Closing a Real Estate Transaction in Hawaii During COVID-19 Restrictions

You may have wondered whether COVID-19 restrictions on travel and businesses make it impossible to buy or sell a property in Hawaii right now. It is very possible. I opened escrow last week with buyers who had seen a property they loved prior to travel restrictions and are excited to be purchasing their special new home in Hawaiʻi.

There can be delays, and procedures have changed of necessity. But all the services associated with the real estate transaction process, including home inspection, appraisal, and escrow services, are deemed essential businesses, and those professionals are taking precautions to ensure the health and safety of themselves and others.

Here are some observations as to what to expect if you are buying or selling real estate in Hawaii right now.

Essential services are exempt from closure but are adapting to keep everyone safe — good thing my mare stands for the farrier without me!

The Basics of Your Real Estate Transaction Remain Unchanged

Fifteen years ago if you bought real estate in Hawaii, you might have gone out looking for the day, then sat at a coffee shop with your agent as you filled in and signed the offer. We thought we were really advanced because she then would take it back to the office to scan and email to the listing agent to present via email to the seller.

For the past decade, electronic signatures have been allowed in real estate deals in Hawaii. Digital signing platforms and smartphones have made it possible to read, sign, and send documents associated with the transaction without having to have people touch paper or go to an office. Your mortgage company already would have had you upload your personal documents to a secure website, and send you documents to sign electronically along the way. Aside from closing documents, such as the deed and mortgage note that have to be notarized, the real estate industry is already used to working in a virtual environment.

Remember Hawaii is an escrow state rather than a state in which table closings typically bring together buyer and seller and their agents and possibly an attorney or closing agent. All documents and funds are processed by the escrow side of your title company. It is quite common to have an escrow where both buyer and seller are out of state at the time of signing. Actual closing, or recording of the property at the Bureau of Conveyances, takes place days later after all the documents arrive in Honolulu.

Hawaii State and County offices including the Bureau of Conveyances and tax offices are “open for business” although most employees are working virtually.

What IS Different About the Buying/Selling Process Under COVID-19 Restrictions

The first thing you will notice that is different when you list your property or are ready to submit an offer on a home, is that the package of documents includes an addendum intended to address COVID-19 related issues.

• On the listing side, the standard contract includes language requiring sellers to allow access during reasonable hours for showings and open houses. The COVID-19 addendum explains that we will not be holding open houses, and will be screening buyers before agreeing to showings, even if the home is vacant. It is common sense that we prefer to show property virtually rather than run the risk of transmitting the virus. 

• The COVID-19 addendum to the purchase contract makes it automatic that if there are any contingencies or obligations under the contract which are unable to be fulfilled in the stipulated time frame because of COVID-19 restrictions, those contingency periods are automatically extended and the count begins once the affecting restrictions are lifted.  Again, just common sense.

Title Guaranty in Kamuela has a table outside so clients can do “drive up” signings without coming into the office.

All real estate professionals, including inspectors, appraisers, and escrow companies, are taking steps to limit the possibility of transmitting infection. That means that inspectors and appraisers are wearing protective gear and disinfecting as they go through the house. It means that escrow companies are offering drive-up signings, where you can have your documents notarized without getting out of your car. If you arrange to sign in person, the room will be disinfected before and after, and everyone involved will maintain physical distance. No congratulatory hugs at the end!

If you are signing in another state with a mobile notary, check on what restrictions are imposed by your own state on notary services. Some states have enacted administrative procedures for remote notarization. Allow enough lead time, as these procedures may make it difficult to sign in front of a notary and overnight the notarized documents to Hawaii on the same day as they are sent out for signature.

Escrow companies have reassured their clients they will provide gap coverage if for some reason Hawaiʻi chose to shut down the Bureau of Conveyances temporarily due to the pandemic — this is essentially what happens when you have a roundtable closing in other states.

The bottom line is that while it may not be business as usual, buying and selling real estate is still happening in Hawaiʻi!