State guide

Buying or Selling a Home in Hawaii: What You Need to Know

Hawaii is one of the most unique real-estate markets in the country, with leasehold property, lava-zone disclosures, and a tiered state conveyance tax that other states don't have.

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TL;DR

Hawaii is one of the most unique real-estate markets in the country, with leasehold property, lava-zone disclosures, and a tiered state conveyance tax that other states don't have. Closings are handled by licensed escrow companies, not attorneys, and sellers must give buyers a detailed written disclosure of the property's condition and any known issues. Buyers and out-of-state sellers also face Hawaii-specific tax rules, so it pays to slow down, read every form, and ask questions before signing anything.

10 things every Hawaii buyer or seller should know

  • Most Hawaii home closings are run by a licensed escrow company, not an attorney. The escrow company is a neutral middleman that holds your earnest money, prepares the closing paperwork, and pays everyone out when the deal closes under HRS Chapter 449.

  • Hawaii charges a state conveyance tax on every home sale, and the seller pays it at closing. The rate is tiered by price and whether the buyer will live there as a primary home, so a higher-priced or investor-bought home is taxed at a higher rate per $100 of the sale price under HRS Chapter 247.

  • Because of the NAR settlement that took effect August 17, 2024, any agent who is a member of the National Association of Realtors must have you sign a written buyer representation agreement before they tour a home with you in Hawaii. The agreement has to state how much your agent gets paid in clear numbers, not 'whatever the seller offers.'

  • Hawaii sellers of residential homes, condos, and small leaseholds must give the buyer a written Seller's Real Property Disclosure Statement under HRS Chapter 508D before the contract is signed. If you get it late, you have the right to cancel the contract within the rescission window, and the seller cannot waive that right by contract.

  • Lots of homes in Hawaii are leasehold, which means you buy the house or condo but not the land underneath it. You pay yearly ground rent to the landowner and the lease has a fixed end date, so the value, financing options, and resale all depend on how many years are left on the lease.

  • On Hawaii Island (the Big Island), every home sits inside one of nine USGS lava flow hazard zones, and the zone has to be disclosed in the seller's disclosure form. Zone 1 areas like lower Puna are the highest risk and lost over 700 homes in the 2018 Kilauea eruption, which also affects insurance and financing.

  • If the seller is not a Hawaii resident, the escrow company must hold back 7.25% of the gross sales price at closing and send it to the Hawaii Department of Taxation under HRS §235-68 (HARPTA). This is a prepayment of the seller's Hawaii income tax on the gain and can be refunded later if too much was withheld.

  • If the seller is a foreign person (a non-U.S. citizen or foreign company), the buyer must withhold 15% of the gross sale price under the federal FIRPTA rule. A common Hawaii exception: if the price is $300,000 or less and the buyer will use the home as a residence, FIRPTA withholding does not apply.

  • Hawaii's fair housing law (HRS Chapter 515) covers all the federal protected classes plus extra Hawaii-specific ones like ancestry, age, and sexual orientation. That means a Hawaii seller, landlord, or agent can be on the hook for discrimination claims even when federal law alone would not apply.

  • Hawaii has a state-run Real Estate Recovery Fund under HRS §467-16 that pays consumers harmed by a licensed agent's fraud or serious negligence, up to $25,000 per transaction. You have to win a court judgment first and show the agent can't pay you, and then you petition the Hawaii Real Estate Commission for the payout.

The guides

Common questions

Do I need a lawyer to buy or sell a home in Hawaii?
No. Hawaii uses an escrow-led closing model under HRS Chapter 449, so a licensed escrow company handles funds, paperwork, and disbursement at closing. You can still hire a lawyer if your deal is complicated (estate sale, leasehold, business entity), but for a standard residential sale it is not required.
What is the conveyance tax and how much will I pay as a seller?
The Hawaii conveyance tax is a state transfer tax the seller pays at closing under HRS Chapter 247, calculated per $100 of the sale price. The rate is tiered: lower for buyers who will live in the home and claim the owner-occupant exemption, and higher for investor or second-home purchases, with the top brackets kicking in on multi-million-dollar sales.
Do I really have to sign a buyer agreement before just looking at a house?
If your agent is a NAR member or works at a brokerage that participates in a NAR-affiliated MLS like HiCentral, yes. Under the NAR settlement effective August 17, 2024, the agreement must be signed before they tour a home with you, and it must state in clear numbers how the agent gets paid.
What is the difference between leasehold and fee simple in Hawaii?
Fee simple means you own the home and the land underneath it forever, like in most of the mainland U.S. Leasehold means you own the house or condo but rent the land from a landowner (often a large estate or trust), pay annual ground rent, and have a lease that expires on a fixed date, which has to be disclosed to you before you contract under HRS Chapter 508D.
I live on the mainland and own a rental in Hawaii. What is HARPTA and does it apply to me?
HARPTA is the Hawaii Real Property Tax Act at HRS §235-68. If you are not a Hawaii resident at the time of sale, the buyer's escrow company must withhold 7.25% of the gross sales price and send it to the Hawaii Department of Taxation as a prepayment of your Hawaii income tax on the gain. You can apply for a refund or reduced withholding if the actual tax owed is lower.
What disclosures does a Hawaii seller have to give me before I sign a contract?
Under HRS Chapter 508D, the seller must give you a written Seller's Real Property Disclosure Statement covering the home's condition and any known material facts before you sign the contract. For condos, you also get a full HRS Chapter 514B disclosure package (declaration, bylaws, financials, reserves, minutes, pending litigation), and for HOA homes a similar HRS Chapter 421J package.
How do I find out if a Big Island home is in a lava zone or flood zone?
The seller's disclosure must list the USGS lava flow hazard zone (1 through 9) for any Hawaii Island property under HRS Chapter 508D, and FEMA flood zone status is also a material fact you can verify yourself on the FEMA Flood Map Service Center. Lower-numbered lava zones and FEMA Special Flood Hazard Areas can affect insurance costs and whether some lenders will finance the home at all.
What if my agent or broker cheats me out of money — is there any backstop?
Yes. Hawaii's Real Estate Recovery Fund under HRS §467-16 can pay you up to $25,000 per transaction (and $75,000 lifetime against any single licensee) if you are harmed by fraud, dishonesty, or serious negligence by a licensed Hawaii agent. You first need a court judgment against the agent and proof you cannot collect from them, then you petition the Hawaii Real Estate Commission.

Glossary

2 terms
NAR — National Association of Realtors
The national trade group for real-estate agents. The 2024 NAR settlement is the legal deal that changed how buyer's agents get paid.
MLS — Multiple Listing Service
The shared database agents use to list and find homes for sale. Most homes you'll see online started here.