Tentative_Subdivsion oJ�tY:°`••".�w� Lincoln S.T. Ashida
Harr; Kin. Corporation Counsel
Mayor
Gerald Takase
°— Assistant Corporation
OF "' Counsel
COUNTY OF HAWAII
OFFICE OF THE CORPORATION COUNSEL
101 Aupuni Street, Suite 325 . Hilo,Hawaii 96720-4262 • (808)961-8251 • Fax(808)961-8622
PRIVILEGED AND CONFIDENTIAL COMMUNICATION ATTORNEY-CLIENT
COMMUNICATION NOT A PUBLIC RECORD
MEMORANDUM
TO: Chris Yuen
Director of Planning
FROM: Amy G. Self '=
Deputy Corporation Counsel
DATE: October 24, 2005
SUBJECT: Morton Bassan's Request to Change Tentative Subdivision
Approval Condition based on Whitlow v. Jennings and Kaneshiro;
Corporation Counsel WRK 05-10863
Pursuant to your request regarding the above subject matter, I am providing the
following legal opinion.
I. Issue Presented
Whether Section 23-76, Hawai'i County Code, which prohibits the conveyance of
land prior to final subdivision approval, is in derogation of an owner's common law right
to sell land, and therefore an invalid condition, in light of the Hawaii Supreme Court
case, Whitlow v. Jennings and Kaneshiro?
11. Brief Answer
No. Based on the specific facts presented in this case, Section 23-76, Hawaii
County Code, is a valid condition and must be enforced by the Planning Department,
unless Mr. Bassan's sales agreement and instructions to escrow contain the necessary
language to protect the public and the buyers.
Hawaii County is an Equal Opportunity Provider and Employer
Memorandum to Chris , uen, Director
Planning Department
October 24, 2005
Page 2
Contrary to Mr. Bassan's belief, the Court's decision in Whitlow did not invalidate
County ordinances like Section 23-76, it merely held that such ordinances are in
derogation of the common-law right to sell and buy land and must, therefore, be strictly
construed in their prohibitive applications, while giving due regard to the purpose of the
ordinance. The purpose of County ordinances such as Section 23-76 is to protect the
public and the unwary purchaser from substandard subdivisions. Therefore, the Court
held that an agreement to sell that is placed in escrow with the condition that the
agreement is of no force and effect until final subdivision approval is granted by the
Planning Department does not violate the County ordinance because the public and the
buyers are fully protected since the contract is of no force and effect until the
subdivision has been approved by the Planning Department.
In the case at hand, the escrow agreement provided to me by Mr. Bassan
contains no language which protects the purchaser. In other words, unlike the escrow
agreement in Whitlow, there is no condition in Mr. Bassan's escrow agreement that
requires the seller to obtain final subdivision approval from the Planning Department
before the agreement will be in full force and effect. If, under these circumstances, the
Planning Department agrees not enforce
Section 23-76, there is no incentive for Mr. Bassan to complete the improvements
required for obtaining final subdivision approval, which goes against the whole purpose
of Section 23-76. In addition, it could potentially expose the planning department to
liability for failing to enforce Section 23-76 for the protection of the buyers.
If, however, the sales agreements for each lot contain such a condition and are
placed into escrow with instructions to the escrow agent that the agreement to sell is to
be ineffectual and not delivered to the buyer until after final subdivision approval is
obtained, Section 23-76 would be in derogation of Mr. Bassan's right to sell land,
pursuant to Whitlow, and therefore should not be enforced against Mr. Bassan under
such circumstances. Therefore, the Planning Department should require Mr. Bassan to
submit a copy of the agreement to sell and instructions to escrow before determining
whether to require Mr. Bassan to comply with Section 23-76.
III. Discussion
Section 23-76, Hawaii County Code, provides:
Land shall not be offered for sale, lease or rent in any
subdivision, nor shall options or agreements for the
purchase, sale, leasing or rental of the land be made until
approval for recordation of the final plat is granted by the
director.
