Author: mdahmk2_kona

I receive quite a few questions asking “what does Contingent mean” and a number of requests to see properties under Contingent status. The best definition in Webster’s Dictionary for “contingent” is “dependent on or conditioned by something else”.  Before I get into the meaning of Contingent status I feel I need to explain what an escrow is.  Many states do not use escrow companies, but use attorneys instead.  So many mainlander don’t know what “escrow” is.  An escrow company is set up to safeguard the interests of the parties to a sale.  In the old days, you could hand over your deposit to a seller only to find out two weeks later that he had “sold” his property to ten other people and absconded to South America with all their deposits.  The escrow company’s job is to hold the Buyer’s funds in an “escrow” account while making sure that all the paper work is in order and all the documents get properly recorded at the State Bureau of Conveyances on the day of “closing”.  On the mainland closing may be called “recordation”.  This is the day that the title transfers from the seller to the buyer.  The escrow company than distributes the funds as the Purchase Contract stipulates.  The whole process is called “Escrow”. 

Here’s how the sale works.  The buyer’s agent helps the buyer draft an offer, which when completed, the buyer signs.  The buyer’s agent sends the offer over to the listing agent who presents it to the seller for their consideration.  If the sellers accept the offer they also sign it.  Once both parties have agreed on the price and terms of a Purchase Contract and signed it, they have consummated a legally binding contract.  Their agent then takes the signed contract to the escrow company and an escrow account is opened.  At that point the sellers agent is required by their Multiple Listing Service to change the status of the listing in the MLS data base.  The status was “A” for “Active”.  At this point there are two choices, “C” for Contingent, and “U” for Under Contract.  Here’s where the confusion starts.  A Contingent offer is also under contract, but with a contingency.  That is, there are conditions that must be met before the seller must turn the property over to the buyer.  The most common contingency is the home inspection. Fifteen days is the usual amount of time allowed for the Home Inspection contingency.  The buyers are allowed this time to fully inspect all aspects of the property.  If they find something they don’t like within the allotted time period, they can cancel escrow and get their deposit back.  The Purchase Contract is then voided and the property goes “Back On The Market”, and the status is changed back to “A”, Active.  The process is similar with any other contingency.  The next most common contingency if financing.  To get to the point where the lender gives their final loan approval takes 30 to 40 days.  If the lender refuses to grant the buyer the loan they were asking for, then escrow is cancelled and the buyer gets their deposit back.

The point is, when you see a “Contingent” listing, it’s in escrow, in effect it is sold, but there are contingencies.  The only difference is, unlike a listing that has the “U” designation, a “C” listing could come back on the market at a later date.  When it does, it will show up in the “Back On The Market” category of the UPdate.  But while it is “C” it is not available to purchase.  However, it is possible to make “back-up” offers on Contingent listings; but back-up offers stay dormant and are voided if the original escrow closes.  If, however, a contingency is not met and the present escrow “falls out”, then the back-up offer automatically goes into first place and takes over the previous offers position in escrow.  But here is the problem with buyers wanting to see listings that are Contingent: back-up offers are successful only about 10% of the time.  That’s because 90% of the time the home inspection goes well and the buyer gets their loan and the escrow closes.  So if you, as the buyer, were to pay for plane fare and a hotel to come look at property for a week, and you make a backup offer on a Contingent property, then go home to wait and see if the current escrow is cancelled, 90% of the time you will have wasted your time and money.  Then you will have to fly back to Hawaii again to find another property to purchase.  Meanwhile, all the properties you saw the first time have sold.  And most likely the prices of all the new listings are higher than those you saw when you were here the first time.  That’s why I always try and discourage people from looking at Contingent listings.

Can a Retired Person Buy a Home in Hawaii?

I recently received a question from a person who was about to retire.  She wanted to know if she could buy a house if she was retired, or would she need to get a job and work for six months. Following is my answer:

It doesn’t matter if you are retired, in only matters what loan amount you are qualified for based on your retirement income.  I presume you have Social Security.  How about interest and dividend income??  A pension?

Email me at trustharry@aloha.net and I’ll send you a list of lenders on the Big Island.  Over the phone, or in an email, they can give you a rough idea what loan amount you qualify for based on your retirement income.  If you were in business for yourself, to get a loan based on your self-employment income, you need two years’ worth of tax returns; just don’t close down the business. If you plan on getting a job once you get to the Big Island, you only need two pay stubs from your new job to use that income toward your qualifying income.  All of your income will be taken into consideration when purchasing a home on the Big Island.

Here is information about services animals, emotional support animals and assistance animals from Bryan Andaya, Esq. E.F. Real Estate CE School http://www.eddiefloresce.com

Perhaps the most common request made to associations for a reasonable accommodation relates to animals.  It is more common than not for an association to restrict animals (this is often entitled “pet rules” in the controlling documents) in some manner – whether it is an absolute ban or a restriction on species, weight or size.  It is likely that some type of animal restriction exists in nearly every association.

Reasonable accommodation requests for animals are sought by owners in relation to the accommodation of a disability; because a disability under the anti-discrimination laws can be physical, mental, sensory, AIDS/HIV and include persons recovering from addiction, the request can come to the association for a myriad of reasons.

