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Hawaii Contract for Deed Law

Contract for Deed – General – Hawaii

DIVISION 3. PROPERTY; FAMILY
TITLE 28 PROPERTY
CHAPTER 508D MANDATORY SELLER DISCLOSURES IN REAL ESTATE TRANSACTIONS

§ 508D-1. Definitions.

As used in this chapter, unless the context requires otherwise:

“Common area” means real property that is designated as common area in or pursuant to a declaration, that is owned or leased by the association under the declaration, or that is otherwise available for the use of members of the association.

“Condominium project” means a real estate condominium project; or a plan or project whereby a condominium of two or more units located within the condominium property regime have been sold or leased or are offered or proposed to be offered for sale or lease.

“Cooperative housing corporation” means a corporation having only one class of stock outstanding, each of the stockholders of which is entitled by reason of the shareholder’s ownership of stock in the corporation to occupy for dwelling purposes a dwelling unit in a building owned or leased by the corporation, and no stockholder of which is entitled, either conditionally or unconditionally, to receive any distribution not out of earnings and profits of the corporation except in a complete or partial liquidation of the corporation.

“Declaration” means any recorded document, however denominated, in favor of or enforceable by a cooperative housing corporation, an association of owners of a condominium project, or other nonprofit, incorporated or unincorporated association, that restricts or conditions the use of the real property being offered for sale, or imposes obligations on the owner of the residential real property being offered for sale with respect to maintenance or operational responsibility for the common areas, architectural control, maintenance of the residential real property being offered for sale, or services for the benefit of the residential real property being offered for sale or other property subject to the declaration including the common areas.

“Disclosure statement” means a written statement prepared by the seller, or at the seller’s direction, that purports to fully and accurately disclose all material facts relating to the residential real property being offered for sale that:

(1) Are within the knowledge or control of the seller;

(2) Can be observed from visible, accessible areas; or

(3) Are required to be disclosed under sections 508D-4.5 and 508D-15.

“Material fact” means any fact, defect, or condition, past or present, that would be expected to measurably affect the value to a reasonable person of the residential real property being offered for sale. The disclosure statement shall not be construed as a substitute for any expert inspection, professional advice, or warranty that the buyer may wish to obtain.

“Real estate purchase contract” means a contract, as it may be amended, by which a seller agrees to sell and a buyer agrees to buy residential real property which shall include a deposit, receipt, offer, acceptance, or other similar agreement for the sale or lease with option to buy.

“Residential real property” means fee simple or leasehold real property on which currently is situated:

(1) From one to four dwelling units; or

(2) A residential condominium or cooperative apartment, the primary use of which is occupancy as a residence.

“Sale of residential real property” means the transfer or disposition of residential real property for consideration including, without limitation, a sale by exchange (provided that the transferor to an exchange accommodator but not the exchange accommodator who has acquired the residential real property for tax purposes prior to transfer to the buyer is deemed to be the seller for purposes of this chapter), auction, or lease with option to buy. [L 1994, c 214, pt of §2; am L 1996, c 161, §1; am L 2001, c 224, §1; am L 2004, c 186, §2; am L 2006, c 276, §1; am L 2008, c 191, §2; am L 2013, c 186, §3]

DIVISION 3. PROPERTY; FAMILY
TITLE 28 PROPERTY
CHAPTER 508D MANDATORY SELLER DISCLOSURES IN REAL ESTATE TRANSACTIONS

§ 508D-2. Applicability.

Except as otherwise provided for in this chapter, this chapter applies to any sale of residential real property. The failure of the seller or the seller’s agent to comply with this chapter shall not affect the validity of title to any residential real property sold. [L 1994, c 214, pt of §2; am L 1996, c 161, §2]

DIVISION 3. PROPERTY; FAMILY
TITLE 28 PROPERTY
CHAPTER 508D MANDATORY SELLER DISCLOSURES IN REAL ESTATE TRANSACTIONS

§ 508D-3. Exemptions.

This chapter shall not apply to the following sales of residential real property:

(1) Sale to a co-owner;

(2) Sale to a spouse, parent, or child of the seller;

(3) Sale by devise, descent, or court order;

(4) Sale by operation of law, including but not limited to any transfer by foreclosure, bankruptcy, or partition, or any transfer to a seller’s creditor incident to a deed (or assignment) in lieu of foreclosure, workout, or the settlement or partial settlement of any preexisting obligation of a seller owed a creditor and any later sale of residential real property by such creditor;

(5) Sale by a lessor to a lessee resulting from conversion of leased land to fee simple;

(6) Initial sale of new residential real property pursuant to chapter 484 under a current public offering statement or chapter 484 exemption;

(7) Sales of condominium apartments or units accompanied by delivery of an unexpired developer’s public report; or

(8) Sale of time share interests as defined under chapter 514E. [L 1994, c 214, pt of §2; am L 1995, c 172, §1; am L 1996, c 161, §3; am L 2001, c 224, §2; am L 2008, c 28, §31]

DIVISION 3. PROPERTY; FAMILY
TITLE 28 PROPERTY
CHAPTER 508D MANDATORY SELLER DISCLOSURES IN REAL ESTATE TRANSACTIONS

§ 508D-4. Prohibitions on sales of residential real property.

Except as provided in section 508D-3, no seller may sell residential real property unless:

(1) Prior to the sale of such residential real property, a disclosure statement is:

(A) Signed and dated by the seller within six months before or ten calendar days after the acceptance of a real estate purchase contract by the buyer; and

(B) Delivered to the buyer as provided in section 508D-5;

(2) The buyer acknowledges receipt of the disclosure statement on the real estate purchase contract or in any addendum attached to the contract, or in a separate document; and

(3) The buyer is afforded the opportunity to examine the disclosure statement as provided in section 508D-5. [L 1994, c 214, pt of §2; am L 1996, c 161, §4]

DIVISION 3. PROPERTY; FAMILY
TITLE 28 PROPERTY
CHAPTER 508D MANDATORY SELLER DISCLOSURES IN REAL ESTATE TRANSACTIONS

§ 508D-17. Limitation of actions.

(a) Any action brought under this chapter shall commence within two years from the date the buyer received the disclosure statement; provided that if no disclosure statement was delivered to the buyer, then the action shall commence within two years of the recorded sale of the residential real property.

(b) This chapter supersedes all other laws relating to the time for commencement of actions for failure to make the disclosures required by this chapter. [L 1994, c 214, pt of §2; am L 1996, c 161, §17]
Hawaii Case Law

Bank of Hawaii v. Horwoth– under an agreement of sale, the legal title to the property remains in the seller, but upon the execution and delivery of the agreement of sale, there accrues to the purchaser an equitable interest in land. The legal title is retained by the seller essentially as security for the payment by the purchaser of the purchase price.

A contract for deed is another term for a land sale contract which is defined as a contract for the purchase and sale of land upon execution of which title is transferred. The term commonly refers to an installment contract for the sale of property whereby the purchaser receives the deed from the owner upon payment of final installment. The seller retains legal title to the property as securtity for payment of contract price. Fong v. Hashimoto, 92 Haw. 637

Absent bad faith on the part of the vendee, the vendor in a land sales contract will not be allowed to retain the property in question and the partial payments made theron, unless those payments approximate his actual damages. Also, absent bad faith, the vendor will not be allowed to effect a forfeiture where he will be fully compensated for his losses and where there will be no injustice to him. It appears that forfeiture of the vendee’s interest in the property and the money he paid is a possible remedy where the result is not unreasonable and unjust. Fong v. Hashimoto


Inside Hawaii Contract for Deed Law