E-Newsletter: Frequently Asked Questions About Hawaii's Condominium Owner-Occupant Presale Notice Requirements

E-Newsletter: Frequently Asked Questions About Hawaii's Condominium Owner-Occupant Presale Notice Requirements

Frequently Asked Questions About Hawaii's Condominium Owner-Occupant Presale Notice Requirements

Developers need to take note of Hawaii's condominium owner-occupant presale notice requirements, as each violation could cost up to $10,000. Hawaii's Condominium Property Act requires a developer of a condominium project containing residential units to designate at least 50% of the units for sale to prospective owner-occupants. Such a developer must also publish an announcement or advertisement notifying the public of the units offered to owner-occupants. Some frequently asked questions are addressed below:

What must be published?

An announcement or advertisement containing at least:

  • The project's location;
  • The minimum price of the residential units;
  • Whether the residential units will be sold in fee simple or leasehold;
  • A statement that for a 30-day period following the date the announcement or advertisement is first published, at least 50% of the residential units being marketed must be offered only to prospective owner-occupants;
  • The name, phone number, and address of the developer or designated broker that prospective owner-occupants may contact to obtain an owner-occupant affidavit, a developer's public report, and any other relevant information; and
  • If applicable, whether the residential units will be offered through a public lottery.

Where must the announcement or advertisement be published?

  • In at least one newspaper published daily in the State with a general circulation in the county in which the project is to be located; and
  • If the project is located on a neighbor island, in at least one newspaper that is published at least weekly in the county in which the project is to be located.

 When and how often must the announcement or advertisement be published?

  • Publication may take place any time after the first developer's public report is issued an effective date.
  • The announcement or advertisement must be published at least once in each of two successive weeks.
  • Note that the mandatory 30-day owner-occupant offering period does not start to run until the day after the date of first publication.

 When may the developer begin to sell units?

  • The developer may start to sell both owner-occupant and market units the day of the first publication.

 What happens if an owner-occupant sale is cancelled?

  • The developer must offer the owner-occupant unit to the next prospective owner-occupant on the backup list, provided that the next person on the list did not already sign a sales contract or reservation for another unit in the project.

 What if the original publication contained a mistake?

  • While the law does not address such a situation, the safest course of action would be to wipe the slate clean by re-publishing the announcement or advertisement with the correct information and starting a new list of prospective owner-occupants.

 What's the penalty for failing to adhere to the requirements?

  • Failure to satisfy these requirements could result in fines. Each violation of the requirements constitutes a separate offense, subjecting the violator to a civil penalty of up to $10,000 per offense.

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