For a Hawaii residential real estate transaction, the Hawaii Association of Realtor’s Standard Form Purchase Contract is typically used. A buyer and/or seller in Hawaii usually retains a real estate brokerage firm to handle and fill out the Purchase Contract for the real estate transaction.
For those interested in avoiding broker commissions, here's general overview of how the Hawaii Purchase Contract works in a Hawaii residential real estate transaction and why you may want to hire a Hawaii attorney for assistance:
• The buyer would normally fill out the Hawaii Purchase Contract containing, among other provisions, buyer’s purchase price, the timeline for when both buyer and seller obligations are to occur prior to closing and any special terms. The buyer would then send the Purchase Contract to seller for seller’s response.
• If the terms and conditions of buyer’s Hawaii Purchase Contract are acceptable to seller, then the seller will usually initial each page and sign the Hawaii Purchase Contract. Otherwise, the seller may counter the buyer’s proposal by submitting a counteroffer. This process may go back and forth until one party accepts the other’s offer or no deal can be reached.
• It both parties enter into a Purchase Contract, the next step would be to open an escrow account with a Hawaii escrow company. The buyer will normally want to obtain title insurance policy from the Hawaii title company as well.
• There are several parts in the Hawaii Purchase Contract that may allow the buyer to back out of the Hawaii Purchase Contract without any penalty or being held in default. If done properly, the buyer may terminate the Hawaii Purchase Contract under the following circumstances:
1. the buyer is unable to obtain a conditional loan commitment letter or is unable to satisfy all conditions of the loan commitment letter under a certain time period.
2. the buyer is not satisfied with the preliminary title report for the property.
3. the buyer is not satisfied with seller’s disclosure statement.
4. the buyer is not satisfied after conducting an inspection of the property.
5. the termite inspection report reveals that there is a termite infestation on the property.
There is a deadline as to when any of the options above can be exercised. Therefore, it may be helpful to calendar when each option will expire.
• If all deadline dates are met without any problem, then all that would be left is the closing.
If you're a buyer, you need to consult with a Hawaii real estate attorney if you're not represented by a Hawaii real estate agent. You don't want to make a mistake with any of the withdrawal provisions. A Hawaii attorney can also review the preliminary title report as well as explain some of the provisions under the Purchase Contract that may be too complicated for the normal buyer to understand. Therefore, please contact us and we'll help you review your Purchase Contract so you understand your rights and risks.
Please note that normally a buyer's real estate broker commission (3% of the sales price) is paid for by the seller. Therefore a buyer should use a broker to do the legwork, unless the buyer wants to obtain a 3% discount from the seller on the purchase price, the seller agrees, and the 3% savings is large enough to justify hiring an attorney.
Contact us now to get experienced help and guidance from our attorneys in your Hawaii real estate purchase.