Hawaii Real Estate Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

A deed to a Hawaii parcel registered in the Land Court is signed, notarized and delivered to the buyer, but it is never filed with the assistant registrar. Under HRS section 501-101 that deed:

• a.conveys the land, because a signed deed was delivered
• b.operates only as a contract between the parties and conveys no land✓
• c.conveys the land as soon as the buyer goes into possession of the parcel
• d.conveys the land once a copy is recorded in the Regular System instead

Hawaii keeps two separate systems of land records, and they work differently. For Land Court property, HRS section 501-101 says that no deed, mortgage or other voluntary instrument "shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties, and as evidence of authority to the registrar or assistant registrar to make registration," and that "the act of registration shall be the operative act to convey or affect the land." Ownership is then evidenced by the transfer certificate of title, and HRS section 501-82 holds a purchaser for value in good faith free of everything except the encumbrances noted on that certificate. Delivery of a signed deed is what passes title in the Regular System, not in Land Court. Possession is not a conveyance in either system. And recording the instrument in the Regular System files it in the wrong register altogether, which leaves the certificate of title unchanged.

Hawaii's conveyance tax carries two rate schedules. Where the property is a condominium or a single-family residence and the purchaser is ineligible for a county homeowner's exemption, the tax on that conveyance is:

• a.waived, because that purchaser has no county exemption to protect
• b.doubled from the schedule that applies to every other buyer
• c.computed on the same schedule that applies to every other buyer
• d.computed on the higher of the two schedules in HRS section 247-2✓

HRS section 247-2 sets two ladders. The general one runs from ten cents per $100 for property worth less than $600,000 up to one dollar per $100 at $10,000,000 or more. The second, in section 247-2(2), applies "for the sale of a condominium or single family residence for which the purchaser is ineligible for a county homeowner's exemption on property tax" and runs from fifteen cents per $100 to one dollar and twenty-five cents per $100 across the same value bands. The higher schedule is therefore a genuinely different table, not the same table doubled, and the difference at the top is twenty-five per cent rather than one hundred. HRS section 247-3 lists the exemptions, and a purchaser's ineligibility for a homeowner exemption is not among them; it is the trigger for more tax, not for none. Note also who pays: HRS section 247-4 charges the tax to the seller or other conveyor, so the purchaser's exemption status sets the rate on a bill the seller settles.

A California resident sells a Kailua condominium to a Hawaii buyer. Under HRS section 235-68, the Hawaii withholding obligation falls on:

• a.the escrow depository, which must withhold 5 per cent of the sale price
• b.the seller, who must remit 7.25 per cent of the gain within twenty days
• c.the buyer, who must withhold 15 per cent of the amount realized
• d.the buyer, who must withhold 7.25 per cent of the amount realized✓

HARPTA puts the duty on the party who is paying, not the party who is leaving. HRS section 235-68(b) provides that "every transferee shall deduct and withhold a tax equal to 7.25 per cent of the amount realized on the disposition of Hawaii real property," and makes the withholder personally liable for the tax. Section 235-68(c) requires the transferee to file a return of the amount withheld with the Department of Taxation "not more than twenty days following the transfer date." Two features of the wording matter on the exam: the base is the amount realized, not the seller's gain, and the obligation runs to the transferee even though escrow usually performs the mechanics. Fifteen per cent is the federal FIRPTA rate, which can apply on top for a foreign seller; five per cent was Hawaii's rate before it rose. Section 235-68(d) excuses withholding if the transferor furnishes an affidavit of resident status, and section 235-68(e) allows the seller to apply for a withholding certificate reducing the amount.

A Hawaii seller must deliver the residential disclosure statement no later than ten calendar days from acceptance of the purchase contract. On receiving it, HRS section 508D-5 gives the buyer:

• a.three business days to rescind, after which the deposit is forfeited
• b.fifteen calendar days to examine it and decide whether to rescind✓
• c.thirty calendar days to examine it and decide whether to rescind
• d.no right to rescind, but a right to demand repairs from the seller

HRS section 508D-5(a) sets the delivery deadline and section 508D-5(b) sets the buyer's window: "Upon receipt of the disclosure statement, the buyer shall have fifteen calendar days to: (1) Examine the disclosure statement; and (2) Decide whether to rescind the real estate purchase contract." Written notification must reach the seller inside those fifteen days, and failing to deliver it "shall be deemed an acceptance of the disclosure statement." The statute also settles the money: "Any rescission made pursuant to this subsection shall be without loss of deposits to the buyer which deposits shall be immediately returned to the buyer," so a rule that forfeits the deposit gets Hawaii exactly backwards. Thirty days is the condominium developer cancellation period under HRS section 514B-86, not the disclosure period. And a right to rescind plainly exists, which is what makes timely delivery a transaction-critical duty. Section 508D-5(c) lets the parties agree in writing to shorten or extend either period.

