HI State Real Estate Practice Exam

Which of these acknowledgments do buyers and sellers make by signing the HAR Purchase Contract form?

The seller makes no guarantee regarding the property's future resale value

What was one purpose of Hawaii's Land Commission, created in 1845?

To manage award of kuleana lands to the kanaka

pre-FIRM property

built before flood zone management was in place, so any major renovations will require that it be brought up to code.

The Professional and Vocational Licensing Act

prohibits leading others to believe one is licensed when no active license exists.

Section S: General Provisions of the HAR Purchase Contract

stipulates that the purchase contract constitutes the entire agreement between the contracting parties and that any prior negotiations or agreements between the parties are cancelled

Margot purchased shares in a Hawaii Co-op a little over a year ago. She just realized that she never received a property tax bill. Which of these statements might explain this?

A cooperative is a business entity (corporation, partnership, or trust) that owns the building and pays the property taxes. Each lessee is assessed a portion of the tax attributable to the individual unit.

A local planning and zoning board on Hawaii'i Island is reviewing multiple applications at this week's meeting. Which of the following new developments is likely to be reviewed relative to a mixed-use zoning ordinance?

A high rise with residential, retail, and entertainment space. The high rise is a planned unit development, which is considered mixed-use zoning.

Which of these is an example of a ground lease in Hawaii?

A landowner leases undeveloped land to another party, who then builds on that land. With a ground lease, the landowner leases the land to the tenant, who builds on the property. Ground leases are written for long periods so the tenant can recoup expenses, because when the lease is up, the landowner gets land back plus improvements.

How long do contractors have to file a mechanic's lien?

45 days

James, a Hawaii seller, is providing financing to his property's buyer in the form of a purchase money mortgage. Which of the following does James hold under this arrangement?

A lien against the property. The seller holds a lien against the property. The buyer has legal, not equitable, title to the property.

What is the protocol with military members breaking their lease for deployment?

A military tenant in a fixed-term lease may terminate on the last day of the month following the month in which the landlord was properly notified if proper notice is presented to the landlord and deployment will be for more than 90 days.

Which of these Hawaii leases requires a minimum 10-day notice to terminate the lease?

A week-to-week tenancy. A week-to-week tenancy only requires 10 days' termination notice (either orally in writing) by either the landlord or tenant.

A broker license applicant needs which of these from the PB or BIC?

Certification of the applicant's tenure as an active, full-time salesperson. Within 10 days of a request from a broker applicant, the PB or BIC must provide an experience certification that documents the length of time the applicant was actively associated with or employed full time by the brokerage firm.

Bylaws

Detail owner's rights related to condominium governance as well as the board's scope of authority

Which of these statements about a Hawaii condominium public report is true?

Developers submit the public report to the REC. It outlines project timelines, purchaser warranties, unit prices, etc. It's not an approval document.

Prior to the Great Mahele, the largest division of land in Hawaii was _____.

Division of land was based off geographical constraints and the largest division of land was moku-puni, which was an entire island.

The Hawaii Uniform Probate Code of 1977 replaced dower and curtesy with which of these protections?

Elective share. A surviving spouse may take an elective share of the decedent's augmented estate, the amount of which ranges from 3% to 50% of the estate, depending on the length of the marriage.

In what way are the tasks that escrow performs limited?

Escrow may only perform tasks according to written instructions from buyers and sellers. Escrow is a fiduciary for both the buyer and seller and can only perform tasks approved by both parties in either the contract, the closing instructions, or some other written document.

In what way are the tasks that escrow performs limited?

Escrow may only perform tasks according to written instructions from buyers and sellers.Escrow may only perform tasks according to written instructions from buyers and sellers.

Roberto's landlord won't cut Roberto any slack in paying his rent on time, so Roberto files a false complaint about a safety violation to get even with his landlord. Based on retaliatory eviction regulations, what can the landlord do?

Evict Roberto. Hawaii laws specifically permit a landlord to evict a tenant if the tenant files a false claim about a health or safety violation.

Which of the following individuals may qualify for a loan under Hawaii's Employee's Retirement System (ERS)?

Geraldine, who retired from employment with the state and is purchasing a single-family home as her primary residence. Employee's Retirement System (ERS) Mortgage Loans are a benefit for those who have retired from employment with the state of Hawaii or its counties. The loan must be for a single-family home intended as the buyer's principal residence. Loans can be used for purchase, construction, refinancing, or home improvement.

Which of the following describes a government police power?

Implementing zoning ordinances and building codes to protect citizens. Police power is the government's right to protect citizens through creating and enforcing various controls, including zoning, building, and environmental regulations.

