Immediate response  to the word “probate” dealing with the sale of real estate quickly brings to mind a delay in the transaction.  Probates usually take a minimum of 6 to 8 months to complete.  Did you know, however, you do not have to wait until the probate is completed in order to sell real estate.

Real estate can be sold as soon as the “personal representative” is appointed by the court.  The personal representative will gather the assets of the person who died, pay the bills, and distribute the property to the persons who are to inherit the assets.  Once a personal representative is appointed and if the beneficiaries or heirs agree to the sale, the real estate can be sold at that time.  If any of the beneficiaries or heirs disagree with the sale – then there will be a “confirmation hearing” in court, which will delay the sale of the property.

In some instances where all of the assets owned by the deceased is over $100,000 or less the Small Estates Division of the Circuit Court can handle the probate without an attorney.  This, however, could delay the sale of real estate and you would have to wait anywhere from 6 to 8 months before the property can be sold.  An alternative to this is you can hire your own attorney and do an “Informal Probate” and you may be able to sell real estate in 6 weeks instead of waiting 6 to 8 months or longer.

A common misunderstanding is the thinking that HARPTA is a tax.  This is a means for the State of Hawaii to collect taxes from absentee owners.  HARPTA stands for Hawaii Real Property Tax Law.

A question that arises from military families is whether HARPTA applies to them.  If an active duty member closes a sales as a primary residence and being transferred from Hawaii under military orders the 5% HARPTA does not apply.  If however the property was rented as an investment then HARPTA would apply.

Here are some other listed exemptions for HARPTA:

EXEMPTIONS FROM WITHHOLDING

1. Transferor furnishes Hawaii Resident Certification. No withholding is necessary if the seller or transferor furnishes to the transferee a properly completed Form N-289 stating (i) the transferor’s federal taxpayer identification number, (ii) address, and (iii) that the transferor is

2. a Hawaii resident. However, this exemption will not apply if the transferee has actual knowledge that the information on the Form N-289 is false. (Note that the definition of Hawaii resident for purposes of the withholding required by HRS §235-68 would include foreign corporations and partnerships which are registered with the Hawaii Department of Commerce and Consumer Affairs to do business in the

State of Hawaii).

3. Transferor’s Affidavit of Principal Residence. No withholding is necessary if the transferee receives an affidavit by the transferor stating (i) the transferor’s federal taxpayer identification number, (ii) that the transferor used the property as a principal residence for the year preceding the date of the transfer and (iii) the sales price for the property does not exceed $300,000.

4. Transferee Receives Hawaii Withholding Certificate.

(a) The withholding under HRS §235-68 may be reduced or eliminated pursuant to a “withholding certificate” issued by the Hawaii Department of Taxation. A withholding certificate may be issued by the Hawaii Department of Taxation upon receipt of Form N-288B establishing that either (i) the transferor will not realize any gain with respect to the transfer or (ii) the transferor will have insufficient proceeds to pay the withholding required by HRS §235-68 after payment of all costs, including selling expenses and the amount of any mortgages or liens secured by the property.

(b) The withholding may also be reduced or eliminated pursuant to a “written agreement” with the Hawaii Department of Taxation. Persons who engage in more than one real property transaction in a calendar year or to whom meeting the withholding requirements are not practicable are eligible to enter into these written agreements.

5. Notice of Non-recognition Treatment. No withholding is necessary if transferee receives from transferor a properly completed Form N-289 stating (i) that transferor is not required to recognize gain or loss with respect to the transfer and (ii) briefly describing the transfer and summarizing the law and facts supporting transferor’s claim. Non-Hawaii residents doing 1031 exchanges of real estate may consider this option to avoid withholding.

An important aspect of dealing with real estate is how the new owner will take ownership of the property.  Although states may differ, there are generally 4 underlying ways that a property owner will take title.

Tenancy in severalty: Severalty mean a condition of being separate.  This gets a lot of people confused because of our use of the word several which would indicate more than two.  You will see this type of ownership held by an individual or corporation.

Tenancy in common: This type of ownership allows for both equal and unequal ownership between multiple parties.  If an owner passes away their ownership interest is conveyed to their heirs.

Joint tenancy:  There are four unities that must exist for joint tenancy which are interest, possession, time and title.  Unlike Tenancy in common, joint tenancy has each owner holding the same (interest).  They share in an undivided interest (possession) and they receive their interest at the same time (time).  Title will require that owners acquire their interest with the same deed (title).

If an owner passes away their interest reverts to the other owners called the right of survivorship.

Tenancy by the entirety:  Ownership allowed for married couples.  The right of survivorship exists and in some states additional privileges can be merited such as better asset protection. 

Many times you will hear someone ask this question in Hawaii real estate….     How much notice does the landlord need to give to the tenant.  It is 2 days.  You need to also remember there are several types of leases. 

First there is a tenancy for years which is a lease with a beginning and ending date.  Normally no notice is required because the terms are spelled out in the lease.

Secondly, there is the tenancy for periods.  This is usually a lease for a period of time like a day (hotel), a week (rooming house) or a month, which is most often called a month to month and is the most common form of tenancy for periods.  Because the lease renews each period unless it is changed.  In other words, we have to decide how many days notice should be required to increase the rent for example, or decide on how many days notice are required to respond to an emergency repair.  This is all provided in HRS 521, (click here for link) which is the Tenant Landlord Code.

Another frequently asked question regarding Hawaii real estate management is:  How much notice does the landlord need to give to enter the apartment or unit; respond to an emergency repair; demand payment for rent; cure a default in the lease; respond to regular repair; abandoning the apartment; intent to raise the rent and last, notice by the tenant of their intent to move out.

A landlord needs to give 2 days notice to enter an apartment. 
Respond to an emergency repair, 3 days notice is required .
Demand payment of rent, 5 days.
Cure a default in the lease, 10 days
Respond to a regular repair – 12 days
Abandoning the apartment – 20 days
Intent to raise the rent – 45 days
Notice by the tenant of their intent to move out – 28 days

When taking the state test for your Hawaii Real Estate License – these types of questions will be asked.

If you are interested in taking a Prelicense Class to get your certificate to sit for the State License you can go to:   HawaiiRealEstateSchools.com.  They have a 4 week accelerated class.