Escrow Process and Closing Statements
Four items across escrow responsibilities, closing responsibilities and closing statements. Hawaii licenses escrow depositories separately, through the Division of Financial Institutions rather than the Real Estate Commission.
Who may hold the escrow
HRS 449-5(a): 'No person shall act as an escrow depository in this State unless it is a corporation licensed to do so by the commissioner' of financial institutions, and an unlicensed person may not even use the word escrow in a business name. HRS 449-3 excepts banks, trust companies and savings and loan associations; a real estate broker who is the broker for a party to the escrow, provided the broker charges no escrow fee; and attorneys on similar fee terms. HRS 449-1 explains the neutrality the arrangement depends on, defining escrow as a transaction in which the holder is 'a person not a party to the transaction and neither having nor acquiring any interest in the title'. Before a license takes effect, HRS 449-9 requires a surety bond in the penal sum of not less than $100,000.
Closing responsibilities
Two statutory allocations drive the settlement statement. The conveyance tax under HRS 247-4(a) is paid by the grantor or seller, unless a government body is the conveyor, and is due no later than ninety days after the taxable transaction and before the certificate seal is imprinted. HARPTA under HRS 235-68 makes the buyer, as transferee, withhold 7.25 per cent of the amount realized where the seller is a nonresident person and file the return within twenty days of the transfer date, unless the seller furnishes an affidavit of resident status or obtains a withholding certificate. Escrow performs both mechanically, but the liability the statutes create does not move with the closing custom.
The buyer's choice on a foreclosure resale
HRS 667-52 applies where a mortgagee is selling residential property of four or fewer dwelling units that it foreclosed or acquired through the foreclosure. It may not require, directly or indirectly, that the buyer take an owner's title insurance policy or escrow service from a particular title insurer or escrow depository. Recommending one is allowed only where written notice of the buyer's right to make an independent selection is given first. Breach costs three times all charges incurred, though the transaction itself is not invalidated.
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State-specific details
State exam facts
- State regulator
- Hawaii Real Estate Commission (DCCA)
- Exam vendor
- PSI
- Scored questions
- 125
- Time limit
- 240 minutes
Who regulates real estate brokers in Hawaii?
The Hawaii Real Estate Commission, within the Department of Commerce and Consumer Affairs (DCCA), licenses brokers and salespersons. The Commission contracts with PSI to deliver the exams.
What experience do I need before the Hawaii broker exam?
Broker applicants must have been a Hawaii-licensed salesperson associated with a Hawaii-licensed broker for at least three of the five years immediately before applying, and must obtain an approved Broker Experience Certificate before registering for the exam — otherwise the exam score is invalidated.
How is the Hawaii broker exam structured?
The Hawaii broker exam has about 125 questions in a uniform (general) portion and a Hawaii-specific portion, delivered by PSI over 4 hours. Confirm the current passing score for the broker exam with the Commission.
Sources: https://cca.hawaii.gov/reb/real_ed/real_ed-exam_lic/, https://cca.hawaii.gov/reb/16-99-19-2-experience-certificate-application/
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