Hawaii Real Estate Broker Exam — All Questions

A Hawaii buyer is considering a condominium sold as a 'leasehold' interest. The most important distinction from a 'fee simple' unit is that the leasehold buyer:

• a.Owns the land under the building outright
• b.Never has to pay property taxes
• c.Automatically becomes a member of the Real Estate Commission
• d.Owns the improvements for a set term but not the underlying land, and pays lease rent to the fee owner✓

Leasehold ownership is common in Hawaii and distinctive among the states. A leasehold buyer holds the right to use the property for a fixed term and pays lease rent to the lessor (the fee owner of the land); the land reverts to the fee owner when the lease ends unless it is renegotiated or the fee is purchased. Brokers must clearly disclose leasehold-versus-fee-simple status because it dramatically affects value and financing.

Hawaii condominium projects are governed primarily by which statute, which a broker must understand when marketing or managing units?

• a.HRS Chapter 514B, the Condominium Property Act✓
• b.HRS Chapter 467, the licensing statute
• c.The federal RESPA statute
• d.HRS Chapter 508D, the seller-disclosure statute

Hawaii condominiums are governed by HRS Chapter 514B (the Condominium Property Act), which covers association governance, budgets, reserves, and required resale documents. A broker handling condo transactions must ensure buyers receive the association documents and understand maintenance fees and reserves. Chapter 467 governs licensing and 508D governs seller disclosures, which are separate topics.

A Hawaii property is registered in the Land Court (Torrens) system. For such a property, ownership is evidenced by:

• a.A recorded warranty deed in the regular system only
• b.An abstract of title compiled by the broker
• c.A Transfer Certificate of Title issued through the Land Court✓
• d.The seller's title insurance binder alone

Hawaii maintains a dual recording system: the Regular System and the Land Court (Torrens) System. Land Court property is evidenced by a Transfer Certificate of Title, which the state guarantees, rather than by the chain-of-title recording used in the Regular System. Brokers should know which system applies because it affects how title is transferred and documented.