Buying a home on Maui - the Purchase Contract explained
You've been doing your homework and done all the research and found a nice home on Maui that you want to buy. Now what? Your buyer's agent will help you with filling out the Purchase Contract, and will explain in detail what it all means. Be sure to ask questions if you don't understand. This is your first step towards making a purchase of a home on Maui! Now you're not just shopping, you're actually buying.
In Hawaii we have standard forms for use by the entire real estate industry, thanks to the Hawaii Association of REALTORS. The Purchase Contract had a major revision in 2012, and consists of 13 pages. I won't go into complete detail of each section, but here's a synopsis of the sections in the Hawaii Purchase Contract RR201:
- A - Agency Disclosure. Defines agency and states who represents buyer and seller.
- B - Deposit Receipt. Refers to the earnest money deposit...who paid, how much, to whom.
- C - Addenda. List of addendum choices, including some blanks. Some of the addenda are: 1031 exchange; AS IS; Dual Agency Consent; Short Sale; Standard Oceanfront Property.
- D - Offer to Buy and Purchase Price. States time frame for offer to be in effect. States purchase price and method of payments.
- E - Property Description. Tax Map Key (TMK) and a brief description. Inclusions and exclusions. Inventory list if applicable.
- F - Closing. States the closing date and any allowable extension to closing. Names the escrow company. Lists who pays for which closing costs. States who pays for any assessments on property. States whether the property will be buyer's primary residence or not.
- G - Title. Outines contingencies for title review and discrepancies. States how buyer will take title and tenancy.
- H - Funding. Cash or financing. Outlines any contingencies for obtaining cash or financing, and providing proof of such.
- I - Seller disclosures. Outlines time frame for seller to provide disclosure statements. Explains buyer's rights and obligations regarding disclosures. General disclosures are explained, such as: asbestos; hazardous waste; mold; lead based paint.
- J - Inspections Maintenance and Warranties. States time frame for buyer to do their due diligence. Explains about warranties and outlines procedure for incomplete repairs which were agreed upon. States the time frame for cleaning and pet treatment. Final walk through contingency explained.
- K - Staking and Survey. Buyer selects one of the other, or neither, and states when it's due. Encroachments and survey discrepancies are discussed, and the time frame to remedy such.
- L - Termite provisions. Outlines who selects the pest control operator and who pays for any treatment if needed.
- M - HOA,Subdivision and Condo Documents. Defines which documents need to be provided to buyer, and time frame for delivery and review.
- N - Rental Property Matters. Buyer chooses whether or not to accept property with tenants. Buyer can select which rental documents to review and accept
- O - Termination, Mediation, Arbitration. Explains various ways to terminate the contract, either by buyer or seller, both before and after specified time periods. Defines mediation and arbitration and other legal claims.
- P - Non-Resident Buyers and Sellers. Explains HARPTA and FIRPTA withholding taxes that may apply to out of state sellers. Refers to other instances where foreign buyers and/or sellers may be required to disclose their status.
- Q - Special Terms. Blank space to be filled in as needed.
- R - Brokers Firm Services and Disclaimers. Talks about scope of service and other topics. Disclosure if buyer or seller is a licensed REALTOR, or if any agent in the transaction is related to a principal.
- S - General Provisions. Defines terms like: Acceptance Date; Dates and Times; Electronic Signatures; Counterparts; Complete Agreement. Space for buyer to date and sign. Space to identify buyer's agent and brokerage firm.
- T - Acceptance or Counter Offer. Seller selects to either accept the offer or to counter the offer. Space for seller to date and sign. Space to identify seller's agent and brokerage firm.