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Hawaii Owner-Builder Law Amended to Allow Hardship Exemption for Selling Property with Open Permits

  |  Legislative Updates: State of Hawaii

Effective July 1, 2011, Act 115 further amends Hawaii’s owner-builder law, clarifying whether or not an owner, in the event of hardship, can sell a property with an open owner-builder permit.

The new legislation allows property owners who have started construction or improvements with an owner-builder permit to list their property for sale before final completion in the event of unforeseen hardship, providing the owner applies for and receives a Hardship Exemption from the Contractors License Board.

Last year, an amendment to the law made it possible for licensed real estate agents to represent owners who obtained a Hardship Exemption during the first year after final completion if the owner found it necessary to sell due to unforeseen circumstances. Previously, agents faced disciplinary action from the DCCA for listing properties with owner-builder permits during the first year after completion. (Learn more in this July 2010 post.)

To obtain a Hardship Exemption, an owner must submit an application to the board “prior to selling, leasing, or offering to sell or lease the property describing the nature of the applicant’s unforeseen hardship.” The Contractors License Board must notify the owner-builder in writing of its determination within 90 days of receipt of the complete application. Supporting documentation detailing the hardship may include:

  • Evidence of receipt of unemployment compensation
  • Tax returns
  • Medical records
  • Bank statements
  • Divorce decrees ordering sale of property
  • Mortgage default letters
  • Bankruptcy filings

Additional Resources

For more information about Act 115, please contact one of our Big Island real estate sales professionals. Or, read Governors Message 1218 (PDF) to view the amendments.

The Got Owner Builder Permit? (PDF) brochure from the Hawaii Department of Commerce and Consumer provides more information about the hardship exemption and outlines two other cases in which owner-builders can be exempt from the one-year rule: 1) if they are selling a residence to an employee or 2) if the work done under the permit is estimated at less than $10,000.

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