Hawaii Administrative Rules › Title 16 - DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS › Chapter 106 - TIME SHARING › Subchapter 16 - LIEN PAYMENT TRUST › Section 16-106-56 - Requirements for trustees

Current through June, 2024
(a) The
				requirements of this section shall be met if time share units are conveyed to a
				trustee under a lien payment trust established pursuant to section
				514E-19,
				HRS.
(b) The trustee shall be a
				bank, savings and loan association, or trust company authorized to do business
				in the State; provided that if the trustee is an out-of-state bank, savings and
				loan association, or trust company, the trustee shall be subject to approval of
				the director.
(c) The trustee shall
				at all times maintain a fidelity bond or fidelity bonds covering all of its
				directors, officers, employees, agents, and volunteers having control of or
				access to moneys or securities of the trustee, or moneys or securities which
				are collected, held, managed, or disbursed by the trustee. The fidelity bond or
				fidelity bonds shall cover any loss of money or other property the trustee, the
				time share owners association, time share owners, and time share purchasers may
				sustain as a result of any fraud, dishonesty, forgery or alteration, larceny,
				theft, embezzlement, unlawful obstruction, misapplication, misplacement,
				destruction or misappropriation, or any other dishonest or criminal act or
				omission, or infidelity to duty of or by any director, officer, employee,
				agent, or volunteer of the trustee. The bond may be in the form of individual
				bonds, a schedule fidelity bond, or a blanket bond covering all of the persons
				mentioned above, and may contain at least the following provisions:
(1) That the surety shall provide, not less
				frequently than annually, written assurances to the director and to the time
				share owners association that the bond is in full force and effect;
(2) That the surety may not cancel the bond
				without giving at least thirty days notice in writing to the director and to
				the time share owners association of the cancellation of the bond;
(3) That the prosecution or conviction or
				both of a director, officer, employee, agent, or volunteer of the trustee shall
				not be a condition precedent to recovery on the bond;
(4) That knowledge of defalcations shall not
				be imputed to the trustee where a director, officer, employee, agent, or
				volunteer other than the offending party has knowledge of the
				defalcations;
(5) That the
				identification of a specific offending party shall not be a condition precedent
				to recovery on the bond; provided that it is conclusively shown that loss has
				occurred as a result of the actions of a director, officer, employee, agent, or
				volunteer of the trustee;
(6) That
				the bond may not be changed or amended without the prior written consent of the
				director; and
(7) That the surety
				waives any defense based upon the exclusion of volunteers or other persons who
				serve without pay from coverage under the bond.
The amount and form of the fidelity bond or fidelity bonds
				  covering directors, officers, employees, agents, and volunteers of the trustee,
				  and the sufficiency of the surety thereon, shall be approved by the director;
				  provided that the amount of any bond shall be at least $50,000 or equivalent to
				  the sum of all blanket liens on the time share units which are registered for
				  sale in the time share plan.