As we noted in our last article, there are disturbing ambiguities in Hawaii’s Mandatory Seller Disclosures act (Chapter 508D of Hawaii Revised Statutes). The law leaves the ordinary seller of real property wondering what he can do to protect himself. In the good-news/bad-news game, we’ll give you some of each today.

The law itself provides a few tools that may be of help to the seller. In the definitions, for instance we find this gem:

“The disclosure statement shall not be construed as a substitute for any expert inspection, professional advice, or warranty that the buyer may wish to obtain.”

We can’t here attempt to give you an explanation of the intended effect of that provision. It’s anyone’s guess.

More to the point is a sentence in §508D-9, which says:

“A buyer shall have no cause of action against a seller or seller's agent for, arising out of, or relating to the providing of a disclosure statement when the disclosure statement is prepared in good faith and with due care.”

That provision can give the seller some comfort, but still leaves open the possibility of an expensive law suit in which the dispute is over whether the seller prepared the statement “with due care.” The section goes on to list some specifics that the seller can rely on, but it does not give the seller any iron-clad guaranties of protection against an unhappy buyer.

In §508-16 there are two helpful items. One says,

 “After recordation of the sale of residential real property, a buyer shall have no right under this chapter to rescind the real estate purchase contract despite the seller's failure to comply with the requirements of this chapter.”

That means the buyer can’t cancel out after the escrow closes just because of this law, but it does not prevent a suit for damages. The other says that where the buyer is unsatisfied with the disclosure statement and cancels out of the escrow before it closes, he cannot also sue for damages. 

The law also has a 2-year statute of limitations, which might be helpful in some cases, but in the end there is no specific provision that the seller can utilize to forestall litigation. The only sure way around the statute appears to be to avoid it altogether by an agreement between the seller and buyer that the statute will not be applicable to the transaction.

Some attorneys believe that the provisions of the statute cannot be waived by agreement between the parties. There is, however, nothing in the statute that says so, and the general rule of law is that any competent person can waive benefits conferred on him by statute or otherwise. Where that is not the case, you will find that there is a provision in the law saying that agreements in contravention of the law are not valid. An example of that is the Landlord-Tenant Code, which prohibits rental agreements that require security deposits in excess of one month’s rent.

The prudent seller will generally want to insert in the sale agreement a paragraph that says the provisions of Chapter 508D do not apply to the transaction. This is especially true in those cases where the property is being sold “as-is”, and where the buyer is accepting the responsibility to inform himself of the condition of the property.

Of course, the information in this article is general only. If you have more questions, we suggest you consult an attorney who practices real estate law.

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