HAR Chapter 104 – Uniform Land Sales Practices

HAWAII ADMINISTRATIVE RULES
TITLE 16
DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
CHAPTER 104
UNIFORM LAND SALES PRACTICES
Subchapter 1 	General Provisions
§16-104-1 	Objective
§16-104-2 	Definitions
Subchapter 2 	Applications for Registration or Exemption
§16-104-8 	Forms and instructions
§16-104-9 	Filing required
§16-104-10 	Application for registration
§16-104-11 	Application for section 484-10(g), HRS, exemption
§16-104-12 	Notice of section 484-3, HRS, exemption
§16-104-13 	Notice of filing
Subchapter 3 	Advertisements
§16-104-19 	Advertisement materials
Subchapter 4 	Public Offering Statement
§16-104-25 	Format
§16-104-26 	Issuance to purchasers and prospective purchasers
Subchapter 5 	Escrow Agreement
§16-104-32 	Executed copy of escrow agreement
§16-104-33 	Escrow terms
§16-104-34 	Escrow arrangement
104-1

Subchapter 6 	Annual Report
§16-104-40 	Form and instructions
§16-104-41 	Final report
Subchapter 7 	Road Maintenance Fund
§16-104-47 	Creation of road maintenance funds
Subchapter 8 	Practice and Procedures
§16-104-53 	Administrative practice and procedure
§16-104-54 	Rejection of application; hearing
§16-104-55 	Proceedings upon petition for reconsideration
§16-104-56 	Proceedings for cease and desist orders, and revocation
SUBCHAPTER 1
GENERAL PROVISIONS
§16-104-1 	Objective. 	This chapter is intended to clarify and implement
chapter 484, Hawaii Revised Statutes, to the end that the provisions thereunder
may best be effectuated and the public interest most effectively served. 	[Eff
8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §454-10)
§16-104-2 Definitions. Definitions of terms found in section 484-1, HRS,
shall be adopted by reference. 	In addition, the following definitions shall be
included:
"Current financial statement" means the balance sheet, income statement,
and any other financial reports as deemed appropriate by the director for the most
recent fiscal year.
"Director" means the director of commerce and consumer affairs.
"Material change" means any change which either renders the information
contained in the application or public offering statement misleading or which
substantively affects the rights and obligations of a purchaser or a prospective
purchaser of a subdivision lot, such as, but not limited to change in the nature or
usage of the subdivision, or change in the underlying encumbrances or restrictive
covenants.
104-2

"Public offering statement" means a statement that fully and accurately
discloses the physical characteristics of the subdivided lands offered and all
unusual or material circumstances or features affecting the subdivided lands. The
statement shall incorporate the requirements of section 484-6, HRS. [Eff 8/8/87]
(Auth: 	HRS §484-10) (Imp: 	HRS §484-10)
SUBCHAPTER 2
APPLICATIONS FOR REGISTRATION OR EXEMPTION
§16-104-8 	Forms and instructions. 	(a) An application for registration or
exemption shall not be accepted by the director unless it contains complete
information called for in the application form and any filing instructions. 	[Eff
8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-5)
§16-104-9 Filing required. Unless the subdivided lands or the transaction
is exempt by section 484-3, HRS, and as provided in section 16-104-12, filing of
an 	application 	for 	registration 	or 	exemption 	is 	required 	of 	all 	real 	estate
subdivisions located in the State or elsewhere offered for sale in the State where
land is divided or proposed to be divided into two or more lots, parcels, units, or
interests and also includes any land whether contingent or not if two or more lots,
parcels, units, or interests are offered as a part of a common promotional plan of
advertising and sale. 	An application is filed when it is received in the office of
the director. 	[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-5)
§16-104-10 Application for registration. (a) An application for registration
shall contain the documents and information required under section 484-5, HRS,
and:
(1) 	A current financial statement of the subdivider prepared according
to generally accepted accounting principles and properly notarized,
or the most current audited financial report prepared by a certified
public accountant which shall be not more than twelve months old.
Any false or fraudulent financial statement or report submitted by
the subdivider may be grounds for rejection or revocation of
registration;
(2) 	A statement that the subdivider has not, or if a corporation, its
officers, directors, and principals, or if a partnership, the general
partners have 	not been convicted of a 	crime involving land
104-3

