Hawaii Real Estate Practices

Attorney Involvement

Please describe any requirements under applicable state law for attorney, abstractor or other special professional involvement, for example, in the search, examination, opinion of title, signing, closing, disbursement, recording, preparation of documents, and/or policy-issuance.

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.

Cancellation/Commitment Fee

Does your state permit or require a cancellation fee or commitment fee upon cancellation?

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

Certificate of Release (of Mortgage)

If anyone other than the lender (such as a title agent, settlement agent, underwriter or attorney) has the authority to release the security instrument, please describe.

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.

Deeds

Please describe the kinds of deeds that are customary for commercial and residential transactions.  Please describe the kinds of deeds that are generally not insurable.

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.

Joinder of Spouses

If a non-title holding spouse is required to join in the execution of a deed or a security instrument, please describe.  Any analogous rights, such as those in a civil union or equivalent, should also be addressed. 

No Joinder required.

Mortgage Tax

Is there a mortgage tax in your state?  If yes, is it uniform across the state or does it vary?  If it is uniform, please describe.  

There is currently no mortgage tax.

Payment Customs

Who customarily pays for:

(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

Policy Countersignatures

Please describe any statutory or regulatory requirements for countersignatures in order to issue the policy (for example, residency requirements).

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

Real Estate Taxes

Please describe the general tax year, due dates, and delinquency dates, including lien dates and payment cycle.

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.

Search and Examination Fees

Is it permissible and/or customary to charge a separate search and/or examination fee, and under what circumstances?  If your jurisdiction is all-inclusive, please state that.

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

Search Requirements

Is there a minimum period of time for a title search required: (a) by state law, (b) pursuant to marketable record title acts, or (c) by any other applicable title examination standards (e.g., state bar association)?  Please respond to each category.  If a minimum search period exists for any category, please state it.

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.”

Security Instruments (Deed of Trust vs. Mortgage)

Please describe the customary and permissible form(s) of security instruments used in your state. 

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 and Requirements

Please identify the standard exceptions and requirements that are customarily used in your state.

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.

State-specific Policy Variations

If there are state-specific changes to the provisions in the ALTA policies (e.g., Arbitration, Minerals), please describe.

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. 

Title Insurance Form and Filing Regulations

Please describe the form and/or rate filing requirements, if any, related to policies and endorsements.  Please describe any applicable rating bureau. 

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 Taxes

Is there a transfer tax in your state? If yes, is it uniform across the state or does it vary?  If it is uniform, please describe.

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

Usury

Is usury coverage available?

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

Withholding Taxes

What are your state’s requirements, if any, with regard to withholding proceeds from a sale, similar to but not including FIRPTA?

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

Witness Requirements

Are witnesses required on a deed or security instrument?  If so, please describe.

Not required.