Real Estate in Hawaii

Question 1

Hawaii was first discovered by Polynesian voyagers, and all the land in the Hawaiian kingdom was owned by the ______ under a _____ system.

Answer 1

kings; feudal

Question 2

Private ownership of land did not exist until the 1840s. In 1845, King Kamehameha III created the _______ which began the reform of land ownership in Hawaii. The most important of this reform happened in 1848 and is known as the, ________ or “great division of lands.” This provided the basis for modern land titles in Hawaii.

Answer 2

Land Commission, Great Mahele

Question 3

In Hawaii, all real estate is broken into one of four land uses:

Answer 3

Conservation (48%);
Agriculture (47%);
Urban (4.8%); and
Rural (0.25%).

Question 4

There are _____ major islands and 124 minor islands that make up the Hawaiian chain known as the State of Hawaii. The ____ major islands make up about 6,422 square miles as follows:

Hawaii (4,028 square miles);
Maui (727 square miles);
Oahu (597 square miles);
Kauai (552 square miles);
Molokai (260 square miles);
Lanai (141 square miles);
Ni’ihau (70 square miles); and
Kaho’olawe (45 square miles).

Answer 4

8

Question 5

The federal, state, and county governments own approximately _____ of the total land area; _____ is owned by a few large trusts and corporations, leaving 45% for other private ownership.

Answer 5

35%, 20%

Question 6

Buying, selling, renting, leasing, and managing real estate activities account for more than $2.7 trillion of the U.S. economy, or about _____ of the GDP, and employ more than 2 million people.

Answer 6

14%

Question 7

3 types of real estate in Hawaii

Answer 7

residential, commercial, investment

Question 8

Chapter _____ of the Hawaii Revised Statutes (HRS), the Uniform Professional and Vocational Licensing Act, which sets uniform standards for licensing of all professions and vocations; HRS Chapter ____, titled “Real Estate Brokers and Salespersons,” and commonly known as the license law, which sets additional specific standards for the real estate profession.

Answer 8

436B; 467

Question 9

Title 16, Chapter 99 of the ________, Real Estate Brokers and Salespersons (the rules). The rules were created by the Commission to provide greater guidance for complying with the law.

Answer 9

Hawaii Administrative Rules (HAR)

Question 10

_______, ________, & ________ have differing yet interrelated responsibilities and authority regarding the regulation of real estate licensees in Hawaii.

Answer 10

The DCCA, the Commissioner, and the Regulated Industries Complaints Office (RICO)

Question 11

Department of Commerce and Consumer Affairs’s goals

Answer 11

promote a strong and healthy business environment while protecting the community from unfair and deceptive business practices.

Question 12

The Uniform Professional and Vocational Licensing Act (HRS 436B) is intended to protect the health, safety, and welfare of consumers who use the services provided by a regulated profession or vocation. It provides for the DCCA to administer all professional and vocational licensing activities and is implemented through the ____________

Answer 12

Professional and Vocational Licensing Division (PVL).

Question 13

______ is the statewide agency that enforces the DCCA’s standards by taking complaints involving the professions, occupations, and programs it regulates.

Answer 13

RICO

Question 14

The Commission is one of the boards and commissions administratively attached to the DCCA through the PVL Division. It consists of ____ members, appointed for ____-year terms, with at least one appointment expiring each year.

At least four members must be licensed brokers who have engaged in business as licensed brokers or salespersons for the three years immediately preceding their appointments. Four must be residents of the city and county of Honolulu, and there must be one resident from each of the counties of Hawaii, Maui, and Kauai. Two must be public members.

Each member must be a citizen of the United States and must have resided in Hawaii for at least three years preceding his or her appointment. One member must be designated as chairperson.

Answer 14

9; 4

Question 15

The Commission has the authority to enforce the licensing law and is responsible for the licensure, education, and discipline of real estate agents, as well as the certification of prelicense and continuing education courses and prelicense instructors. The Commission also is in charge of the administration of the:
1.
2.
3.

Answer 15

Real Estate Education Fund.
Real Estate Recovery Fund
Condominium Management Education Fund

Question 16

Real Estate Recovery Fund grants how much per aggrieved person and how much per licensee

Answer 16

Payment from the fund must be claimed within two years of the date of the fraudulent act and is limited to $25,000 per aggrieved person and is limited to $50,000 against any one licensee. Payment from the fund on behalf of a licensee automatically leads to revocation of the licensee’s real estate license. Any licensee wanting to reinstate a terminated license must repay the recovery fund the amounts paid out, plus interest.

