In 2018, the Hawaii State Legislature passed HB1869 and on July 11, 2018, it was signed by Governor Ige resulting in Act 194 (2018). This new law creates an exemption in the landlord-tenant code for sellers of real property who continue to reside in the sold property.
The apparent intent behind the law is to prevent holdover sellers from improperly residing in the property and then becoming a tenant. In addition, this mirrors the exemption in the landlord-tenant code for early occupancy by the buyer of real property. As a holdover seller cannot become a tenant, the new owner of the property would have an easier time removing the seller from the property, instead of having to go through the eviction procedure laid out in the landlord-tenant code.
This law does not prevent a seller from residing in the property after the sale, but any agreement between the buyer and seller should specifically note the fact that the landlord-tenant code does not apply to the relationship. For instance, if a buyer and seller agree that the seller may reside in the property for a month to allow the seller to finish packing, they should sign an agreement stating the seller can remain for a month. In this case, the standard Rental agreement is not the correct form since it is designed for situations where the landlord-tenant code applies.
There is a new HAR Standard Form – Post Closing Occupancy Contract that was created for this situation and new law. A commonly asked question by members is whether the buyer and seller could opt into a landlord-tenant code. As the law currently applies, this is not possible without the buyer and seller doing something to change their relationship. Another possibility would be for the drafted agreement between the parties to lay out all of the landlord-tenant code, this would require the buyer and seller to write out the entire landlord-tenant code or reference it in its entirety.
This article is not intended to be a comprehensive explanation of the new law, but rather to give REALTORS® an understanding of what the new law does and who it applies to.