HRS section 508D-15 makes a Hawaii seller put into the disclosure statement the fact that the property sits inside certain mapped areas. Along with flood, airport noise, military air installation and tsunami inundation areas, the list includes:

• a.the state land use conservation district as mapped by the Land Use Commission
• b.any parcel a newspaper has ever described as being at risk of erosion
• c.the sea level rise exposure area designated by the State's climate commission✓
• d.any area a county planning department has studied for future development

Section 508D-15(a) lists five mapped areas, and the fifth, added by Act 179 in 2021 and amended in 2023, is "the sea level rise exposure area as designated by the Hawaii climate change mitigation and adaptation commission or its successor." The duty is conditional on the maps existing: it applies "subject to the availability of maps that designate the five areas by tax map key (zone, section, parcel)," and each county must supply legible copies identifying properties by TMK number. Section 508D-15(b) adds a shoreline duty, requiring disclosure of permitted and unpermitted erosion control structures, permit expiration dates, notices of alleged violation and fines. Section 508D-15(c) construes genuine map ambiguity in the seller's favor where a good faith effort was made, and section 508D-15(d) confirms that outside these items the seller has no duty to examine any public record. The conservation district is a land use classification under HRS section 205-2, not one of the five; press coverage and county studies are not designations at all.

A Hawaii home for sale is subject to a recorded declaration enforced by a planned community association. HRS section 508D-3.5 requires the seller to provide the buyer with:

• a.an appraisal of the common areas prepared by a licensed appraiser
• b.a title report certified by the registrar of the Land Court
• c.the association's articles, bylaws, declaration and use rules✓
• d.a written waiver of the association's enforcement rights

Section 508D-3.5(a) lists the documents: the articles of incorporation or other document creating the corporation or association, the bylaws, the declaration or similar organizational documents with exhibits, and any rules on use of common areas, architectural control, maintenance of units, or assessments. Section 508D-3.5(b) extends the duty to restrictions imposed by deed covenants or another recorded document, including unrecorded rules or guidelines issued by whoever enforces them. Timing is generous but finite: under section 508D-3.5(c) the seller need not produce the documents until ten calendar days after both parties have received a current title report, and the buyer then has fifteen calendar days to examine them and rescind, a right that stacks on top of the rescission rights in sections 508D-5, 508D-6 and 508D-13. Section 508D-3.5(d) allows the seller, with the buyer's consent, to point the buyer to an internet address instead of printing copies, and section 508D-3.5(e) provides that complying "shall fulfill the seller's duty of disclosure of material facts relating to a recorded declaration." Nothing in the section calls for an appraisal, a certified title report, or a waiver the association would have no reason to give.

HRS section 7-1, a survivor of Hawaii's nineteenth-century land division, provides that on all lands granted in fee simple:

• a.the springs of water, running water and roads shall be free to all✓
• b.no structure may be built without the consent of adjoining owners
• c.the State keeps a one-half interest in all mineral and water rights
• d.title reverts to the State if the land is unimproved for ten years

This is the statute that keeps Hawaii land history on a licensing exam. Section 7-1 is titled "Building materials, water, etc.; landlords' titles subject to tenants' use," and it provides that where landlords obtained allodial titles, "the people on each of their lands shall not be deprived of the right to take firewood, house-timber, aho cord, thatch, or ki leaf, from the land on which they live, for their own private use, but they shall not have a right to take such articles to sell for profit." It continues: "The springs of water, running water, and roads shall be free to all, on all lands granted in fee simple; provided that this shall not be applicable to wells and watercourses, which individuals have made for their own use." Article XII section 7 of the state constitution protects traditional and customary rights on the same footing. A buyer can therefore acquire fee simple land that carries access and gathering rights no deed ever granted, which is a material fact a broker should raise rather than discover at closing. The State takes no automatic half interest, forfeits nothing for non-use, and the section says nothing about neighbors consenting to construction.

In a Hawaii condominium, HRS section 514B-3 defines a unit's "common interest" as:

• a.the percentage of undivided interest in the common elements it holds✓
• b.the part of the building the owner may alter without board approval
• c.the number of votes the owner may cast at the association's meeting
• d.the share of the association's annual operating budget the owner funds

The statutory words are "the percentage of undivided interest in the common elements appurtenant to each unit, as expressed in the declaration, and any specified percentage of the common interest means such percentage of the undivided interests in the aggregate." The same section defines common elements as "all portions of a condominium other than the units" plus any other real estate interests held for owners under the declaration, and defines common expenses as the association's expenditures and liabilities including reserve allocations. The common interest is the ratio the declaration fixes; it is commonly used to allocate common expenses and votes, but it is not itself the budget share or the vote count, and those can be allocated differently by the declaration. Nor does it describe what an owner may alter: the boundary of unilateral change is set by the unit boundaries and, for a limited common element, by the declaration reserving that element to one or more units but fewer than all.

