Opinion ID: 2596174
Heading Depth: 3
Heading Rank: 1

Heading: The Purposes of HRS Section 667-5

Text: The question thus becomes whether a contract to purchase foreclosed property at auction is void where the foreclosure sale was invalid under HRS section 667-5. The text of the statute does not explicitly address this question and the legislative history is not helpful in providing an answer. In determining whether a contract is void when made in violation of a statute, we have stated: courts will always look to the language of the statute, the subject matter of it, the wrong or evil which it seeks to remedy or prevent, and the purpose sought to be accomplished in its enactment; and if, from all these, it is manifest that it was not intended to imply a prohibition or to render the prohibited act void, the courts will so hold, and construe the statute accordingly. . . [T]he statute must be examined as a whole, to find out whether or not the makers of it meant that a contract in contravention of it should be void, or that it was not to be so . . . When the statute is silent, and contains nothing from which the contrary can be properly inferred, a contract in contravention of it is void. Carey v. The Discount Corp., 36 Haw. 107, 124-25 (Haw.Terr.1942) (quoting Miller v. Ammon, 145 U.S. 421, 426, 12 S.Ct. 884, 36 L.Ed. 759 (1892)). In general, the purposes behind nonjudicial foreclosure statutes are threefold: First, the nonjudicial foreclosure process should protect the debtor from a wrongful loss of property; second, the process should ensure that properly conducted sales are final between the parties and conclusive as to bona fide purchasers; and third, the process should give creditors a quick, inexpensive remedy against defaulting debtors. Molly F. Jacobson-Greany, Setting Aside Nonjudicial Foreclosure Sales: Extending the Rule to Cover Both Intrinsic and Extrinsic Fraud or Unfairness, 23 Emory Bankr. Dev. J. 139, 151 (Fall 2006) (emphasis added) (citing, e.g., Cox v. Helenius, 103 Wash.2d 383, 693 P.2d 683, 685-86 (1985); Moeller v. Lien, 25 Cal.App.4th 822, 830, 30 Cal.Rptr.2d 777 (Cal.Ct.App.1994)). The text of HRS section 667-5 shows it to be consistent with these purposes. The statute's requirements that there be a breach of condition of the mortgage and that the mortgagee give public notice of its intent to foreclose before it can exercise the power of sale evince the desire to protect the mortgagor from a wrongful loss of property. The statute requires the mortgagee to file an affidavit setting forth the mortgagee's acts in the premises fully and particularly. See HRS § 667-5(d). That the affidavit shall be admitted as evidence that the power of sale was duly executed demonstrates the legislature's intent to promote the finality of properly conducted sales. See HRS § 667-8 (1993). [3] Allowing mortgagees to foreclose by power of sale pursuant to HRS section 667-5, rather than through judicial foreclosure, is relatively quick and inexpensive. It does not require a lengthy time period between the notice of default and foreclosure sale, and does not require court costs and legal fees associated with discovery and drafting of pleadings. Georgina W. Kwan, Mortgagor Protection Laws: A Proposal for Mortgage Foreclosure Reform in Hawai`i, 24 U. Haw. L.Rev. 245, 253 (Winter 2001) (internal citations omitted). [4]