Welcome to our Hawaii Real Estate learning page for buyers and sellers. Find answers to your questions about buying and selling Hawaii real estate. Here are our subjects:
Hawaii short sales - At times Hawaii homeowners must sell at a loss.
Hawaii foreclosure properties - we all want to find them and make a profit by selling them.
Leasehold versus fee simple - or, why is that property selling for such a low price?
Real Property Tax appeals - if you believe your property's tax assessed value is too high, file this form by January 15th.
Maintenance fees - is this a rip off or what?
Pet friendly properties - can I bring my dog?
Hawaii Flood zones - What do the codes mean?
Escrow holds the buyer's funds and delivers them to the seller when conditions of the purchase contract are fulfilled. The escrow company is independent and works for both the buyer and seller. Escrow officers keep track of contract contingencies, such as money deposited to escrow, loan approvals, home and termite inspections, delivery of documents (disclosures, reports etc).
Escrow also determines whether the seller has legal title (the right to sell) the property. When the buyer's loan is approved and "funded," escrow holds the money until the date of "recordation," the day that the property changes from the seller to the buyer. At that time escrow delivers the funds to the seller, net of any money owed on a mortgage and other liabilities.
When buying real estate, you will want to decide what type of tenancy to hold. We'll discuss four types of tenancy:
Severalty - Property held by one person, "severed" from all others. This tenancy is usually selected by an unmarried buyer.
Entirety - Property held by a husband and wife, with the right of survivorship. If one spouse dies, the other spouse becomes the full owner of the property. Both spouses must agree to convey (sell) the property.
Joint - Two or more individuals hold a property with the right of survivorship. Each individual owns an equal share of the property and the property is not legally divided for each share. Each owner has an interest in the entire property. Upon death, a joint tenant's interest belongs to surviving co-tenants. A joint tenant's sale of his interest breaks his tenancy - the recipient becomes a tenant in common. Note that joint tenancy can be used by family members that cannot legally be married, such as a brother and sister, to hold property. It helps each party retain equal control of the property.
Common - Each co-owner has a separate legal title to his undivided interest. Each interest is equal unless the interests are expressed in writing. Each co-owner can convey his interest separately. The tenant's interest passes to his legal heirs.
Co-op is an abbreviation for Cooperative. A co-op is a corporation, formed to own and manage a property. When a buyer purchases in a co-op, he purchases a share of the corporation. That share entitles the buyer to use a unit in the property.
Co-ops can be fee simple or leasehold. Fee simple co-ops are unusual in that when a buyer purchases a share, he has a fee simple interest in the co-op. However, the co-op grants him a Proprietary Lease to use the specific unit he's buying. The end result is that the buyer has a property that he can use in a manner similar to a fee simple property. The buyer/owner can sell, rent, mortgage and transfer a co-op property to his heirs.
Each co-op can have its own set of rules. It is not uncommon, when purchasing a co-op property, that the board of directors must approve your purchase. Co-ops may also have a first right of refusal. In other words, if a buyer agrees to purchase a unit for $X dollars, the co-op can buy it for the same amount if it's inclined to do so. This is not a common occurrence, as most co-ops do not have millions of dollars in spare cash idling in their bank accounts. With our governmental protection that consistently grows stronger, it is most likely that the board will approve you as a buyer unless they want to risk be sued for discrimination.
Other unusual features about co-ops are that they don't always include an assigned parking stall number (although the owner may have the right to use a parking stall) and some co-ops require that the owner conduct all rentals through a real estate agency.
Hawaii co-ops were somewhat popular back in the 1960's and 1970's. Since then, condo and homeowners associations have become the norm. You will probably encounter a co-op only if you're considering purchasing an property was built way back when.
Own and occupy the property as their principal home.
Have their ownership recorded at the Bureau of Conveyances in Honolulu on or before September 30th preceding the tax year for which you claim the exemption.
Click here for the home exemption form to complete and send to the Real Property Tax office prior to September 30th for the next tax year. Our next tax year begins on July 1, 2019 and ends on June 30, 2020. Missing the deadline means paying higher taxes for one year, but the exemption form can be submitted for the following year's taxes.
The law allows for one home exemption, currently $80,000 of assessed value. If a husband and wife live apart and own separate homes, each may use one-half (50%) of the exemption. Other exemptions are available for the following homeowners:
Persons 65 years and older are eligible an $120,000 exemption.
Continuance of the exemption when the owner moves to a care home.
Totally disabled veterans.
Hansen's disease patients.
Blind, deaf or totally disabled.
Low-income rental housing owners.
Historic residential real property.
For additional information, please call the Real Property Tax Assessment offices at 527-5510 or 692-5541.
Real Property Tax appeals - Tax assessments are prepared by the City and County once a year. Assessment notices usually arrive in December. If your property's assessed value has increased and you disagree with the valuation, you may file an appeal with the tax assessor. Appeals must be postmarked by January 15th each year. Fax transmissions are not allowed.
You can download the form here: Oahu tax assessment appeal form.
Property tax appeals can also be filed online. Visit the City and County of Honolulu's property tax website here.