A Hawaii buyer is purchasing an interest in a cooperative housing corporation under HRS chapter 421I. What the buyer acquires is:

• a.a recorded fee simple interest in one described unit within the building
• b.a leasehold estate in the land with the improvements owned outright
• c.an undivided interest held as tenant in common with the other owners
• d.stock in the corporation carrying the right to occupy a dwelling unit✓

HRS section 421I-1 defines a cooperative housing corporation as one that "has one and only one class of stock outstanding" and "allows each tenant shareholder to occupy a dwelling unit for dwelling purposes solely by reason of the tenant shareholder's ownership of stock in the corporation," with distributions barred except on liquidation and at least eighty per cent of gross income derived from tenant shareholders. HRS section 508D-1 carries the same construction into the seller disclosure law, which is why a residential cooperative apartment counts as residential real property there. The consequence for practice is that a co-op transfer moves shares and an occupancy right rather than a deed, and the corporation, not the buyer, holds title to the building. Fee simple ownership of an individual described unit is condominium ownership under chapter 514B; a leasehold with owned improvements describes Hawaii's fee-and-leasehold split; and a tenancy in common is a form of concurrent ownership of the land itself, which a shareholder does not receive.

A purchaser signs a contract for an interest in a Hawaii time share plan. HRS section 514E-8 provides that:

• a.only the purchaser may cancel, and then only within three business days of signing
• b.neither party may cancel once the disclosure statement has been delivered
• c.only the developer may cancel, and only before the deed has been recorded
• d.either party may cancel the contract without penalty within seven calendar days✓

Section 514E-8 is titled "Mutual right to cancel," and the mutuality is the unusual part: "Within seven calendar days after the execution of the contract to purchase an interest in a time share plan, or within seven calendar days after the purchaser's receipt of a disclosure statement required by this chapter, whichever occurs later, either party may cancel the contract without penalty by mailing or delivering a notice of cancellation to the other party at an address specified on the contract." Two mechanics follow from the text. The clock starts at the later of signing or receipt of the disclosure statement, so a developer who delivers the statement late extends its own exposure. And the notice "shall be effective upon mailing or delivery," which means a purchaser who posts it on the seventh day is protected even though it arrives later. Nothing conditions the right on recording, and delivery of the disclosure statement starts the period rather than ending it.

Under HRS section 521-44, the most a Hawaii landlord may require at the start of a residential tenancy is one month's rent plus:

• a.a further two months' rent as a deposit
• b.a pet deposit of up to one month's rent✓
• c.the last month's rent, in every tenancy
• d.a cleaning fee set by the property manager

Section 521-44(b) caps the security deposit at "an amount not in excess of a sum equal to one month's rent, plus an amount agreed upon by the landlord and tenant to compensate the landlord for any damages caused by any pet animal allowed to reside in the premises," and caps that pet amount at one month's rent as well. Two limits ride along with it. The pet deposit may not be required from a tenant with no pet, or "for an assistance animal that is a reasonable accommodation for a tenant with a disability pursuant to section 515-3." And the section closes the door on anything else: "The landlord may not require or receive from or on behalf of a tenant at the beginning of a rental agreement any money other than the money for the first month's rent and a security deposit as provided in this section," which rules out a separate cleaning fee. No part of the deposit counts as the last month's rent "unless mutually agreed upon, in writing, by the landlord and tenant if the tenant gives forty-five days' notice of vacating the premises."

A Hawaii tenancy ends and the property manager wants to keep part of the security deposit for cleaning. Section 521-44 requires written notice and the balance to be returned within:

• a.thirty days, after which interest begins to run on the balance
• b.fourteen days, after which the entire deposit must be returned✓
• c.forty-five days, after which the tenant may sue for double rent
• d.sixty days, unless the tenant supplies a forwarding address

Section 521-44(c) gives the manager one deadline for two things. The remaining deposit "shall be returned to the tenant not later than fourteen days after the termination of the rental agreement," and the written notice of any retention, with "the particulars of and grounds for the retention, including written evidence of the costs of remedying tenant defaults, such as estimates or invoices for material and services or of the costs of cleaning, such as receipts for supplies and equipment or charges for cleaning services," is due in the same fourteen days. Missing it is not a technicality: "If the landlord does not furnish the tenant with the written notice and other information required by this subsection, within fourteen days after the termination of the rental agreement, the landlord shall not be entitled to retain the security deposit or any part of it, and the landlord shall return the entire amount." Compliance is presumptively proven if mailed to an address supplied by the tenant. No interest accrual, forwarding-address condition or double-rent remedy appears in the section.