Question 17

The term real estate includes _______ (4 answers). If a transaction involves property other than real estate (e.g., the sale of an ongoing business, a leasehold, or some other interest in real property), to the extent that real estate is involved, it is considered a real estate transaction.

Answer 17

lands, improvements, leaseholds, and all other interests in real property

Question 18

Anyone wanting to take the broker’s examination must have worked full time as a salesperson for _____ of the past five years and have successfully completed an approved 80-hour course from an accredited school.

Answer 18

three

Question 19

HAR 467-12
A licensed real estate broker must have and maintain a definite place of business in the state, in compliance with this chapter and the rules of the Commission, and must display _______

Answer 19

in the place of business the real estate broker’s license

Question 20

Within _____ days of its occurrence:

A licensee must report a change in the name and license number of the brokerage firm with whom he or she is associated or employed; or his or her legal name, residence address, or mailing address.
A brokerage firm must notify the Commission, in writing, of any changes in the address of the firm’s principal place of business or branch offices, or the name and license number of:
The principal broker;
The broker-in-charge;
Any licensee employed by or associated with the brokerage firm; or
Any partner, officer, and director or member and manager of a partnership, corporation, or limited liability company.
When a principal place of business or branch office is closed, the principal broker or broker-in-charge must immediately notify affected licensees within 10 days. The principal broker must notify the Commission in writing of the names and license numbers of affected licensees.

A principal broker or broker-in-charge must release a licensee within ____ days of a written request. Any licensee who changes employing or associating brokerage firms must provide written notification to the Commission within ____ days of the change, or immediately place his or her license on inactive status. A change is effective as of the date on the form submitted to the Commission.

Answer 20

10

Question 21

Important Time-Related Facts
Immediately

When broker must notify licensees of office closure.

60 Hours

Education hours required for salesperson license.

80 Hours

Education hours required for broker license.

10 Days

Number of days broker has to notify the Commission of name or address changes or closures.
Number of days licensee has to notify the Commission of name or address change.
Number of days condominium hotel operator has to notify the Commission of changes in registration information.
Number of days following request in which broker must release licensee.

Less than 30 Days

Number of days lodging is transient in condominium hotel.

30 Days

Maximum calendar days principal broker may be absent without temporary principal broker or broker-in-charge.
Number of days licensee has to notify the Commission of adverse ruling involving real estate.
Number of days to pay fee to convert license to different form of business entity.

One Year

Number of years within which forfeited license can be restored.

Two Years

Number of years in license period.
Length of time experience certificate is valid from date of issuance.
Length of time school-completion certificate is valid from date of issuance.

Three Years

Years of experience required for broker license.

Five Years

Years within which three years of experience is required for broker license.

Question 22

A licensee must provide written notice within _____ days following a judgment that finds him or her liable for a loss caused by personal conduct in the practice of real estate.

Answer 22

30

Question 23

Condominium hotel operators are required to maintain a fidelity bond that covers _____.

Answer 23

all employees who handle funds

Question 24

In the early 1800s, King Kamehameha the Great gained control of all of the Hawaiian Islands. He owned all of the land and could distribute it as he saw fit.

Question 25

Land was divided into pie-shaped pieces that went from the mountaintop to the shore. These wedges were called ahupua’a and were thought to provide everything a person might need to survive. Smaller divisions, called ‘ili, stood either alone or within an ahupua’a.

The king appointed chiefs to manage and control the land, called koele, and the farmers who worked it. The agricultural workers were not serfs; they had the freedom to move at will to other land and were able to profit from their labors.

Question 26

In 1840, the first constitution of the Kingdom of Hawaii was written. It acknowledged that the people had more of an interest in the land they worked than merely the value of the crops grown on the land.

In 1845 the Land Commission was established to award land claims, and in 1848 the Great Mahele, or great division, abolished the feudal system of land tenure in Hawaii.

King Kamehameha, who had been convinced that he should divide ownership of land in Hawaii, apportioned it three ways:

Answer 26

Crown lands (approximately a million acres owned by the king): Kamehameha Deeds, executed by the king when he sold crown land, existed prior to the Act of January 1, 1865, at which time the crown lands became inalienable (i.e., not transferable). In 1893, the monarchy was overthrown, and all of the crown land that was left became public land.

Government lands (approximately a million and a half acres for the government to own): When the government disposed of land, a grant or Royal Patent grant was issued; there was no need for the Land Commission to issue an award for these lands. Land Patent grants were issued for government lands sold after the overthrow of the monarchy.