dispositions or any aspect of land sales business in the United
States or foreign country within the past ten years or has not been
subject to any injunction or administrative order within the past ten
years restraining a false or misleading promotional plan involving
land dispositions;
(3) 	If federal registration is required, the date of registration (date of
filing if pending registration) and a copy of the "Statement of
Record";
(4) 	A letter of preliminary or final subdivision approval, or both, from
the county or other appropriate jurisdictions;
(5) 	The 	name, 	address, 	and 	phone 	number 	of 	the 	subdivider’s
representative or real estate agent in Hawaii; and
(6) 	A description of a road maintenance fund or any other maintenance
fund that may have been established by the developer.
(b) 	The 	application 	shall 	be 	submitted 	with 	a 	payment 	of 	the
appropriate registration fee and inspection expenses. 	[Eff 8/8/87] (Auth: HRS
§§484-10, 484-5) (Imp: 	HRS §484-5)
§16-104-11 	Application for section 484-10(g), HRS, exemption. 	(a) All
applications for section 484-10(g), HRS, exemption shall contain the following
documents and information:
(1) 	A statement of the condition of the title to the subdivided lands
including encumbrances as of a specified date within thirty days of
the date of application by a title report prepared by a qualified title
company, or by other evidence of title acceptable to the director;
(2) 	Copies of the instruments which shall be delivered to a purchaser
to evidence the purchaser’s interest in the subdivided lands and of
the contracts and other agreements which a purchaser shall be
required to agree to or sign;
(3) 	If there is a lien or encumbrance affecting any lot, parcel, unit, or
interest, a statement of the consequences for a purchaser of failure
to discharge the lien or encumbrance and the steps, if any, taken to
protect the purchaser in case of this eventuality;
(4) 	A statement of the existing provisions for access, sewage, disposal,
water, and other public utilities in the subdivision; a statement for
the improvements to be installed, the schedule for their completion,
and a statement as to the provisions for improvement maintenance;
(5) 	A narrative description of the promotional plan for the disposition
of the subdivided lands together with copies of all advertising
104-4

material which have been prepared for public distribution by any
means of communication;
(6) 	A statement that the subdivider has not, or if a corporation, its
officers, directors, and principals, or if a partnership, the general
partners have 	not been convicted of a 	crime involving land
dispositions or any aspect of land sales business in the United
States or foreign country within the past ten years or has not been
subject to any injunction or administrative order within the past ten
years restraining a false or misleading promotional plan involving
land dispositions;
(7) 	A letter of preliminary or final subdivision approval, or both, from
the county or other appropriate jurisdictions;
(8) 	For application for preliminary order of exemption, an executed
copy of the escrow agreement between the developer and a bank,
savings and loan association, trust company authorized to do
business in Hawaii under an escrow arrangement, or a corporation
licensed as an escrow depository under chapter 449, HRS, and a
copy of a receipt for a written notice of a purchaser’s right to
rescind a contract within seven days after signing a contract,
without penalty to the purchaser; and
(9) 	The 	name, 	address, 	and 	phone 	number 	of 	the 	subdivider’s
representative or real estate agent in Hawaii.
(b) 	The 	application 	shall 	be 	submitted 	with 	a 	payment 	of 	the
appropriate exemption fee and inspection expenses. 	[Eff 8/8/87] (Auth: 	HRS
§484-10) (Imp: 	HRS §§484-10, 484-7)
§16-104-12 Notice of section 484-3, HRS, exemption. (a) All notices of
section 484-3, HRS, exemption shall contain the following documents and
information:
(1) 	The subdivider’s name, address, and phone number;
(2) 	The name and location of the subdivision; and
(3) 	A statement and explanation of the specific exemption being
applied for, pursuant to section 484-3, HRS, with appropriate
documents, including but not limited to, a legal description of the
subdivided lots, together with a map showing the division proposed
or made, and a letter of subdivision approval from the county or
other jurisdiction which requires subdivision approval.
(b) 	All notices of section 484-3, HRS, exemption shall be filed with the
director at least seven days prior to the commencement of sales. 	[Eff 8/8/87]
(Auth: 	HRS §484-10) (Imp: 	HRS §484-10)
104-5

