Real Estate Law Journal
Legislature Tightens Disclosure Standards for Condo and Co-op Projects
By Bruce Voss
Trying to clear up confusion among buyers, the Hawaii Legislature has created uniform disclosure requirements for sales in Hawaii condominium projects, cooperative housing corporations, and other community associations.
Under the new law, anytime residential real estate is being offered for sale subject to a recorded declaration, the seller must provide the buyer: (1) Articles of incorporation of the condo association or co-op corporation; (2) By-laws of the condo association or co-op corporation; (3) the Declaration and any exhibits; (4) Any rules relating to use of the common areas, architectural control, and maintenance of units; and (5) Any underlying deed restrictions on use of the property.
The seller is not required to provide the documentation until 10 ccalendar days after the seller and buyer have received a current title report for the property. After the documents are delivered, the buyer has 15 calendar days to examine them and decide whether to rescind the real estate purchase contract. The buyer must deliver the notice of rescission in writing; a buyer’s failure to rescind shall be deemed acceptance of the property subject to the restrictions in the documents. In lieu of hard copies of the documents, the seller may provide a written statement to the buyer with an Internet address where the documents are located.
The new law should provide useful guidance, and protection, for both buyers and sellers. As with other similar laws, there likely still will be disputes and litigation over the adequacy of the written disclosures, particularly in cases where the market value of the property has fallen and the buyer is trying to get out of the sales contract.
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