Konohiki lands (approximately one and a half million acres for the chiefs to own outright): A Royal Patent was awarded to the chiefs by the Land Commission once the chiefs made their land claims to the commission, paid a fee, and had a survey done. The patent indicated that the government no longer had an interest in the property. After the overthrow of the monarchy, a Land Patent was issued by the government to indicate that the government had no further interest in the land. This patent replaced the Royal Patent.

In 1850, the rights of the commoners were acknowledged, particularly since much land was being sold from all three sectors. It was decided that, if a commoner developed and occupied any part of the Konohiki Land, the Land Commission would award a fee simple title to the land to the commoner. This land, known as kuleanas, was productive and quite valuable.

Question 27

After 1850, government land was made available for sale to commoners as well as to foreigners.

Question 28

Pre-1778, all of the lands of Hawaii were owned by the kings under a feudal system. The concept of private landownership (allodial system) did not exist. Lands were controlled by the ali’i nui (high chiefs) who allowed the kanaka (commoners) to farm and tend the land. The original land divisions were the mokupuni, an entire island. The largest units of land within each mokupuni were the moku, pie shaped wedges running from the top of the mountain to the ocean. Moku were further divided into ahupua’a, also pie-shaped strips but narrower that ran from the mountain to the ocean as well. Next were smaller divisions known as ‘ili, generally the smaller estates of chiefs or konohiki. Some ‘ili were subservient to ahupua’a; others were independent. An ‘ili might consist of several contiguous or non-contiguous parcels. If not contiguous or connected, they were called lele. Smaller divisions within the ‘ili were known as mo’o or mo’o aina, and pauka.

Question 29

Prior to 1967, 49% of the land in Hawaii was owned by the federal and state governments, and 47% of it was owned by a mere 72 private landowners. In the Land Reform Act of 1967, the Hawaii Legislature provided a method of redistribution in which the title to property could be taken from the lessor and given to the lessee in fee simple estate through the Land Committee. This act provided that owners of single-family homes had a right to buy their land in fee. This does not apply to condominiums. In 1984, the U.S. Supreme Court held that such a taking, and transfer from lessor to the individual lessees, was a valid exercise of the state’s power of eminent domain. New legislation in 2005 has repealed much of the Land Reform Act, no longer making it mandatory for lessors to sell the fee interest to lessees.

Question 30

Mineral Rights
HRS 182 et seq.
In Hawaii, all mineral rights are owned by the state, including gas, oil, mineral, and even geothermal energy rights. Mining leases are issued by the Department of Land and Natural Resources on a royalty basis. Those who receive mining leases must not undermine the subjacent support (support from beneath the surface) of the owner of the surface rights.

Question 31

Commission on Water Resource Management (the commission), which is attached to the Department of Land and Natural Resources, administers the state Water Code of 1987. Its general mission is to protect and enhance the water resources of Hawaii through wise and responsible management. The Department of Health, however, administers the water quality plan.

Question 32

Native Hawaiian water rights legislation (which does not change any provisions of the Hawaiian Homes Commission Act of 1920 or statutes relating to the Molokai irrigation system) requires that the Commission, with certain constraints, protect adequate reserves of water for Hawaii homelands. Appurtenant water rights of kuleana and taro lands, and traditional and customary rights, may not be lost because a person fails to apply for or receive a permit. Such water rights include:

Cultivating or propagating taro on one’s own kuleana; and
Gathering hihiwai, opae, o’opu, limu, thatch, ti leaf, aho cord, and medicinal plants for subsistence or cultural and religious purposes (HRS 174C-101).

Question 33

A person who owns property with no one else is said to hold the property in severalty and may be said to have a tenancy in severalty or an estate in severalty. That person can be a natural person or a legal person or entity (e.g., a corporation).

Question 34

Two or more persons may own the same property at the same time as:

Tenants in common;
Tenants in general and limited partnerships (a partnership must be registered with the Department of Commerce and Consumer Affairs);
Tenants by the entirety;
Reciprocal beneficiaries; or
Joint tenants.

Question 35

Tina, Dixie, and Helena purchased a condo in the same building. While their individual contributions were not equal, they have chosen to have their interests divided equally as joint tenants. If one of them passes, the remaining two will receive that person’s share under a right of survivorship.

Question 36

Married couple Jasper and Jessica have purchased a condo. They will hold their property as tenants by the entirety, a form of joint tenancy that is available only to married couples. Upon the death of one spouse, the survivor succeeds to the entire ownership interest in the property.