§16-104-13 Notice of filing. (a) A notice of filing shall be issued by the
director:
(1) 	Upon receipt of an application for registration or section 484-10(g),
HRS, exemption in proper form with all required documents and
information requested; and
(2) 	When the applicant has paid to the director the proper registration
or section 484-10(g), HRS, exemption fee and advanced the
inspection expenses set forth in section 484-20, HRS.
(b) 	Upon issuance of a notice of filing, the director shall initiate an
examination to determine that the requirements of section 484-7, HRS, have been
met. 	[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-7)
SUBCHAPTER 3
ADVERTISEMENTS
§16-104-19 Advertisement materials. (a) The advertising material and the
general promotional plan shall not be false or misleading and shall afford full and
fair disclosure.
(b) 	No advertisements, promotional brochures, circulars, pamphlets,
handouts, or other materials shall be published or used by the developer or real
estate agents unless a copy has been previously filed with the director at least
seven days prior to its publication or use.
(c) 	No radio or television advertisements or any standard verbal
presentation shall be used by the developer or real estate agents unless copies of
verbatim scripts have been previously filed with the director at least seven days
prior to its use.
(d) 	Any 	audio-visual 	material 	used 	in 	connection 	with 	a 	sales
presentation of a subdivision shall be produced for examination upon the director’s
request.
(e) 	Whenever a statement is made to the effect that the subdivision is
registered with the department of commerce and consumer affairs, the following
statement shall also be included:
"REGISTRATION 	DOES 	NOT 	MEAN 	APPROVAL 	OR
DISAPPROVAL OF THE SUBDIVISION."
[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §§484-5(a)(13), 484-7)
104-6

SUBCHAPTER 4
PUBLIC OFFERING STATEMENT
§16-104-25 Format. (a) The proposed public offering statement submitted
to the director shall include the following information:
(1) 	Name and address of subdivider;
(2) 	Description of land, which includes the location, number of lots,
area of the lots, size of lots, total area of subdivision, and tax map
key number;
(3) 	Ownership of land;
(4) 	Type of interest to be conveyed to purchaser;
(5) 	Type of instrument to be used for conveyance;
(6) 	Existing zoning regulations, including land use classification and
general plan;
(7) 	Use for which the property is offered;
(8) 	Encumbrances, easements, liens, restrictions;
(9) 	Current real property taxes, special taxes or assessments;
(10) 	Description of roads, existing and proposed;
(11) 	Description of water supply, existing and proposed;
(12) 	Elevation of the land;
(13) 	Soil conditions - drainage;
(14) 	Availability of sewage disposal facilities, including estimated cost
to bring service to lot;
(15) 	Exposures to natural hazards; e.g., earthquakes, floods, tidal waves,
volcano, forest fires, slides, etc.;
(16) 	Date 	of 	completion 	and 	responsibility 	for 	construction 	and
maintenance of existing and proposed improvements;
(17) 	Electricity, telephone and gas, including estimated cost to bring
service to lot;
(18) 	Type of mail service;
(19) 	Fire and police protection;
(20) 	Public transportation;
(21) 	Schools;
(22) 	Shopping facilities;
(23) 	Hospitals or medical facilities;
(24) 	Terms and provisions of sale;
(25) 	Existing or proposed association of lot owners that purchasers shall
be required to join;
(26) 	Name and address of company contracted for escrow or trust
agreement;
104-7

