Section 4-153-35 - Rights of holder of security interest(a) Whenever any notice of breach or default is given to any party under section 4-153-34, or under the terms of any lease or other instrument issued under this chapter, a copy of the notice shall be delivered by the administrator to all holders of record having a security interest in any land or interest covered by an agricultural park lease or other instrument whose security interest has been recorded with the department and the bureau of conveyances of the State. Should the board seek to forfeit the privilege, interest, or estate created by the lease, each holder may, at its option, cure or remedy the breach or default, if the same can be cured or remedied, by the payment of money or, if such is not the case, by performing or undertaking in writing to perform all the terms, covenants, restrictions, or conditions of the lease capable of performance by the holder, as determined by the board, within the time period provided in section 4-153-34 or within such additional period as the board may allow for good cause, and add the cost thereof to the mortgage debt and the lien of the mortgage. Upon failure of the holder to exercise its option, the board may: (1) Pay to the holder from any moneys at its disposal the amount of the mortgage debt, together with interest and penalties, and secure an assignment of the debt and mortgage from the holder; or if ownership of the interest or estate shall then have vested in the holder by way of foreclosure or action in lieu thereof, the board shall be entitled to a conveyance of the interest or estate upon payment to the holder of the amount of the mortgage debt, including interest and penalties, and all reasonable expenses incurred by the holder in connection with the foreclosure and preservation of its security interest, less appropriate credits, including income received from the privilege, interest, or estate subsequent to the foreclosure; or(2) If the property cannot be reasonably reassigned without loss to the State, then terminate the outstanding privilege, interest, or estate without prejudice to any other right or remedy for arrears of rent or for any preceding or other breach or default, and use its best efforts to redispose of the affected land to a qualified and responsible person free and clear of the mortgage and the debt thereby secured; provided that a reasonable delay by the board in instituting or prosecuting any right or remedy it may have under this section shall not operate as a waiver of the right or to deprive it of the remedy when the delay serves to assist the board in resolving the problems created by the breach or default involved.(b) The proceeds of any redisposition effected under this section shall be applied: first, to reimburse the department for costs and expenses in connection with the redisposition; second, to discharge in full any unpaid lease rental or other indebtedness owing the State in connection with the privilege, interest, or estate terminated; and the balance, if any, to the owner of the privilege, interest, or estate. Nothing in this section shall be construed in a manner as to infringe upon or prejudice in any way the rights of a holder of record having a security interest which shall have vested prior to the effective date of this section.[Eff 3/6/92; comp] (Auth: HRS §§ 166- 6, 166-9) (Imp: HRS § 166-6)