Rent is overdue on a Honolulu rental the brokerage manages. Under HRS section 521-68 as it now reads, the landlord's notice must give the tenant at least:

• a.five business days to pay, with no further step required of the landlord
• b.thirty calendar days to pay, and the notice must be served by a sheriff
• c.ten calendar days to pay, and a copy must go to a mediation center✓
• d.three business days to pay, and the notice must be posted at the unit

This section changed under the practitioner's feet. Act 278 of 2025 rewrote HRS section 521-68 effective 5 February 2026, and the current text requires notice "that unless payment is made within a time mentioned in the notice, not less than ten calendar days after receipt thereof, the rental agreement will be terminated." Section 521-68(b) prescribes eight contents for that notice, including the current amount of rent due after applying all payments and a bold-type warning about mediation. Section 521-68(c) adds the second step: the landlord "shall provide the ten-calendar-day notice to a state-funded mediation center that offers free mediation for residential landlord-tenant matters," and if mediation is scheduled and the tenant participates, summary possession may be filed only after twenty calendar days from the tenant's receipt of the notice. Posting is still allowed, and receipt is then deemed to be the date of posting; a mailed notice is deemed received two business days after the postmark. Five business days was the rule until 4 February 2026 and is the figure a pre-2026 study guide still gives.

For a month-to-month residential tenancy in Hawaii, written notice to terminate must be given at least:

• a.forty-five days by the landlord and twenty-eight days by the tenant✓
• b.twenty-eight days by the landlord and forty-five days by the tenant
• c.thirty days by the landlord and thirty days by the tenant alike
• d.sixty days by the landlord and thirty days by the tenant alike

The two figures are asymmetric and the exam tests which way round they go. HRS section 521-71(a): "When the tenancy is month-to-month, the landlord may terminate the rental agreement by notifying the tenant, in writing, at least forty-five days in advance of the anticipated termination." Section 521-71(b): "When the tenancy is month-to-month the tenant may terminate the rental agreement by notifying the landlord, in writing, at least twenty-eight days in advance." A tenant who receives the landlord's notice may leave any time in the last forty-five days on notice of the date and prorated rent. Longer notice is required in one case: section 521-71(c) demands at least one hundred twenty days where the landlord contemplates voluntary demolition, conversion to a condominium property regime under chapter 514B, or a change of use to transient vacation rentals. Section 521-71(d) drops the period to ten days for tenancies shorter than month-to-month, and section 521-71(e) exposes a holdover tenant to up to twice the monthly rent prorated daily, with a month-to-month tenancy reviving if the landlord does not commence summary possession within the first sixty days of holdover.

A Maui rental is owned by a Nevada investor. HRS section 521-43 requires the written rental agreement to designate:

• a.an agent who resides on the same island as the rental unit✓
• b.a financial institution in the State to hold the deposit
• c.a Hawaii-licensed attorney to receive service of process
• d.a property manager separately approved by the Real Estate Commission

Section 521-43(f) is specific about geography: "Any owner or landlord who resides without the State or on another island from where the rental unit is located shall designate on the written rental agreement an agent residing on the same island where the unit is located to act in the owner's or landlord's behalf." With an oral rental agreement the information is supplied on demand in a written statement. The requirement runs alongside section 521-43(a), which obliges the landlord to disclose in writing at or before the commencement of the tenancy the name and address of each person authorized to manage the premises and each owner or person authorized to accept service of process and receive rents. Failing to comply has a defined consequence rather than a penalty: section 521-43(b) makes the non-complying person the landlord's agent for service of process, for receiving rents, and for performing the landlord's obligations out of the rent collected. Section 521-43(h) separately requires the landlord to give tenants the general excise tax number so they can claim the low-income tax credit.

Every parcel in Hawaii sits in one of the State's land use districts, which HRS section 205-2 lists as:

• a.state, county, federal and homestead lands
• b.residential, commercial, industrial and resort
• c.urban, suburban, agricultural and shoreline
• d.urban, rural, agricultural and conservation✓

Section 205-2(a) is categorical: "There shall be four major land use districts in which all lands in the State shall be placed: urban, rural, agricultural, and conservation." The Land Use Commission groups contiguous areas and sets the boundaries, giving the greatest possible protection to lands with a high capacity for intensive cultivation when drawing agricultural boundaries, and treating the conservation district as the successor to the forest and water reserve zones created in 1957. Rural districts are characterized in section 205-2(c) by low density residential lots "of not more than one dwelling house per one-half acre" mixed with small farms. This state layer sits on top of, and does not replace, county zoning: urban district uses are those the county allows by ordinance, so a parcel needs to clear both. The other lists confuse zoning categories, which are county creations, or landowner identity, with the statewide districting the Commission administers.

A client proposes to subdivide an oceanfront parcel that lies within a county's special management area. HRS section 205A-28 requires:

• a.a shoreline setback variance from the Land Use Commission
• b.an environmental impact statement filed with the Governor
• c.a special management area permit obtained from the county✓
• d.a conservation district use application filed with the DLNR

The rule is short: "No development shall be allowed in any county within the special management area without obtaining a permit in accordance with this part." What makes it bite is the breadth of "development" in HRS section 205A-22, which includes placement of solid material, grading and dredging, "change in the density or intensity of use of land, including but not limited to the division or subdivision of land," change in the intensity of use of water or access to it, and construction, reconstruction or alteration of the size of any structure. A subdivision is therefore squarely inside the definition even if nothing is built. The same section carves out, among other things, construction or reconstruction of a single-family residence of less than seven thousand five hundred square feet that is not on a shoreline parcel or a parcel impacted by waves, storm surge, high tide or shoreline erosion and is not part of a larger development. Administration sits with each county's planning department, not with the Land Use Commission, the Governor or the Department of Land and Natural Resources.