(27) 	Description of a road maintenance fund, if applicable;
(28) 	Representative or real estate agent in Hawaii; and
(29) 	Name and address of agency to receive service (out-of-state
applicants only).
(b) 	No portion of the public offering statement may be underscored,
italicized, or printed in larger or heavier or different color type than the remainder
of the statement.
(c) 	Notwithstanding subsection (b), the following statements shall
appear on all public offering statements and be capitalized and underscored:
"THIS SUBDIVISION HAS BEEN REGISTERED WITH THE
DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS,
STATE OF HAWAII, ON (DATE). REGISTRATION DOES NOT
INDICATE 	APPROVAL 	OR 	DISAPPROVAL 	OF 	THE
SUBDIVISION.
THIS PUBLIC OFFERING STATEMENT MUST BE GIVEN TO
EACH PURCHASER AT THE TIME OF SALE AND A RECEIPT
THEREOF MUST BE TAKEN. PURCHASER MUST ALSO BE
GIVEN AMPLE OPPORTUNITY TO READ THE STATEMENT.
SALE OF SUBDIVISION IN HAWAII IS GOVERNED BY
CHAPTER 484, HAWAII REVISED STATUTES."
[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-6)
§16-104-26 Issuance to purchasers and prospective purchasers. (a) Copies
of the current public offering statement shall be delivered to purchasers and
prospective purchasers.
(b) 	Delivery of the public offering statement shall be evidenced by a
signed receipt by the purchaser or prospective purchaser.
(1) 	The receipt for public offering statement shall contain the following
information:
(A) 	The Hawaii registration number;
(B) 	The name of the subdivision;
(C) 	The name of the subdivider or agent;
(D) 	The number of parcel or parcels purchased; and
(E) 	The signature of the purchaser or purchasers;
(2) 	All receipts shall be kept by the subdivider or agent for a period of
not less than three years from the date the receipt was taken and be
104-8

open for inspection by the director or the director’s authorized
representative.
(c) 	If the director requires the subdivider to amend the public offering
statement prior to entering a final order, a copy of the amended public offering
statement shall be delivered to the purchaser, and at the same time the purchaser
shall be notified of the purchaser’s right of refund and cancellation of the sales
contract within a seven-day period. 	[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp:
HRS §484-6)
SUBCHAPTER 5
ESCROW AGREEMENT
§16-104-32 	Executed copy of escrow agreement. 	An executed copy of
the escrow agreement between the subdivider and a bank, savings and loan
association, trust company, or escrow company shall be filed with an application
for registration and preliminary exemption pursuant to section 484-10(g), HRS.
[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §§484-5, 484-7, 484-8.5)
§16-104-33 	Escrow terms. 	(a) All funds and instruments received from
purchasers or prospective purchasers shall be held by the escrow agent in
accordance with chapter 484, HRS, and this chapter.
(b) 	The agreement shall comply with the requirements of chapter 484,
HRS, and this chapter. 	[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-5)
§16-104-34 	Escrow arrangement. 	(a) Purchasers’ monies shall be
deposited with the escrow agent; provided that the subdivider or its agents may
hold the monies, until the expiration of the seven-day rescission period or any
longer purchaser cancellation period provided in the sales contract, if the payment
made by the purchaser is in the form of a check payable to the escrow agent, and
no cash shall be accepted.
(b) 	Purchasers’ monies received by an escrow agent shall be deposited
in a trust fund with a bank, savings and loan association, or trust company
authorized to do business under an escrow arrangement.
(c) 	The subdivider shall establish a mechanism by which the purchaser
shall receive and sign a receipt for a written notice of a seven-day period
rescission right pursuant to section 484-8.7 or 484-8.6(b) or (c), HRS, and the
receipt deposited with the escrow agent.
104-9

