You may already know that the Hawaii DROA or Deposit Receipt Offer and Acceptance form was recently updated. The new form released by the Hawaii Association of Realtors (HAR) is simply entitled the “Purchase Contract.” What you may not know is how to navigate this complex legal document. Whether you’re a real estate broker, salesperson, lawyer, buyer or seller, you can benefit from this introduction to the Hawaii Purchase Contract. Here is a quick look at the Purchase Contract for the purchase and sale of residential property in the State of Hawaii.
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The Purchase Contract is split into an introductory section followed by four major sections known as Section A, Section B, Section C and Section D. In Section C, you will find the terms of the Offer. Essentially, Section C is the bulk of the Purchase Contract. It contains seventy-nine paragraphs that start on page two of the Form and continues through the better part of it.
Here’s what you’ll find inside the major sections:
- Section A contains “Agency Disclosures”. Each Brokerage Firm has to make Agency Disclosures to the parties whenever that Firm serves as a representative of a Party or as an agent in the transaction.
- Section B functions as a receipt of the Buyer’s initial deposit. This is typically signed by the Buyer’s agent. Additionally, Section B will specify whether Escrow or the Buyer will earn interest on the Buyer’s deposit if the deposit is placed into an interest bearing account.
- Section C is the main part of the Purchase Contract. It is made up of the Offer to buy the Property and the Offer’s terms and conditions, numbered C-1 through C-79. Section C also has additional documents or a list of addendum (if one document) and addenda (if more than one). Those additional documents can either be physically attached to or included by reference in the Purchase Contract in order to become part of the form.
- Section D is the section in which the Seller will do one of two things. The Seller can accept the Buyer’s Offer or Counter Offer meaning that they reject the original Buyer’s Offer. If the Seller does want to make a Counter Offer, they can do so by attaching HAR’s standard “Counter Offer” form. The confirmation of the Seller’s agreement to pay the Brokerage Firm’s agreed upon commission is also found in Section D.
Additionally, the HAR standard form “Cooperating Brokerage Firm’s Seperate Agreement” is usually attached to the Purchase Contract and is not legally part of the form. The HAR standard form is an agreement between the Brokerage Firms representing the Seller and the Buyer when they are not one in the same firm. It provides for the compensation of the Brokerage Firm providing services to the Buyer through the sharing of the listing commission. In most cases, the commission is split equally between the two Brokerage Firms.
Finally, if you have any part in buying or selling a home in Hawaii you will most likely use the standard form of the Hawaii Purchase Contract that was recently published by the Hawaii Association of Realtors. In order to better understand this form, we recommend reading the new Hawaii Real Estate Purchase Contract in it’s entirety, reading a comprehensive book on the New Purchase Contract and contacting one of Hawaii’s top real estate lawyers.
Hawaii DROA Purchase Contract Blog 