Under HRS section 46-4, county zoning in Hawaii is:

• a.exercised by ordinance within the framework of a general plan✓
• b.adopted by the Land Use Commission and applied by each county
• c.set by the Real Estate Commission for all four counties alike
• d.controlled by the recorded covenants that run with each parcel

Section 46-4(a) provides that "zoning in all counties shall be accomplished within the framework of a long-range, comprehensive general plan prepared or being prepared to guide the overall future development of the county," that zoning "shall be one of the tools available to the county to put the general plan into effect," and that "the zoning power granted in this section shall be exercised by ordinance." That places the drafting and the political accountability at the county council. The Land Use Commission draws the four state districts under HRS section 205-2, a different and higher layer, and the Real Estate Commission has no land use jurisdiction at all. Private restrictive covenants in a recorded declaration or deed do restrict use, but they bind by contract and are enforced by the owners or the association rather than by the county; where a covenant and an ordinance both apply, the stricter of the two is what an owner must actually observe. HRS section 508D-3.5(b) obliges a seller to disclose such recorded restrictions to the buyer.

A Honolulu condominium is offered as a leasehold. Compared with a fee simple unit, the leasehold buyer:

• a.owns the land beneath the building and leases only the parking stall
• b.is exempt from real property tax for the duration of the lease term
• c.acquires the fee simple automatically when the lease term expires
• d.holds the unit for a fixed term and pays lease rent to the fee owner✓

Leasehold is common enough in Hawaii that the licensing law addresses it directly. HRS section 467-1 defines "real estate" to include "lands, the improvements thereon, leaseholds, and all other interests in real property," so selling a leasehold is licensed activity like any other. HAR section 16-99-11(d) then requires that "a leasehold property advertised for sale in any medium shall be identified by the word 'leasehold'," precisely because the difference is easy to miss in a listing photograph. Substantively, the buyer takes a term of years with the right to occupy and pays lease rent to the fee owner; at the end of the term the land and, depending on the lease, the improvements revert unless the lease is extended or the leased fee is bought. Leasehold status confers no exemption from real property taxation, gives the buyer no ownership of the land under the building, and produces no automatic conversion to fee at expiry, which is why the remaining term and the rent renegotiation dates are the first things to check.

HRS section 509-2 allows Hawaii real property to be held as tenants by the entirety by:

• a.any two people named in a single conveyance
• b.spouses or registered reciprocal beneficiaries✓
• c.business partners who record a partnership agreement
• d.a parent and a child who occupy the same dwelling

Section 509-2(a) lets a person convey to themselves and a spouse or reciprocal beneficiary, or spouses to themselves, or reciprocal beneficiaries to themselves, as tenants by the entirety, without conveying through a third party, and directs that each such instrument be construed as validly creating that tenancy "if the tenor of the instrument manifestly indicates such intention." The reciprocal beneficiary relationship is a Hawaii status, registered with the State, and its inclusion here is what separates Hawaii from the states that confine the entirety estate to married couples. The protection the estate carries is preserved when the property is moved into revocable trusts: section 509-2(b) and (c) keep the immunity from separate creditors so long as the relationship continues, both remain beneficiaries, the parties' names appear in the trust name, and notice of the intention to continue holding as tenants by the entirety is filed or recorded in land court or the bureau of conveyances. Any other two people can take as joint tenants or tenants in common, but not by the entirety.

A contractor who has not been paid for work on a Hawaii property wants a mechanic's and materialman's lien. Under HRS section 507-43 that lien attaches:

• a.when a notice of lien is recorded at the Bureau of Conveyances
• b.when a circuit court finds probable cause and orders it to attach✓
• c.when the owner receives the contractor's written demand for payment
• d.automatically on the day the last labor or material was furnished

Hawaii does not let a claimant create the lien by filing. HRS section 507-43(a) requires an application to "the circuit court of the circuit where the property is situated," accompanied by a written notice of lien, served on the owner, anyone with an interest, and whoever contracted for the improvements. The application and notice are returnable not less than three nor more than ten days after service, and at that hearing the court decides "whether probable cause exists to permit the lien to attach." The statute then says plainly: "The lien shall not attach to the property until the court finds probable cause exists and so orders." Deadlines bracket it on both sides. Section 507-43(b) requires filing "not later than forty-five days after the date of completion of the improvement," with a further seven days to file a certified copy of the order in the land court office for registered land, and section 507-43(e) expires the lien three months after the order unless enforcement proceedings begin. A demand letter starts nothing, and completion of the work starts only the forty-five day clock.

