This overview of the Hawaii Real Estate Purchase Agreement covers substantial parts of the agreement in an easy-to-understand format with simple explanations. I will go through the highlights of the contract and focus on the important parts. H-3 (Conditional Financing) If Buyer is unable to obtain a letter of conditional loan commitment or is unable to meet all the terms of the Loan within the time limits set out in paragraph H-4, Buyer may terminate the Contract on the basis of paragraph O-2. H-4 (Buyer`s Obligations) Buyer must generally submit a completed loan application within 5-7 days of acceptance, receive a pre-qualification letter generally within 0-3 days of acceptance, and generally provide the seller with a conditional loan commitment letter no later than 12-15 days prior to the scheduled closing date. The buyer must also provide the seller with proof that all conditions have been removed, usually within 7 to 10 days of the issuance of such a loan commitment letter, with the exception of conditions that the buyer cannot cancel before closing. If the buyer fails in one of the two points, the seller may terminate the contract on the basis of paragraph O-3. Remember, if the lender is late, an extension must be requested, otherwise the buyer will have breached the contract and the seller may choose to terminate the purchase contract. Hello Tehane, if the seller signs and delivers the purchase contract after the expiration date described in point J-1 and the expiration date and time described in point J-1, the contract is null and void, correct. Section I (Seller`s Obligation to Disclose) Hawaiian law requires sellers to “fully disclose to a reasonable person all facts, defects or conditions, past or present, that are expected to measurably affect the value of the property, within 5 to 10 days of acceptance.” This is usually done by filling out a standard disclosure statement – about 100 questions – a way for the buyer to know about possible problems, defects, repairs or improvements (leaks, damage, remodeling, etc.) that are known to the seller. Seller is required to provide Buyer with an updated disclosure during the escrow account with any information discovered later, if any, that has not already been disclosed in the original disclosure statement. If the buyer finds something that “directly, materially and negatively affects the value of the property,” the buyer may consider that information discovered later. The Buyer may terminate the Contract within the period of review/approval of the disclosure, updated disclosure and/or information subsequently discovered on the basis of paragraph O-2.
O-1 (Termination for Default): If Buyer is in default and fails to perform the services described in this Agreement, Seller may terminate the Agreement and Buyer`s deposits may be compromised. The seller may also claim damages. If the seller is in default, the buyer can terminate the contract and receive a refund of the deposits. The buyer may also claim damages. H-1 (No possibility on obtaining cash funds) Select if the buyer has no conditions in the fundraiser. The buyer must usually provide the seller with proof of cash within 2-4 days of acceptance. A proof of money can be a letter from the buyer`s banker stating that the buyer has sufficient funds to make the purchase, or a bank statement that includes the name of the bank, the name of the buyer, and the balance (be sure to lighten the account number). Some clients have highly liquid assets (stocks, bonds). However, the Seller may terminate the contract on the basis of paragraph O-3 if the proof of money is not satisfactory to the Seller, which is an ambiguous term. It rarely happens, but I`ve seen it. H-2 (Contingency on Get Cash Funds) The buyer`s purchase is subject to the availability of the required money and the buyer must provide the reason and a date on which these funds will be available. If the Buyer is unable to provide proof of the funds available by a certain date, the Seller may terminate the contract on the basis of paragraph O-3.
D-2 (Purchase Price) List of payments due by the Buyer. First filing: See B-1. Additional deposit (2nd): Usually 1% to 10% of the purchase price and usually due 1-3 business days after withdrawal of D-1 (home inspection). Cash payment balance: Due 2 business days before closing (if the money arrives too late, closing will be delayed). Loan Amount: The lender usually transfers the loan amount to the escrow account no later than 2 business days before closing. BUYER`S ATTENTION: DO NOT be in arrears with the scheduled payments, otherwise the seller may terminate the contract on the basis of paragraph O-1, which means that the buyer`s deposit could be at risk. If the seller has a solid backup offer or regrets the sale, a buyer with late payments offers a great opportunity for the seller to cancel the contract. D-3 (Property Condition Maintenance and Final Visit) The buyer may have a final inspection carried out, usually no later than 4-6 days before closing, to ensure that the property is in the same condition as during the J-1 home inspection or as otherwise agreed with the seller.
If the property is not in the same condition, paragraph J-4 applies. However, as described in section I, the seller is required to disclose and the buyer may terminate on the basis of paragraph O-2 of the contract if the seller discovers defects or conditions that “could directly, materially or negatively affect the value of the property”. Would a missing light bulb require the seller to update the disclosure – probably not. A major leak that would damage the entire kitchen and floors would require the seller to update the disclosure – certainly. What about a damaged kitchen cabinet door, where the seller argues that the replacement costs $50, but the buyer argues that we cannot find the exact color of the closet and that this significantly affects the value of the property – this is a difficult task! It expressly states that the purchase agreement takes precedence over the conditional addition “How is”, so if you request that something be repaired in the contract, this will overwrite the conditional addition “As is”. L-2 (Termite Inspection Contingency): When the checkbox is checked, we usually select the checkbox for the buyer to select the termite inspector and the checkbox for the seller to pay for the inspection, and a termite inspection report is usually delivered to the buyer 10 to 15 days before the end. If the termite inspection report reveals live termites, the seller must pay for the recommended treatment. The buyer is only required to purchase the property if they receive a termite inspection report stating that there are no live termites or if the recommended termite treatment has been completed no later than 5 days prior to the expected completion. Otherwise, the Buyer may terminate on the basis of paragraph O-3.
L-3 (Termite Damage): If the termite inspection report reveals visible damage caused by termites and the damage “directly, materially and negatively affects the value of the property”, seller must disclose in accordance with section I-2, which means that buyer may terminate the contract on the basis of paragraph I-4. Aloha Kris Bannister! Careful. Technically, it is the buyer`s responsibility to ensure that the seller`s holds are sent to the tax office. But in reality, the trust holds the seller`s proceeds and sends the money to the tax office. If you dare to sell without a trust and no one sends HARPTA deductions to the tax office, then the buyer is on the spot! Good luck convincing the buyer that “everything will be fine” when you finally file the appropriate tax form as soon as it is available to pay the tax. Read more about HARPTA and FIRPTA here: www.hawaiiliving.com/blog/harpta-firpta-tax-pitfalls/ By the way, there are ways to forego HARPTA and FIRPTA deductions with a 1031:www.hawaiiliving.com/blog/1031-2/ exchange – Call us when you`re ready to sell. We`re here to help. ~ Mahalo & Aloha G-1 & G-2 (Preliminary Title and Title Report) Shortly after buyers and sellers have accepted the contract by signing, the escrow service orders a preliminary title report showing the names of the owners on the title and whether there are any outstanding mortgages and liens, etc.
against the property. Escrow`s title company division carefully reviews the title report, as the title company`s responsibility is to ensure clear title and issue a title insurance policy to the buyer. If the buyer is not satisfied with the preliminary title report, it can generally terminate the contract within 5 to 7 days of its receipt in accordance with paragraph O-2. K-3 (Encroachment of Boundaries): If there are assaults, the buyer can accept such an intervention or ask the seller to withdraw the intervention (not always easy – think of a rock face) or to conclude an aggression agreement with the adjacent owner. If the Seller is unable to remedy the intervention (deletion or conclusion of a contract), the Buyer may terminate the contract within the period specified on the basis of paragraph O-3. E-3 (Inventory List) The seller must provide the buyer with a list of the furniture attached to the sale, if any, before a certain date. The buyer usually has 5-10 days to review and approve the list. .