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Selling Real Estate in Hawaii

This article is not and does not substitute legal advice. The legal consequences from mistakes or omissions during the selling process can, in some cases, be irreversible. In most cases, they present difficult and expensive problems to fix. While Hawaii does not require that you hire a real estate attorney, the nominal cost of hiring one to protect your interests in the context of your circumstances is invaluable. Getting the most from your real estate investment without the fear of unexpected costs to close, hard-nosed negotiators, or the potential for future lawsuits.

Real estate professionals like agents and brokers can help you with all of the customary steps to selling property in Hawaii. Some are very skilled and know the mechanics of contracts and art of negotiation. But do you need a realtor when you’ve already found a buyer? Probably not. Hiring an attorney will save you money by cutting out your realtor’s commission and you’ll have the guidance, advice, and security of having a legal expert manage your transaction.

Contract formation and enforcement can be technical. Whereas a realtor might gloss over challenges that could jeopardize the transaction (and therefore their commission), your legal team has fiduciary duty to protect your interests. This means that no matter what question, issue, or challenge arises during the transaction, your lawyer will ensure that you make decisions based upon complete information.

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Additional Considerations From A Real Estate Attorney

A real estate attorney can only help you once you’ve found an interested buyer, so if you need marketing and listing services (other than those available through Zillow or Trulia) you should work with a realtor. But regardless of which professional you hire to help you complete the sale successfully, a solid sales transaction starts long before the buyer makes an offer. Inspect and repair critical infrastructure before you advertise and, if you live in an association, stay informed about the overall welfare of your association and make sure that your Board of Directors is making decisions that protect and improve the value of your property.

Information on this page, and throughout the website should not be construed as legal advice.

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  1. Offer & Acceptance.  A contract is formed with an offer, acceptance, and consideration. For example, a buyer might offer to buy your property for consideration of $915k. It is possible for you to accept such an offer explicitly, implicitly, or constructively—which means that your actions are taking place on a legal minefield. For this reason, we recommend that all contract negotiations be in writing and contain specific terms. Often, we start negotiations with a letter of intent that identifies and explains the key terms of the proposed deal. It’s more efficient to reach an agreement on the “big stuff” first and then plug that into a comprehensive purchase/sale contract. The common terms in a letter of intent are: Price, Timeline, Contingencies, Cure Periods, Allocation of Costs, Possession, and Inclusions.

  2. Contingencies. We represent buyers, too, so we know that buyers use contingencies to “game the system.” They will offer to buy your property, so long as they can subjectively decide to back out at a later date. This is important for buyers for many reasons. But as the seller, you need a committed buyer who wants to follow through with the transaction. You can minimize the impact of non-committal buyers by including in the contract a provision that allows you to continue marketing, showing, and accepting offers on your property until the contingency periods expire. Also, we strive to eliminate subjective contingencies so that a buyer has to find something that legitimately alters their opinion of the property (e.g. holes in the sewer pipes).

  3. Condo or HOA Associations. Many properties in Hawaii are subject to an owners’ association. Whether it is a condominium project or a planned community, the primary management functions are performed by volunteer owners. Not every association is as bad as Del Boca Vista where the Board of Directors launched an investigation into allegations that Morty Seinfeld was stealing from the association, just because his son Jerry bought him a Cadillac. But the volunteers who run associations are not professionals, so there is a lot of room for error. Fiscal management, debts, litigation, and deferred maintenance are areas that often spook buyers. Having a lawyer on your team means that you can more effectively communicate and minimize the perceived risk of your association.

  4. Title Defects. Hawaii properties often have some type of title defect that results from the State’s recent history of monarchical land ownership and persisting cultural norms. Many families have not probated wills, entrusted property, or devised interests in real property for several generations. Title insurance will not issue if there is any defect in title, so this is typically the buyer’s first indication of such an issue. Defects can be created by name changes, marriage, death, inaccurate deeds, and fraud (among others). Carefully reviewing the title report, including all of the referenced deeds, easements, and encumbrances will help you to understand the true marketability of title to the prospective property.

  5. Seller’s Disclosure Statement. Hawaii Revised Statutes 508D requires that all sellers of real property issue a disclosure statement that attempts to advise buyers of all known issues with a property. The theory is that you’ve been living in the property so you should know everything about it. But when is the last time you actually looked under the floor boards for mold? To some extent, the disclosure requirements place an unreasonable burden on sellers because you can’t know everything about your property (especially if you are selling a vacation home). And these disclosure statements are frequently the basis for post-closing disputes that can turn into lawsuits.

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