In Hawaii's Regular System, an unrecorded deed is void under HRS section 502-83 against a later purchaser who:

• a.pays value, whether or not that purchaser records the conveyance at all
• b.records first, whether or not that purchaser knew of the earlier deed
• c.pays value in good faith, lacks actual notice and records first✓
• d.takes possession of the property before the earlier buyer manages to

Section 502-83 requires all deeds, leases for a term of more than one year, mortgages and other conveyances to be recorded in the bureau of conveyances, and then supplies the consequence: "Every such conveyance not so recorded is void as against any subsequent purchaser, lessee, or mortgagee, in good faith and for a valuable consideration, not having actual notice of the conveyance of the same real estate, or any portion thereof, or interest therein, whose conveyance is first duly recorded." Four elements have to line up, which is what makes Hawaii's Regular System race-notice rather than pure race or pure notice: good faith, valuable consideration, no actual notice, and recording first. A buyer who knew of the earlier deed gains nothing by winning the race, and a buyer who never records is not protected however much was paid. Possession does not substitute for recording, and Hawaii case law treats actual possession under an unrecorded deed as constructive notice that defeats the later purchaser's good faith. Land Court parcels follow section 501-101 instead, where registration is the operative act of conveyance.

Hawaii sharply limits adverse possession. Under HRS sections 669-1 and 657-31.5 a good faith claim today may be made only to a parcel of:

• a.any size, after ten years of open and notorious possession of it
• b.one acre or less, after seven years under color of title
• c.any size, if the claimant has paid the taxes for five years
• d.five acres or less, after twenty years of adverse possession✓

Section 669-1(b) allows an action to establish title "to a parcel of real property of five acres or less" by a person in adverse possession "for not less than twenty years," and requires the claimant to show good faith, defined as a reasonable belief in an interest in title "based on inheritance, a written instrument of conveyance, or the judgment of a court of competent jurisdiction." Section 669-1(c) adds the frequency limit: such a claim "may be asserted in good faith by any person not more than once in twenty years, after November 7, 1978." Section 657-31.5 imposes the same acreage and once-in-twenty-years conditions on a defendant asserting adverse possession, so the restriction works offensively and defensively alike. Parcels larger than five acres can be claimed only where the twenty years ran before 7 November 1978. Nothing shortens the period to ten or seven years, no color-of-title shortcut exists, and paying taxes is evidence of a claim in some states but is not a Hawaii route to title.

After a nonjudicial foreclosure of Hawaii residential property, HRS section 667-38 provides that the foreclosing mortgagee:

• a.may pursue a deficiency judgment after a further court hearing
• b.may not pursue a deficiency judgment against any borrower at all
• c.may not pursue a deficiency judgment against an owner-occupant✓
• d.may pursue a deficiency judgment for six years after the sale

The section reads: "Upon completion of the nonjudicial foreclosure of residential property pursuant to this part, the mortgagee or other person, excluding an association, shall not be entitled to pursue or obtain a deficiency judgment against an owner-occupant unless the debt is secured by other collateral." Three limits are built into that sentence and each is tested. The protection runs to owner-occupants, not to investors or second-home owners. It applies to the power of sale route in Part II, so a lender that forecloses judicially is outside it. And associations are expressly excluded, which is why an unpaid condominium association keeps its remedies. The debts of other lien creditors are unaffected except as the part provides. Hawaii gives the borrower a related lever in HRS section 667-53, which lets residential property owners convert a nonjudicial foreclosure to a judicial action, and HRS section 667-24 requires the mortgagee to rescind and release the recorded notice of default within fourteen days if the default is cured.

A Hawaii seller orally agrees to sell a vacant lot and then refuses to complete. Under HRS section 656-1:

• a.no action can be maintained on an oral contract to sell land✓
• b.the oral contract binds the seller once two witnesses confirm it
• c.the oral contract becomes enforceable when a deposit is accepted
• d.the oral contract binds the seller but not the buyer to complete

Hawaii's statute of frauds is framed as a bar on suing rather than a rule voiding the agreement: "No action shall be brought and maintained" in the listed cases "unless the promise, contract, or agreement, upon which the action is brought, or some memorandum or note thereof, is in writing, and is signed by the party to be charged therewith, or by some person thereunto by the party in writing lawfully authorized." Paragraph (4) covers "any contract for the sale of lands, tenements, or hereditaments, or of any interest in or concerning them." Witnesses do not cure the absence of a signed writing, since it is the signature of the party to be charged that the statute demands, and accepting a deposit is not a signed memorandum either. Nor does the statute bind one side only. HAR section 16-99-3(f) reinforces the point in practice by requiring a licensee to see that financial obligations and commitments regarding real estate transactions are in writing, express the exact agreement of the parties, set out the essential terms, and are placed in the hands of all parties at the time of execution.

