Hawaii Real Estate Practices

Attorneys generally prepare documents for conveyances involving third parties. Preparation of legal documents, such as deeds, mortgages, etc. is considered to be the practice of law, and is to be done by an attorney, unless the document is prepared by a party to the transaction; e.g., seller drafts a deed. Blank form deeds are not available or used. In Hawaii for title insurance through Stewart Title, the documents to be insured must be handled/recorded through the local Stewart agent. Recordation directly with the recorder’s office by the customer directly or through a recording service is discouraged. For escrow functions, like disbursements, the company must be licensed by the State. A producer’s license is necessary to issue policies. Otherwise, there are no other state requirements for the involvement of an attorney, abstractor or other special professional.

There is no prohibition on or requirement regarding cancellation fees. Each title company has its own cancellation policy.

A title insurer or title agent is permitted to execute a release of mortgage on behalf of the mortgagee following the prescribed procedures in Section 506-8, HRS.

The usual conveyance document is a Warranty Deed or if leasehold, assignment of lease. Deeds not generally insurable would depend on the circumstances and underwriting requirements. Quit claim deeds may be insurable, subject to review and underwriting requirements.

Yes Stat. 449-16(b) (9-4-19)

No Joinder required.

There is currently no mortgage tax.

(a) Owner’s Policy?
(b) Transfer Tax & Recording Fee?
(c) Survey Charges?
(d) Closing/Settlement Fees?

Payment Customs

(a) Owners Policy paid by Buyer
(b) Transfer Tax paid by Seller; Recording fees for transfer paid by Buyer
(c) Seller
(d) Half each

No countersignature by the agent is required as long as the policy is executed by officers of the title insurer. Facsimile signatures are permitted.

Fiscal Year runs from 7/1 to 6/30 of the following year. First half taxes are due 8/20 of each year, and cover the period July 1 to January 1 of the following year; second half taxes are due 2/20 of each year and cover the period January 1 to July 1.

No specific minimum period is required by state law, marketable record title act or other title examination standard. Statute states that “no title insurance policy may be written unless and until the title insurer has caused to be conducted a reasonable search and examination of the title, and has caused to be made a determination of insurability of title in accordance with sound underwriting practices.”

The search and examination fee are inclusive in the title premium.

Who can be listed as the trustee on the Deed of Trust (e.g., residency and/or natural person requirements, etc.)? Can an underwriter or title agent be designated as the trustee, and, if so, is it customary?

Hawaii is a lien theory state and uses mortgages instead of deeds of trust. The question regarding the trustee on the deed of trust, therefore, is not applicable.

Standard exceptions are:

1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records.

2. Any facts, rights, interests or claims which are not shown by the public records but which could be ascertained by an inspection of the land or by making inquiry of persons in possession thereof.

3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records.

4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records.

5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water.

6. Any lien, or right to a lien, for service, labor or material theretofore or hereafter furnished, imposed by law and not shown by the public records

The above standard exception items one through six will be deleted in any extended coverage Loan policy or Homeowners policy issued.

Standard requirements are:

1. Pay the agreed amounts for the interest in the land and/or the mortgage to be insured.

2. Pay the premiums, fees and charges for the policy.

3. Documents satisfactory to us creating the interest in the land and/or the mortgage to be insured must be signed, delivered and recorded.

4. You must tell us in writing the name of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then make additional requirements or exceptions.

5. Payment of all taxes, charges, assessments levied and assessed against the subject premises, which are due and payable.

None in Hawaii for Stewart policies and ALTA policies are used, except that an arbitration endorsement (found on Virtual Underwriter HI forms titled HI Arbitration Endorsement 1) must be attached to all ALTA 2006 policies.

Hawaii Revised Statutes section 431:20-120, addresses insurance rate requirements. Generally, schedule must be adopted, printed and made public, with any changes requiring public display of 5 days before it becomes effective.

Section 431:20-121 addresses form requirements. Every title insurer, at least thirty days before use, is to file with the commissioner for approval every form of insurance contract which it proposes to issue as to risks located in Hawaii. If the commissioner does not disapprove any such form after expiration of the initial thirty-day advance filing period, it can do so only after a hearing thereon held in accordance with chapter 91.

Transfer (conveyance) taxes apply for various levels of considerations and occupancy status. Please see State of Hawaii Form P64A.

Yes. ALTA Endorsement 27-06. Usury statutes are found at HRS Chapter 478.

Hawaii Investment Real Property Tax Act (HARPTA) 5 percent of sales price for non-residents of the State of Hawaii.

Not required.