Pictured home: 15-964 Paradise Ala Kai Dr. Keaau
Buying something under $25,000? (Yes, it’s possible!) If so, the State requires the inclusion of a two page form called a Plain Language Addendum. Why $25,000? You got me! It’s been that way for at least 32 years. Maybe it’s meant to educate an unsophisticated/novice buyer, or perhaps it was instituted so long ago that $25,000 was the norm. One thing I do know is that even seasoned buyers and sellers will likely find something among the 74 listed terms to add to their real estate vocabulary. For example:
- Do you know the difference between an amendment and an addendum?
- Or how real property differs from personal property?
- How about common elements and limited common elements?
- Many states have doc stamps associated with a sale, but in Hawai`i, it’s a conveyance tax.
- What about a preliminary title report or risk of loss?
It’s such a comprehensive list that many companies include it with all their purchase contracts…a good reminder that there’s a difference between an offer and a purchase contract. As complete as the list may seem, there are a few terms NOT included that might be very important to your purchase.
Notice of Completion
Ever notice/see the public announcements about completion of real estate in the classifieds? Commonly referred to as the “NOC” (pronounced knock), it’s meant to put sub-contractors on notice that they have 45 days to file a claim against the owner or contractor for monies still due them. When a home is sold prior to the expiration of the 45-day notice period, escrow and title may impose a waiting period especially if a licensed contractor is not involved. There may be a work-around, but you need to know to ask.
If you’re buying new construction, always ask for a copy of the NOC to ensure it was posted. Without it, you may find yourself faced with owning a subcontractor. Within the body of the NOC is notice regarding the name of the general contractor or if the property was built with an owner-builder exemption. Remember, a home built with an owner-builder exception cannot be sold or leased for one year. Not clear if it’s a year from posting of the notice or a year from final inspection. I vote for the final inspection.
General contractors are required to warrant the home one year from completion. There is no such requirement for an owner-builder, hence the genesis of the one year holding period. Also, left undefined by statute (warranty is based on case law, not statute) is the date when the warranty should begin. Logically, beginning a warranty before occupancy doesn’t make any more sense than beginning your refrigerator warranty before you buy it, and yet most agents (and probably the contractor’s board) generally state the date is upon completion….whatever that means. For this reason, it’s best to state your expectation in your purchase contract.
So, now you know what you didn’t know you didn’t know. And, no matter the amount of your purchase, study a copy of the Plain Language Addendum, but be sure to ask your agent if there might be other terms you need to know that relate to your real estate transaction!