Question 37

Syndication
Real property may also be owned through participation in a syndicate. A syndicate is a group of investors who join together to make and operate a real estate investment. Syndicates can be created through various forms of organization, including:

Tenancy in common;
Joint tenancy;
General or limited partnership;
A corporation;
A trust;
A joint venture; or
A limited liability corporation.

Question 38

land trust may be created to hold real estate as its only asset. Under a land trust, a real property owner becomes a beneficiary of the trust, converting his or her real property interest to a personal property interest in the trust by transferring legal title to the land to a trustee.

Question 39

Adverse possession is a means of acquiring title whereby the occupant of the land has been in actual, open, notorious, hostile, exclusive, and continuous possession of the property under color of title or claim of right for a required statutory period of time. In Hawaii, the prescriptive period for an easement by prescription is 20 continuous years.

In Hawaii, three categories of real estate may not have title claimed by adverse possession:

Parcels larger than 5 acres;
Property registered in Hawaii’s Land Court System; and
Federal, state, or county land.

Question 40

Hawaii is a public domain state, meaning the state government controls the disposition of land. In homestead states, people may purchase public land and, with some restrictions, claim public land after living on it and cultivating it for a set number of years.

To get marketable title to property, an adverse possessor must obtain a quitclaim deed from the ousted owner or file a quiet title action to obtain a judicial decree clearing the title to the property (HRS 669 et seq.).

A person who merely uses another’s property—openly, notoriously, and hostilely for 20 continuous years—may not claim title to it but may claim an easement by prescription

Question 41

The Land Court was established in 1903 to provide a means of guaranteeing ownership of land and assisting in eradicating the confusion over ownership and similar names. Only fee simple ownership and encumbrances relating to such property may be registered in Land Court. Land Court generally will not accept leasehold land for registration.

Question 42

The Land Court System and the Regular System of recording in Hawaii are not necessarily mutually exclusive. In the Double System, property may be both registered and recorded.

Question 43

The seller of the property normally pays the tax, and the deed may not be recorded unless a conveyance tax certificate, or exception from conveyance tax, is filed at the time of recording.

The tax due is calculated on a sliding scale based on the actual consideration paid for the property. In addition, a lower rate applies to condominiums and single-family residences if the owner is eligible to claim the county homeowners exemption.

Question 44

Any deed, lease for a term of more than one year, mortgage of any interest in real estate, or other conveyance of real estate within the state must be recorded in the Bureau of Conveyances.

Question 45

There are three types of property descriptions commonly found on deeds, preliminary title reports, and title insurance policies:

Plat and parcel (also known as lot and block, or recorded plat);
Metes and bounds; and
Rectangular (or government) survey (used only on the mainland).
Other descriptive methods used in Hawaii are:

The Land Court map number; and
The lot number and number of the Certificate of Title.

Question 46

tax map key system, real property is mapped and indexed numerically.

Question 47

Tax map key numbers are assigned under a parcel number format:

Division# (I)–Zone# (Z)–Section# (S)–Plat# (PPP)–Parcel# (ppp)–CPR# (CCCC)

Question 48

Oahu is Division 1.
Maui County is Division 2.
The Big Island of Hawaii is Division 3.
Kauai County is Division 4.
The CPR number is used for a parcel with a condominium to show the condominium unit number.

A colon within a dash indicates multiple parcels (e.g., 1-2-4-6-1:45 would refer to parcel numbers 1 through 45 on Oahu, in Zone 2, Section 4, Plat 6).

Question 49

To understand directions, picture a circle at the beginning of each line, with the point at which the line starts being the center of the circle. A circle has 360 degrees (360°). Each degree has 60 minutes (60’). Each minute has 60 seconds (60”). Do not confuse these marks with feet and inches, although they are written the same. The notation N 15° 35’ 30” E is north 15 degrees, 35 minutes, 30 seconds east.

This method describes the land

Question 50

Government Survey
The government survey method (or rectangular survey method or section and township system) is used extensively on the mainland but is not used in Hawaii. It is used to divide land into squares and rectangles, called townships and sections.

Question 51

Dower and curtesy are outdated terms that referred to the rights of a spouse to their deceased spouse’s property. These rights were based on gender and have been replaced by equal treatment for all genders.
Dower
Curtesy
Who it applies to
Wife
Husband
What it grants
Life estate to one-third to one-half of the husband’s property
Life estate to all of the wife’s property if the couple had a child