Unless the disability is readily apparent, the owner requesting the accommodation must offer proof of the disability in the form of a medical certificate.  The association should be careful in how it approaches the request, as making the request burdensome on the owner or delaying the request may give rise to a claim of discrimination.  There also must be a reasonable relation between the disability and the accommodation requested, i.e., the animal.  An owner’s failure to provide such information would relieve the association from liability for a charge of discrimination in denying the request.

Generally, an owner must obtain documentation from a physician, psychiatrist, social worker or other mental health professional that the animal provides support that mitigates at least one identified symptom of the disability.  In doing so, however, it is important to note that the owner need not disclose the specific details of the disability nor provide a detailed medical history to the association.

There is much confusion between the definitions of a “service animal,” [Mostly applicable with respect to public accommodations, a service animal is an animal that is individually trained to do work or perform tasks for the benefit of an individual with a physical, intellectual, and/or a mental disability, i.e., guiding individuals with impaired vision, providing protection or rescue work, pulling a wheel chair, or retrieving dropped items.  Under the Americans with Disabilities Act, service animals are limited to dogs and miniature horses.] an “emotional support animal,” [Emotional support/companion animals provide some therapeutic benefit to a person with a mental/psychiatric/emotional disability.  The mere presence of the emotional support/companion animal mitigates the effects of the emotional or mental disability for the person with the disability. Emotional support/companion animals can be virtually any species of domesticated animal.  Under the ADA, a commercial establishment need not accommodate emotional support animals.  With respect to residential housing in Hawai`i, however, the Hawaii Civil Rights Commission’s (HCRC) definition of an assistance animal includes emotional support animals.] and an “assistance animal.”  In Hawai`i, the HCRC is the agency charged with the enforcement of the anti-discrimination laws.  The HCRC defines “assistance” animal as “animals that work, assist, or perform tasks for the benefit of a person with a disability.  They can also be animals that provide emotional support.  They are not pets.  Assistance animals can include:  service animals, therapy animals, and comfort animals.  An assistance animal does not have to be a dog.  Cats, birds, rabbits and other animals have been recognized as assistance animals.” 

https://labor.hawaii.gov/hcrc/files/2013/01/ASSISTANCE_ANIMALS.pdf

Based on this language, associations and unit owners must provide a reasonable accommodation to persons with documentation from a medical provider indicating the need for an assistance animal.  In most cases, a reasonable accommodation would be an exception to the association’s established policies, which would include allowing the animal in question.

The owner of an assistance animal is not required to provide proof of training or the certification of the animal.  An assistance animal need not demonstrate the function they perform.  It is possible to have multiple assistance animals.  Neither the association nor the unit owner may request a pet “fee” or “deposit” be paid because the assistance animal is not a “pet.”  If the animal causes damage to a common area, however, the owner may be required to pay for the cost of repair.  Assistance animals are permitted in all areas of the residence and the common areas including recreational facilities.

CAN CANADIANS BUY PROPERTY IN HAWAII?

Absolutely!  There are no special restrictions on Canadians for buying property in Hawaii.  You just have to decide for yourself if the exchange rate is favorable.

If you want to make an offer on property to tie it up in escrow and take if off the market while you arrange to fly over, I can email you contracts in an electronically signable format; all you have to do is open the email, sigh in and click the places where you initial and sign  First you will have to inform me of the terms of your offer (offer price, down payment amount, names of signatories as you would sign a legal document, mailing address).  I will fill out the paperwork and email it to you.  

What you do is submit an offer with an inspection contingency and, if you are not paying cash, a financing contingency.  First, Buyer and Seller have to agree on terms and price.  Once they have both accepted and signed a contract, the contract and earnest money (usually $1,000.00 to start with) are deposited into an escrow account. You can wire the deposit to the escrow company. I will personally email the contracts to them.  At that time you must apply for your loan and order the home inspection.  The property is now effectively off the market.  You must apply for a loan within 5 days of the acceptance date.  At the end of the five days I will need a “pre-qualification” letter from your lender.  This can all be done by email while you are still at home. 

The most common inspection period is 15 days.  I usually know the day before if a contract is going to be accepted.  I then notify you to book your flight to the Big Island such that you will arrive at least three days before the inspection period is up.  You can then view the property and make up your mind.  If you decide you don’t like it then you can cancel the escrow account and get your deposit back.  Prior to your departure from the mainland you can also hire a professional inspector to view the property the day after your arrival.  If you decide you like the property when you see it, I can then give the professional inspector the go-ahead for the next day.  If you decide you don’t like the property I can cancel the professional inspection to save you the fee.  If you like the property and give the inspector the go-ahead, he will prepare a detailed report for you.  If you decide you are not happy with the inspection report then you can cancel the escrow account and get your deposit back.  During this inspection period you can cancel escrow at any time WITHOUT CAUSE and get your deposit back.  If you approve of his report, the inspection contingency is waived, and escrow proceeds to the next step which is the financing contingency.  Once your loan is approved the escrow proceeds to closing and the property is yours!  

You can also make your offer “sight-unseen”, in which case I would take photos and videos for you in addition to the report from the professional home inspector.