Pictured home: 952-A Iolani St. Hilo, HI 96720
Hawai`i is the only state in the nation with a dual system of recordation. Land Court recordation applies to some but not all real estate transactions. Properties recorded in Land Court undergo additional scrutiny and Court oversight. The system pre-dates the issuance of title insurance policies which first began in Hawaii in 1957. While some owners still love Land Court because it virtually eliminates title problems, others including attorneys, REALTORS®, and title companies find it frustrating and time consuming.
Land Court Woes
Case in point, (especially when the market is over-heated), Land Court documents are approved for recordation but certified years later. When errors are found during the confirmation process, interim sales and mortgages can be put in jeopardy. If errors can not be corrected, earlier transactions might be automatically invalidated. Not good. Title companies normally have parties to the transaction to give prior permission to correct administrative errors. Every land court document requires personal review.
Watch this, if a 100 unit time share sold 52 increments per unit, 5,200 transfer reviews would be generated for a land court recorded project. Every vacant land and residential sale in HPP, most of Puna, and any parcel previously conveyed by WH Shipman would be a land court sale. It’s easy to see that the numbers might be staggering. Backlogs are constant. Many argue that the land court system is passé.
A few years back, our legislature took a significant step toward correcting the land court backlog by moving time share transactions to the regular system. About the same time, the legislature passed into law a requirement that homeowners disclose the amount of the last 3 electric bills. Despite the fact, that homeowners (in my experience) never refused to provide this information, we apparently needed a law to cover this eventuality. Each year, the legislature piles on changes or creates new laws that affect our real property rights. In my mind, the bundle of rights a property owner enjoys is among most fundamental rights of our nation. Any limitation on such basic rights should undergo extreme scrutiny.
For instance, a landowner (in my opinion) should never be forced to accept an after-the-fact restriction on use and yet as our lands continue to be developed, it happens constantly. Each year, more restrictions surface. And it’s not just the legislature creating restrictions. The county council, lenders, insurance agencies, and appraisers all have their hand in the restriction pie. Keeping up with it all isn’t easy!
One very recent and significant change to appraisal rules states that if a lower level is under 7 ft, it cannot be given value as living area. There’s more to it but…Hello!! Don’t they know, ceiling heights below 80” are so common with our local construction that in many homes, the only bath is on the lower level. Can’t really have a home without a bathroom! Besides, this rule (if narrowly applied) will eliminate half the legal living area square footage of many vintage homes…homes that were originally designed for those of us under 65” tall!
Stand by for yearly legislative highlights coming to your inbox or mailbox real soon!