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Memorandum to Chris r uen, Director
Planning Department
October 24, 2005
Page 3
The selling and buying of land by an owner and a purchaser are common-law
rights; therefore, statutes and ordinances in derogation of a common-law right must be
strictly construed in their prohibitive applications, giving due regard to the purposes of
the statutes and ordinances and the evils which the legislature intended to prohibit, and
will not be extended beyond the course of the evils sought to be prevented. See
Whitlow v. Jennings and Kaneshiro, 40 Haw. 523 (1954). "Restrictions upon the sale of
unapproved subdivisions are twofold: (1) for the protection of the public, and (2) for the
protection of purchasers of subdivisions." Id. at 528. The purpose of the Hawaii
statutes and County ordinances relating to subdivisions is "to prevent the subdividing of
large areas into smaller areas for the purpose of sale, lease or rent, without providing
for adequate light, air, fire protection, traffic safety and to insure the proper sanitation
and drainage of lands. The provision against the owner selling such land without
approval is to protect an unwary purchaser who may find he has bought a parcel of land
upon which he cannot build, cannot install public utilities, etc., because the lot does not
comply with the building ordinances or other health or police measures." Id. at 528.
The seller in Whitlow agreed to subdivide and enter into and execute an
agreement to sell, and the buyer to purchase a lot, upon the condition that the seller
would, in conformity with the statutory requirements, obtain approval of the proposed
subdivision by the planning commission of the City and County of Honolulu. It was
further agreed that the agreement to sell would be placed in escrow and the agreement
to sell would be wholly ineffectual and would not be delivered until final approval by the
city planning commission of the proposed subdivision, at which time — and not before -
the escrow agreement would be delivered by the escrow holder to the buyer and
thereupon take effect. Based on the foregoing facts, the Court held that the escrow
agreement did not fall within the purpose of the statute because "(1) the public was fully
protected as the contract was of no force and effect until the subdivision was approved
by the planning commission; (2) the purchaser was protected for the same reason; and
(3) the seller would be protected in that the placing of the agreement in escrow was an
assurance that the contract to subdivide, when performed, would not be in vain and the
various expenses . . . would not be lost to the vendor." Id. at 532-533.
The whole purpose of Section 23-76 and other similar ordinances and statutes is
to protect the public and the unwary purchaser from substandard subdivisions. Unlike
the escrow agreement in Whitlow, Mr. Bassan's escrow agreement with First American
Title Company does not contain a condition requiring the seller to obtain final
subdivision approval from the Planning Department before the agreement to sell will be
effectual and delivered to the buyer. In other words, the escrow agreement provided to
me by Mr. Bassan contains no language which would prevent the conveyance of lots to
buyers prior to Mr. Bassan obtaining final subdivision approval from the Planning
Department. If, under these circumstances, the Planning Department agrees not
enforce Section 23-76, there is no incentive for Mr. Bassan to complete the
improvements required for obtaining final subdivision approval, which goes against the
w
Memorandum to Chris ) uen, Director
Planning Department
October 24, 2005
Page 4
whole purpose of Section 23-76. This could potentially expose the Planning
Department to lawsuits filed by the buyers of the lots. Therefore, the Planning
Department should not agree to waive Section 23-76, unless
Mr. Bassan provides a copy of the sales agreement and instructions to escrow
containing appropriate language to protect the buyers.
IV. Conclusion
The Court in Whitlow makes it clear that a statute or ordinance that is in
derogation of the common law right to sell and buy land, such as Section 23-76, Hawaii
County Code, must be construed strictly in its prohibitive application, giving due regard
to the purpose of the statute or ordinance and the evils which the legislature intended to
prohibit. The purpose of Section 23-76 and other similar ordinances and statutes is to
protect the public and unwary buyers from substandard subdivisions. The placing of an
agreement to sell for lots in a proposed subdivision upon the express condition that the
agreement to sell will be ineffectual and not delivered to the buyer until final approval by
the Planning Department is granted does not violate Section 23-76 because the public
and buyers are fully protected since the agreement to sell is of no force and effect until
the subdivision is approved by the Planning Department. Therefore, the Planning
Department should require Mr. Bassan to provide a copy of the
agreement to sell and the instructions to escrow to determine whether they contain the
necessary language to protect the public and the buyers. If no such language exists,
the Planning Department must require Mr. Bassan to comply with Section 23-76.
AGS:cm
S:dept\plann\05-10863 morton bassan req tent subdiv app 10-24-05 AGScm.doc