In Hawaii, the ______ separates public from private land at the shoreline.

In Hawaii, the high water mark is used, which is usually at the debris or natural vegetation line.

Protected classes in Hawaii but not Federal

In addition to the seven federally protected classes, Hawaii adds age, marital status, gender identity/expression, HIV infection, sexual orientation, and ancestry.

Trinity's loan is subject to Hawaii's usury laws and is restricted to a 10% interest rate. Which of these must be true?

It's a loan with no written agreement between the borrower and lender. Hawaii law restricts interest the interest rate to no more than 10% on a loan for which there's no written agreement.

Jonah recently sold his Kauai beachfront property for $650,000. Morgan sold his Oahu Property for $650,000. Jonah's conveyance tax was higher than Morgan's. How can this happen?

Jonah isn't eligible for a homeowner's property tax exemption, so his tax rate is higher. Sellers who are eligible for a homeowner's property tax exemption pay a lower conveyance tax rate than those who aren't eligible.

Jesse has permission to live on his father's Kauai property as long as Jesse's grandmother is alive. This is an example of which type of life estate?

Pur autre vie

Which of these actions is prohibited by Hawaii's Escrow Act of 1967?

Rebates and referral fees. Rebates and referral fees are prohibited. Annual audits, depositing of funds into client trust funds, and incorporation are required.

Which of these activities normally would not require a Hawaii real estate license?

Selling personally owned property. A person can buy, sell, lease, rent, option or perform other real estate -related activities without a license as long as these actions pertain to the individual's own property.

The primary purpose of HICZMP is to ______.

Serve as an umbrella resource for county implementations of coastal zone management programs. Counties must comply with federal CZMA objectives and policies. The HICZMP permits counties to manage their own SMAs, stepping in to assist and help standardize processes.

Halia just purchased a condo in Hawaii. She didn't receive a seller's property disclosure form. What's the likely reason?

She purchased a bank-owned property. Lenders or trustees who are selling bank-owned properties aren't required to provide a disclosure form.

Mallory's firm is permitted by Hawaii law to hold earnest money funds for real estate transactions. Which of these statements must be true?

She works for a corporation. Only specially bonded and licensed corporations may hold Hawaii escrow funds.

Which of these categories of agency representation can a buyer or seller select in Section A of the HAR purchase contract?

Single Agency. Hawaii recognizes only single agency (for the buyer or seller) and dual agency. Buyers and sellers may also choose "no agency representation" in this section of the contract.

Which of these must comply with Hawaii's fair housing laws related to accessibility?

Sunny Side Development built a five-unit apartment building in 2016. Multi-family properties built after March 13, 1991, must meet certain design and accessibility requirements.

What provisions does Hawaii's Professional and Vocational Licensing Act make for license suspension?

The act prohibits license suspension for a period of more than five years.

How many days does a seller of a leasehold property have to provide the buyer with a disclosure that the property is leasehold and that certain risks accompany its purchase?

The seller has 10 days to provide the disclosure and must obtain a statement from the buyer acknowledging its receipt. After receipt, the buyer has 10 days to terminate.

A Hawaii seller is providing financing to a buyer under an agreement of sale arrangement. Which statement best summarizes who holds title to the property in a seller financing situation?

The seller retains legal title to the property until the buyer fulfills the terms of the agreement of sale, but the buyer holds equitable title to the property. Under an agreement of sale arrangement, the seller provides financing for the home and retains legal title to the property until the purchase price is paid off; the buyer holds equitable title.

Lydia is applying for a homeowner property tax exemption in Kauai County. If she qualifies, what will her tax rate be?

The standard property tax rate in Kauai County is $6.05 per $1,000 of assessed value. If the homeowner exemption is granted, the rate drops to $3.05 per $1,000 of assessed value.

In relation to a Hawaii Agreement of Sale (land contract), the buyer is referred to as the _____.

The vendee is the buyer/borrower, and the vendor is the seller/lender in an agreement of sale.

For how long must a trespasser use another's property before a claim of adverse possession will apply in Hawaii?

Use must be open, hostile, notorious, exclusive, and uninterrupted for 20 years for an adverse possession claim to prevail in Hawaii.

Which of these most accurately depicts an agreement of sale (land contract)?

Victor buys a property from Yolanda for $200,000. Victor agrees to pay Yolanda in monthly installments of $4,000 over the course of 50 months. Yolanda will retain title to the property until the loan is fully paid. An agreement of sale involves a seller financing the property purchase and retaining title to the property until the loan is paid in full.

When does the Hawai'i Good Funds act state that closing can occur?

