These three paragraphs seem to cause the most confusion of anything in the DROA (the Hawaii sales contract for real estate), with the possible exception of C-25, which we’ll cover in a future post.

     Whether a Buyer or Seller realizes this or not, whenever a Buyer client purchases a property, they are purchasing the property AS IS. This does not relieve the Seller from the obligation of the mandatory disclosure of all pertinent information about the property, or the Buyer’s obligation to have an inspection to determine the condition of the subject property.  However, the fact that every property is bought and sold As-Is does not negate the Buyer’s ability to ask that repairs and/or replacements be accomplished by the Seller prior to closing the transaction.

    The Seller can obviously respond by countering the offer, and either agreeing to the Buyer’s requests, amending the requests, or deleting the requested repairs/replacements entirely. From that point on, it is a matter of give and take - leading to either a meeting of the minds and the opening of escrow or the deal falls through if agreement cannot be reached. 

     If Buyer and Seller agree on what will and won’t be completed by both parties prior to closing, then escrow is opened. The Buyer can again request repairs/replacements be made prior to the end of the Buyer’s C-51 Inspection (Due Diligence) Period.  It is at this point that the thinking on the part of a lot of REALTORS seems to break down.

    The Buyer’s agent needs to educate the Buyer that - the earlier the Buyer presents the Seller with the list of requested repairs/replacements during the C-51 period - the better chance the Seller will respond.  NOTE: This necessitates that the Home Inspection be conducted early on.

     Many people, REALTORS and clients alike, are not aware of a very important element of the sales contract.  THE SELLER DOES NOT HAVE TO RESPOND either verbally or in writing to the Buyer’s request for repairs.  The Seller can choose to comply entirely, by accommodating all of the Buyer’s requests, they can agree to perform some of the requested tasks and not others, or they can TOTALLY ignore the request and be well within their rights according the contract.

    The key point for the Buyer to be aware of is that - if the Seller refuses the Buyer’s request for repairs/replacements, or totally ignores the Buyer’s request, the Buyer then has three options: 

1. Obtain the Seller’s written agreement to extend the C-51 Inspection period prior to the stated expiration date
2. Cancel the DROA prior to the end of the C-51 period, or
3. Accept the property in its initial as is condition. 

    “If the Buyer fails to make an election in writing within the specified time period, Buyer will have waived this contingency”.

    The C-52 paragraph states only that the Seller will maintain the property in the (exact) same condition it was in when the contract entered escrow.

    The C-53 paragraph states that the Buyer has an opportunity to inspect the property prior to closing to insure that the property is, in fact, in the same condition as when the contract entered Escrow – nothing more.  The Buyer cannot – as a result of the C-53 Inspection – request repairs/replacements be made unless the property has in fact changed since opening Escrow. 

    This fact makes it imperative that the Buyer perform a thorough C-51 Inspection, preferably accompanied by a Professional Property Inspector, to document all needed repairs/replacements prior to closing. 

    I hope this has helped clarify your understanding of these often misunderstood/misinterpreted sections of the Hawaii DROA.

Until next time – Take Good Care!

Jay J. Spadinger, REALTOR, BIC, Accredited Buyer Representative, akahi@jayhawaii.com

Hawaii State Educator, Akahi Real Estate Network, LLC  www.jayhawaii.com

Broker-in-Charge, Rainbow Properties www.rainbowproperties.com