Hawaii Real Estate Broker Exam — All Questions

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.