When all buyer and lender funds have cleared and have been deposited (unless the parties agree otherwise).

Section R of Hawaii's purchase contract

includes a description of the brokerage's scope of services, including limitations on providing advice and a recommendation that contracting parties confer with other experts as necessary to protect themselves.

What does a mortgage with a 'Power of Sale' clause permit?

permits the lender to use a non-judicial foreclosure process if forced to foreclose on Kindra.

Hawaii's Land Reform Act of 1974

permitted the government to require conversion of some leasehold properties to fee simple properties through eminent domain proceedings.

What is conveyance tax based on?

Homeowner exemption status of buyer and sale price of the property.

If a Hawaii company forfeits its real estate license, how long does the company have to restore it before the license is terminated?

If a company forfeits its real estate license and fails to restore it within one year, the license is terminated.

Great Mahele of 1848

It distributed ownership of lands previously owned by the kings to high chiefs and chiefs who further distributed some of it to commoners who could work the land as tenants.

The judicial foreclosure sale on Morgan's property is scheduled for May 12. By what date must he exercise his equitable right of redemption?

May 9 Borrowers may exercise an equitable right of redemption up until three days before a non-judicial foreclosure sale.

Tina has fee simple ownership of her timeshare unit. Which of these is NOT an example of the type of ownership she may have?

Right to use. Fee simple ownership of a timeshare (aka timeshare estate) unit means that the owner may share tenancy in common with other timeshare owners or may have an interval ownership. A right-to-use timeshare is a lease agreement, not an ownership interest.

Which of these statements accurately reflects how items would appear on the settlement statement based on Hawaii custom?

Seller pays FIRPTA/HARPTA, buyer's title insurance, and conveyance taxes. Remember that while custom often dictates who pays for what, all these items are negotiable between buyer and seller.

Which of these scenarios most likely describes who controls the condo association during the early phases of development?

The developer or his agent can appoint and remove association board members. The declaration may provide an initial period of developer association control, during which the developer may appoint or remove board of directors' members. The declaration and state law dictate the length of the developer's control period.

The Hawaii conveyance tax rate varies based on whether or not the purchaser qualifies for a homeowner exemption, but how is the rate expressed?

An amount per $100 based on the sales price.

Ryan has made an offer on a Maui property and elects to have it tested for radon and lead. Which of these statements is true?

As the buyer, Ryan will likely bear the cost of any inspections performed. The inspection contingency clause provided in the HAR purchase contract notes that payment for all inspections the buyer requests are the buyer's responsibility.

Property conveyance under a land trust

Because real property held in a land trust is considered personal property, the beneficiary can convey the property by simply assigning the beneficial interest to another party.

Which of these statements about Hawaii's GET is true?

Businesses must include GET collected from customers in their gross receipts.

What is the primary difference between a specific and general lien?

General liens attach to both personal and real property; specific liens attach to the property used as collateral.

The county with the highest property tax rate in Hawaii is ________.

Hawaii County. The tax rate in Hawaii County is $6.15 per $1,000 of assessed value, which is the highest rate in Hawaii. Its basic homeowner exemption is $40,000.

In Hawaii, any encroachment beyond the ______ will require an encroachment agreement.

De Minis

What's the purpose of Hawaii's rent trust fund?

Landlords or tenants may request that rent be deposited into the trust fund if the court has been brought into a rent dispute.

Which number or numbers represent the plat number in TMK number 453120310?

The last three digits, 310, represent the parcel number. The three numbers preceding the parcel number, in the middle of the TMK number, 120, represent the plat number.

Reggie is a legal guardian for his mother, who suffers from a mental illness. His mother would like to buy a luxury condo, but Reggie tells her she can only afford a cheap condo. In reality, his mother could easily afford a luxury condo, and Reggie hopes to transfer her excess money into his personal account. Reggie's mother trusts his word, and enters into a contract to buy a cheap condo. This is an example of ______.

Undue influence. Undue influence exists when an act of persuasion overcomes another person's free will and judgment. Reggie's familial relationship to his mother gives him the opportunity to exercise undue influence over her decisions.

What are a borrowers' redemption rights under Hawaii foreclosure law?

Borrowers have an equitable right of redemption, which permits them to bring all payments and fees current before a foreclosure sale takes place. Hawaii recognizes a borrower's rights to equitable redemption before a foreclosure sale, but no statutory right of redemption is provided except for a one-year redemption period in the case of foreclosure for non-payment of property taxes.

Which of the following is true about Hawaii's de minimis encroachment allowance?

Commercial: three inches; residential: six inches; agricultural: nine inches; conservation: 18 inches.