(d) 	Upon notification of a purchaser’s exercise of rescission right, the
escrow agent shall immediately refund any monies paid by the purchaser and the
purchaser shall be released from the purchaser’s obligations under the sales
contracts.
(e) 	The escrow agent shall not disburse purchasers’ monies to the
subdivider until the director enters a final order registering the subdivision or
exempting the subdivision pursuant to section 484-10(g), HRS, and the director
determines that the requirements of sections 484-8.7, 484-8.6(b) and (c), HRS,
have been met. [Eff 8/8/87] (Auth: HRS §484-10) (Imp: HRS §§484-7, 484-8.5)
SUBCHAPTER 6
ANNUAL REPORT
§16-104-40 Form and instructions. (a) The subdivider shall file with the
director 	an 	annual 	report 	prepared 	in 	accordance 	with 	and 	containing 	the
information called for in the annual report form provided by the director, or any
instructions which may be required by the director with respect to filing.
(b) 	The annual report shall specify, in detail, material changes in
information contained in the original application for registration, and shall also
include information such as the number of parcels sold, the number of agreement
of sale or deeds delivered, and the number of parcels remaining unsold. A current
financial statement of the subdivider shall also be attached to the report. 	[Eff
8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-9)
§16-104-41 Final report. All subdividers are required to file a final report
to advise the director when the last parcel in the subdivision has been sold. [Eff
8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-9)
SUBCHAPTER 7
ROAD MAINTENANCE FUND
§16-104-47 Creation of road maintenance funds. (a) The application for
registration and the public offering statement shall include a complete description
of any fund which is created to provide for the maintenance of roads within the
subdivision. 	This description shall include the following information:
104-10

(1) 	A description of the method by which decisions are made about the
use of such funds, including what voting rights each property
owner has, whether a property owner must join a community
association or similar organization in order to vote, whether there
are any other conditions which must be met prior to exercising the
right to vote, and how much each owner must pay to the fund and
how often; and
(2) 	A description of how the funds will be managed and by whom,
where the funds will be deposited and whether the funds will be
federally insured in that depository, whether interest will be earned
on deposit and what kind of reports on the funds will be made to
property owners.
(b) 	The disclosures concerning road maintenance funds, if applicable,
shall 	be 	separately 	stated 	and 	identified 	in 	language 	clear 	to 	owners 	and
prospective owners. 	[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-10)
SUBCHAPTER 8
PRACTICE AND PROCEDURES
§16-104-53 Administrative practice and procedure. The rules of practice
and procedure shall be as provided in chapter 16-201, the rules of practice and
procedure of the department of commerce and consumer affairs, which are
incorporated by reference and made a part of this chapter. 	[Eff 8/8/87] (Auth:
HRS §§91-2, 484-10) (Imp: 	HRS §§91-2, 484-10)
§16-104-54 	Rejection of application; hearing. 	Any subdivider whose
application for registration or exemption pursuant to section 484-10(g), HRS, has
been rejected by the director, shall be entitled to a hearing upon filing if the
subdivider files a petition for reconsideration within twenty days of the order of
rejection. 	[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-8(c))
§16-104-55 	Proceedings upon petition for reconsideration. 	If a petition
for reconsideration is filed within the time prescribed, the director shall order a
hearing upon notice, which shall be conducted in accordance with the provisions
of chapter 16-201, relating to contested cases. [Eff 8/8/87] (Auth: HRS §484-10)
(Imp: 	HRS §484-8(c))
104-11

§16-104-56 	Proceedings for cease and desist orders, and revocation. 	If,
after investigation, the director determines possible violations of chapter 484,
HRS, or this chapter, the director shall order a hearing upon notice, which shall
be conducted in accordance with the provisions of chapter 16-201, relating to
contested cases. 	[Eff 8/8/87] (Auth: 	HRS §484-10) (Imp: 	HRS §484-10)
104-12

DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
Chapter 16-104, Hawaii Administrative Rules, on the Summary page dated
May 27, 1987, was adopted on May 27, 1987, following a public hearing held on
May 27, 1987, after public notice was given in the Honolulu Star-Bulletin and
Honolulu Advertiser on May 3, 1987.
The adoption of chapter 16-104 shall take effect ten days after filing with
the Office of the Lieutenant Governor.
/s/ Robert A. Alm
ROBERT A. ALM
Director of Commerce and Consumer Affairs
APPROVED AS TO FORM: 	Date: 	6/23/87
/s/ Grant Tanimoto
Deputy Attorney General
APPROVED: 	Date: 	7/29/87
/s/ Benjamin J. Cayetano
JOHN WAIHEE
Acting Governor of Hawaii
Filed
104-13

DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
Adoption of Chapter 16-104
Hawaii Administrative Rules
May 27, 1987
SUMMARY
Chapter 16-104, Hawaii Administrative Rules, entitled "Uniform Land Sales
Practices" is adopted.