Did you know that there are some important changes taking place starting on May 1st to the purchase agreement contract for the state of Hawaii?
There are some small changes that make it easier to understand the contract for the buyers and sellers, but there are a few that are important to bring attention to such as when the seller is leasing solar panels, the buyer needs to be aware that they need approval to transfer the lease from the photovoltaic provider. Left unnoticed, that could cause a huge headache during escrow!
These are just a few of the issues that have come up over the last few years when the Hawaii Association of Realtors last updated the purchase agreement. The agreement is used in all transactions when a Realtor is involved and is utilized to legally close transactions between the seller and buyer of any type of real estate in Hawaii. The changes include clarification of the language to ensure consumers know exactly what they are signing, boxes to check to make sure timeline delays are curtailed and adding boxes that help buyers and sellers understand terms such as professional shampooing is different than professional cleaning.
When reviewing the contract and its changes, you can appreciate the expertise of Realtors in the transaction to ensure the deal is as clear and defined by both parties as possible.
Here are the top seven most important changes in the contract:
- Photovoltaic systems are becoming more and more common. Non-owned systems (leased) require approval of the PV provider and the contract terms are unique and require a buyer’s review so there is a new paragraph creating a contingency for non-owned PV systems.
- The contract now has a sentence that states that inclusion items cannot be substituted, which refers to air conditioning types, as an attempt to reduce the occurence of sellers replacing new appliances with older ones.
- The new contract has eliminated the mortgage application contingency, which stated that the pre-qualification letter must include credit review and added election boxes indicating whether income verification documents were reviewed during pre-qualification.
- The changes reflect the language that the mortgage industry has adopted after TRID ( the TILA / RESPA Integrated Disclosure Rule. TILA is the Truth in Lending Act and RESPA is the Real Estate Settlement Procedures Act) Specifically, the mortgage industry does not do pre-approval letters anymore and specified what the seller and the industry sees as valuable, which are credit review and income verification for the prequalification process. Final approval was also changed to be tied to a closing, instead of days after issuance of the conditional loan commitment letter.
- Added climate change to the contract as rising tides are causing additional risk of loss for homes.
- Added a second walk through if repairs, cleaning, etc were not completed within the timeline for closing. Buyers should have the right to ensure the required items are completed prior to closing.
- There is new language in the purchase agreement contract about the issue of wire fraud. The contract now requires that brokerages disclose the proper and safe steps for wire fraud prevention. Prior to the contract requiring this action, LUVA Real Estate created a new wire fraud document that we have clients sign to add security during the process.
Click here for more information about wire fraud.
LUVA Real Estate has created training courses for its Realtors to ensure they are aware of the new contract changes and the benefits the changes bring to their clients in making sure that both parties in the transaction are successful.