Kristin is buying Alyssa's Waikiki condo. They've not negotiated anything out of the ordinary related to who pays what closing costs. How will the lender's title insurance appear on the closing statement?

Debit to buyer, no entry seller. Items that are in a party's favor appear as a credit on the settlement statement; items that impact only one party appear on just that party's settlement statement. Since the buyer pays for the lender's title insurance, this would result in a debit to the buyer.

Which of these statements related to the NAR Code of Ethics and Hawaii real estate licensees is true?

Hawaii codified licensee ethical behavior in HAR 16-99-3, requiring licensees to protect against unethical practices.

Hawaii is a _______ theory state

Hawaii is a lien theory state, which means the mortgage is used to create a lien against the property.

Which of these statements about fair housing laws in Hawaii is true?

Hawaii names additional protected classes beyond those protected by federal fair housing laws. The Hawaii Civil Rights Commission has jurisdiction over discrimination cases, which may be brought against anyone who discriminates in any real property transaction.

Keanu uses his Kauai home as a short-term vacation rental for three months out of the year and lives in it the rest of the year. His most recent rental was for 14 days for $1,500 a day plus daily cleaning and maintenance fees of $20 as well as TAT. His lease agreement separates out each of these expenses. Which of these statements about TAT is correct?

Keanu will calculate his gross rental income using the rental charge plus cleaning and maintenance fees. Gross rental income includes rental income and the fees charged. Because Keanu clearly lists TAT charges on his lease agreement, he doesn't have to include it in the gross income calculation.

In which of these situations does a Hawaii licensee have a disclosable ownership interest in the property?

Kennedy is representing his LLC in the purchase of a commercial building. Kennedy is part of the LCC that's purchasing a commercial building, so he must disclose this interest to all parties to the transaction.

According to Hawaii law, which of these is an example of commingling client funds?

Kirstin deposited a client's earnest money check into the firm's operating account. Commingling is combining client funds with personal or business funds. In Hawaii, it's legal to hold an earnest money check until an offer is accepted (with the buyer's permission) and to deposit maintenance funds into a trust account.

Gina wrote a lease agreement for use with the six apartments she owns. Which of these provisions would Hawaii law prohibit?

Landlord is not liable for injuries sustained on the premises. The rental agreement may not include any terminology that limits the landlord's liability.

What is the difference between leasehold ownership and a leasehold estate?

Leasehold ownership refers to a ground lease; a leasehold estate is a less-than freehold estate (tenancy).

Tina is negotiating a lease in Hawaii. For which transaction is agency disclosure required?

Leases, both commercial and residential, of longer than one year require agency disclosure.

What disclosure appears in Section R, Brokerage Firms Services and Disclaimers, of the HAR Purchase Contract?

Licensees aren't permitted to acquire any type of interest in a property listed with their brokerage firm without disclosing that relationship in this contract section

When an offer is being made, what information does the Hawaii listing agent need to disclose to the seller?

Listing brokers must disclose to the seller the buyer's representation situation (whether the buyer is represented by another broker).

Luke just purchased a property for $325,000, which was over list price. The Hawaii County assessed property value is $318,000. He's eligible for a $40,000 homeowner exemption and other exemptions of $5,000. His GET for the year was $80. On what amount will his property tax be calculated?

Luke's assessed value will be reduced by the amount of his exemptions. The GET doesn't impact his property taxes. Thus, his property tax will be calculated on $273,000 ($318,000 - $45,000 = $273,000).

As late as the 1960s, a significant portion of Hawaii lands were leasehold rather than fee simple. The Land Reform Act of 1967 provided for ______.

Mandatory leasehold conversions through condemnation. The Land Reform Act gave the state the authority to pursue mandatory conversion of leasehold lands to fee simple using condemnation for the purpose of providing homeowners with fee simple title to their properties.

Lanai Developers submitted its initial public report and has sold 55% of the units developed. Lanai's attorneys discover that an amendment to the public report is necessary. Based on Hawaii law, to which of these parties is the developer NOT required to submit the amended report?

Project investors. Not Hawaii law

Which of these is Hawaii's permanent legislation designed to protect the state's coastal zones?

The Hawaii Coastal Zone Management Program, HICZMP, is Hawaii's permanent coastal zone management legislation.

In which of these situations would the client be protected under Hawaii fair housing laws but not federal fair housing laws?

Suny, who's a transgender woman, was refused an apartment lease because of her sexual identity. Both federal and state fair housing laws prohibit discrimination based on HIV and familial status. Federal law doesn't currently specify protection for sexual identity, though some course cases appear to support this protection.