A Hawaii brokerage sues a seller for a commission promised only orally. HRS section 656-1 means the brokerage:

• a.recovers if the seller admits the promise while testifying in court
• b.cannot maintain the action without a writing signed by the seller✓
• c.cannot recover the commission but may recover advertising costs
• d.recovers the customary rate for the island where the lot is located

Paragraph (6) of section 656-1 puts commission agreements on the same footing as land sale contracts: no action may be brought "to charge any person upon any agreement authorizing or employing an agent or broker to purchase or sell real estate for compensation or commission" unless there is a writing signed by the party to be charged. The practical effect is that the listing agreement is the brokerage's cause of action, and without it a court will not supply one from custom, from an admission on the stand, or from a smaller claim for expenses. Two rules of practice sit alongside it. HAR section 16-99-3(t) requires that "an exclusive listing shall state a definite termination date," and HAR section 16-99-3(f) requires financial commitments to be in writing and copies given to all parties when executed. A licensee who works on a handshake is therefore exposed twice: to losing the fee and to a rule violation independent of whether the fee is ever paid.

HAR section 16-99-3 imposes one requirement on every exclusive listing a Hawaii licensee takes. The listing:

• a.shall be filed with the Real Estate Commission when taken
• b.shall state a definite date on which it terminates✓
• c.shall run for no more than one hundred eighty days total
• d.shall be signed by the firm's principal broker in person

Subsection (t) is a single sentence: "An exclusive listing shall state a definite termination date." The mischief it addresses is the open-ended exclusive that ties an owner to a firm indefinitely, and the cure is a date rather than a maximum term, so no rule caps a Hawaii exclusive at one hundred eighty days or any other figure. Listings are contracts between the owner and the firm; nothing files them with the Commission. The principal broker need not personally sign the listing, though related provisions do put the principal broker or broker-in-charge in the chain elsewhere: subsection (l) forbids placing any sign or advertisement that a property is for sale, rent, lease or exchange "without the written authorization of the owner or seller and approval of the principal broker or broker-in-charge," and subsection (i) forbids the firm to submit or advertise property without written authorization or at a price other than the one agreed with the owner.

A buyer initials a change to a Hawaii purchase contract after the seller has already signed it, and the licensee passes it along. HAR section 16-99-3 provides that a licensee shall not:

• a.deliver a counter offer without the principal broker's approval
• b.change a signed instrument without all parties' written consent✓
• c.accept an offer for a client without a written power of attorney
• d.send a contract to escrow before a closing date has been agreed

Subsection (u) states: "The licensee shall not add to or modify the terms of an instrument previously signed or initiated by a party to a transaction without written consent of all the parties." The rule protects the integrity of a document that someone has already committed to, and it applies whether the change originates with the licensee or with the other party. The correct handling is a counter offer or an addendum that everyone signs, not an alteration of the executed page. Neighboring duties in the same section deal with movement of documents rather than their content: subsection (j) requires a licensee to transmit immediately all written offers to the listing broker and the listing broker to transmit each offer to the seller immediately, and subsection (f) requires that copies of executed agreements be placed in the hands of all parties at the time of execution. None of the other options states a rule found in chapter 16-99.

A Hawaii listing broker holds a first written offer when a second one arrives before the seller has accepted anything. HAR section 16-99-3 requires the broker to:

• a.hold the second offer until the seller decides on the first one
• b.submit the second offer only if it exceeds the first one in price
• c.return the second offer to its originator as having arrived late
• d.transmit the second offer to the owner immediately for decision✓

Subsection (j) leaves no discretion: "In the event that more than one formal written offer on a specific property is made before the owner has accepted an offer, any other formal written offer presented to the broker, whether by a prospective purchaser or another broker, shall be immediately transmitted to the owner for decision." The same subsection requires a licensee to transmit immediately all written offers to the listing broker holding a written unexpired exclusive listing, and requires the listing broker to transmit each offer to the seller immediately on receipt. It also closes the loop on rejections: "If an offer or counter offer is rejected, the rejection shall be noted on the offer or counter offer, or in the event of seller's or buyer's neglect or refusal to do so, the broker for the rejecting party shall note the rejection... and a copy shall be returned immediately to the originator." Screening offers by price, by timing, or by which one the broker prefers is the decision the rule reserves to the owner.

A buyer signs a contract to purchase a unit from the developer of a new Hawaii condominium. HRS section 514B-86 gives that purchaser:

• a.thirty days to cancel, running from signing and delivery of the report✓
• b.fifteen days to cancel, running from recordation of the declaration
• c.no right to cancel once the developer has countersigned the contract
• d.seven days to cancel, running from the date on which the contract was signed

Section 514B-86(a) makes the contract non-binding on anyone until the developer has delivered a true copy of its public report, including all amendments with an effective date issued by the commission, together with the recorded declaration and bylaws, house rules, a letter-sized project map, and "a notice of the prospective purchaser's thirty-day cancellation right on a form prescribed by the commission," and until the purchaser has waived or is deemed to have waived that right. Section 514B-86(b) then runs the clock from the later of two events: purchasers may cancel "at any time up to midnight of the thirtieth day after" the date the purchaser signs the contract and delivery of everything required by subsection (a)(1). Section 514B-86(c) recognizes three ways to waive: checking the waiver box and delivering the notice, letting the period expire, or closing before it expires. Seven calendar days is the time share rule in HRS section 514E-8, not the condominium rule, and nothing keys the period to recordation.

Before closing, a Hawaii buyer discovers that the disclosure statement omitted a material fact that substantially and adversely affects value. HRS section 508D-6 lets the buyer:

• a.rescind at any time up to one year after the sale has been recorded
• b.require the seller to repair the condition before the closing
• c.recover treble damages from the seller's brokerage firm at once
• d.rescind in writing within fifteen calendar days of the discovery✓

Section 508D-6 gives a buyer who receives a disclosure statement that "fails to disclose a material fact or contains an inaccurate assertion that directly, substantially, and adversely affects the value of the residential real property," and who did not know of it, the right to "elect in writing to rescind the real estate purchase contract within fifteen calendar days of the earlier to occur of: (1) The discovery of the failure or inaccuracy; or (2) The receipt of an amended disclosure statement correcting" it. The right has a hard end point: it "shall not apply if the sale of the residential real property has been recorded," though the buyer may still pursue all additional remedies provided by law. Rescission is the remedy the chapter supplies, not a repair obligation and not a damages claim against the brokerage. The seller's agent has a duty running in parallel under section 508D-7(c): on becoming aware of facts inconsistent with or contradictory to the disclosure statement, the agent must disclose them to the seller, the buyer and the buyer's agent.

Hawaii sellers sometimes finance a sale with an agreement of sale. HRS section 501-101.5 defines it as an executory contract in which:

• a.a lender holds legal title in trust until the promissory note is paid off
• b.the buyer takes legal title and gives the seller a purchase money mortgage
• c.the seller keeps legal title to the real estate until the buyer performs✓
• d.an escrow depository holds legal title on behalf of both of the parties

The statutory definition is: "'Agreement of sale' means an executory contract for the sale and purchase of real estate which binds one party to sell and the other party to buy real estate which is the subject matter of the transaction, and in which the seller retains legal title to the real estate," and it includes subagreements of sale. That retention of legal title is the whole point and the whole risk: the buyer takes possession and equitable ownership while the seller stays on the title until the price is paid. Hawaii protects the buyer's position by recording. For Land Court property, section 501-101.5(a) gives a duly filed agreement of sale priority over a later conveyance by the seller and over a judgment against the seller not filed earlier, and section 501-101.5(b) extinguishes such claims on the buyer's satisfaction and the filing of a transfer of title. Conveyance tax is paid on the agreement of sale itself, and HRS section 247-3(6) then exempts the deed later given pursuant to it where that tax was fully paid. A purchase money mortgage is the opposite structure, since legal title passes to the buyer at once.

A client bought a unit from the Hawaii Housing Finance and Development Corporation four years ago and now wants to refinance. Under HRS section 201H-47:

• a.no refinancing at all is permitted in the first ten years after purchase
• b.refinancing is unrestricted because the restriction applies only to a sale
• c.the loan may not exceed the restricted price and HHFDC must consent✓
• d.the corporation's share of appreciation becomes payable immediately

Section 201H-47(a)(3) permits refinancing but fences it: a purchaser "shall not refinance the real property within ten years from the date of purchase for an amount in excess of the purchase price as determined by paragraph (1)(A) to (C); provided further that the purchaser shall obtain the corporation's written consent if any restriction on the transfer of the real property remains applicable." Two other limbs of the section matter to a broker. Section 201H-47(a)(1) gives the corporation, for ten years after purchase, "the first option to purchase the real property" at a price capped at the original cost, the cost of the purchaser's improvements, one per cent simple interest, and any appreciation share already paid, and that interest is a statutory lien superior to most other liens. Section 201H-47(a)(4) frees the property from price restrictions after the tenth year, subject to repaying the corporation the balance owed, any subsidy or deferred sales price, interest, and its share of appreciation. Listing such a unit at an unrestricted market price inside the ten years offers a price the seller is not free to accept.

Under HRS chapter 449, a Hawaii brokerage may itself hold the escrow for a transaction:

• a.only where the principal broker holds an escrow depository license
• b.in any transaction, since brokers are exempt from that chapter
• c.only where it is the broker for a party and charges no escrow fee✓
• d.only with the written approval of the Real Estate Commission

Section 449-5(a) sets the general rule: "No person shall act as an escrow depository in this State unless it is a corporation licensed to do so by the commissioner," the commissioner of financial institutions, and the same subsection bars unlicensed persons from even using the word "escrow" in a business name. Section 449-3 then lists who is outside the chapter when acting as an escrow depository, and paragraph (2) is the brokerage's exception: "any person licensed as a real estate broker in the State who is the broker for a party to the escrow, provided the person does not charge any escrow fee." Both conditions are load-bearing, so a brokerage that charges even a modest escrow fee falls back under the licensing requirement. Banks, trust companies and savings and loan associations are excepted by paragraph (1) and attorneys, on similar fee terms, by paragraph (3). Section 449-1 explains why neutrality matters: an escrow is 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."