Suzanne's lender sold her foreclosed home at auction, receiving less for it than Suzanne owed against it. Her lender is seeking a deficiency judgment. Which of these must be true?

Suzanne's lender used a judicial foreclosure process. Lenders may file for a deficiency judgment only if they used a judicial foreclosure process.

Which of these statements about Hawaii purchase contract contingencies is true?

The HAR purchase contract includes provisions that address most contingency issues. Most contingency situations are addressed in the body of the HAR purchase contract. Only HAR members have access to this contract form, so other contract forms may or may not cover the same contingencies.

What's the primary impact of the PASH decision?

The ambiguous nature of the decision places into question what access property owners can and can't prohibit. The primary impact of PASH results from the ambiguous nature of enforcement and what activities are and aren't protected.

What does it mean when an individual has an interest in real property?

The individual has some claim against or right to a property. An ownership interest refers to the individual's legal rights to a specific property. These rights may be either as an owner or as a tenant.

How long is a real estate license revoked if a client is given funds from the Hawaii Real Estate Recovery fund?

The license of any individual on whose behalf the Real Estate Recovery Fund reimburses a consumer will be terminated for a minimum of five years. The licensee will not be eligible for a license until all funds have been reimbursed to the fund

Typically, HREC would be responsible for placing a licensee on involuntary inactive status. Who else has the authority to do this?

The licensee's principal broker or broker-in-charge. The licensee's principal broker or broker-in-chargemay place a licensee on involuntary inactive status if the licensee doesn't comply with broker policies, which results in a liability to the firm.

Caitlin needs to pay for some routine maintenance to one of the units in her apartment complex. Which bank account should she use?

The operating account for that specific unit. Funds in the firm's operating account are used for operating expenses. Trust account funds are disbursed only for very specific purposes, such as returning a security deposit.

Which of these best describes a condominium property regime (CPR)?

The ownership structure and governance process for a condominium project. A condominium property regime refers to the way ownership is held and how a new condominium property is governed.

Who is responsible for paying the conveyance tax in Hawaii?

The person who is doing the conveying—the seller—is responsible for paying the conveyance tax.

What are the main ways that Hawaii license laws ensure consumer protection?

They establish requirements, define activities, and set standards. License laws ensure consumer protection by establishing basic requirements for entry to the profession, defining licensable activities, and setting conduct standards.

What's the purpose of the additional checkboxes in Section T of the HAR Purchase Contract that identify parties to the contract as a foreign, non-resident, or owner occupant?

To identify the status of the contracting parties to escrow and other responsible parties so closing withholdings and charges can be made properly

Toni purchased a fee simple property in Hawaii. Her deed is recorded in Hawaii's regular system. What can she do to ensure she has sole ownership of the property?

Toni can submit the property to Hawaii Land Court. The judicial review process will reveal if Toni is the sole owner. If she is, she'll receive a certificate of title verifying ownership.

Trinity has fee simple defeasible ownership of her property. Which of these is true?

Trinity's estate includes the full bundle of legal rights, but her ownership is based on a condition. Ownership may be terminated if the required condition is violated.

Which of these statements about a Hawaii brokerage firm's main and branch offices is most accurate?

Tristan is opening a second branch office on Hawaii island. He doesn't need to register it. Only one branch office per island must be registered. Brokerage firms must have a Hawaii location from which they conduct operations.

Bobbie and Samantha enter into a contract for Samantha to purchase Bobbie's home. Bobbie decides he doesn't want to sell, and is elated when he finds out that Samantha is only 17 years old. Can Samantha force Bobbie to sell?

Yes, Samantha can require that Bobbie fulfill the contract terms. In the same way that a legally incompetent party can void a contract while the competent party cannot, a legally incompetent party can enforce a contract should the competent party wish to terminate.

Estelita lives in her island property nine months out of the year and uses it as a rental for the remaining three months. Is she liable for TAT?

Yes, because TAT applies to renters who stay fewer than 180 consecutive days.

A borrower in Hawaii defaulted on their home loan. The lender foreclosed on the property and sought additional legal action to collect remaining debt that was owed. What type of loan did the borrower have?

recourse loans, the debtor is personally liable for the debt. This means that if the borrower defaults, the lender can take the collateral (the home) and pursue the borrower for remaining debts. In some cases, this may include levying accounts or garnishing wages to collect what's owed. Hawaii is a recourse state.

Purchase Money Mortgage

seller financing typically used to bridge the gap between the buyer's available down payment and the institutional loan, though it can also be used to finance the entire purchase price.

What form is required in a short sale?

standard Hawaii property disclosure form