Rising gas prices. A more chaotic climate. Improved health and wellness. There are a lot of reasons why driving less has more appeal these days. Maui is a pretty rural place. As a result, it is not exactly an easy place to live car free. That said, there are parts of the island where there are more conveniences and amenities accessible by foot or by bike. We recently created a handful of Walkable community pages on MauiRealEstate.com that highlight areas within a higher concentration of amenities within walking distance. This is a quick overview of those new pages on the site and a few communities that are worth an honorable mention.

Featured Walkable Areas of Maui

• Walkable Paia : For a small town, Paia has a lot going on. It has restaurants, a great grocery store, a Bank of Hawaii Branch, a yoga studio, massage studios, coffee shops, a post office, the beach and more all in and around town. If you live in the neighborhoods to the East and North of town, almost all of this is accessible via your own two feet. As an added bonus, the North Shore bike path runs to the West of town, through Spreckelsville and into Kahului. Paia is the one area of the island where you really could go for longer stretches without driving.
• Walkable Wailuku : Downtown Wailuku is the seat of Maui County Government. It is also home to federal and state agencies, medical facilities, law offices and other professional services. The homes and condos in the downtown area give options to those who work downtown that want to avoid commuting by car. Add in restaurants, the Iao Theater, shops, a library and other amenities and there are plenty of things accessible by foot. While you will still find yourself driving to some amenities, your odometer is less likely to get a workout.
• Walkable Makawao : Upcountry Maui may not be the first place you think of when it comes to walkability. That said, downtown Makawao is another small town with a lot going on. There are restaurants, a public library, Eddie Tam Park, a post office, shops, coffee, yoga and more. There are quite a few neighborhoods within walking distance of these attractions. Again, this is a place where it may be difficult to completely avoid car dependence, but you could get away with driving less when you live close to Makawao.
• Walkable Lahaina : Front Street is a renowned tourist destination. That said, residents living in the neighborhoods close to Front Street are located close to restaurants, shops, grocery stores, the beach, surfing and more. Put on your walking shoes or grab your cruiser bike. This is an area where you can leave your car parked in the driveway more often than not.

Honorable Mention

The Kulamalu area of Pukalani wouldn’t have received a mention 10 years ago. While there was a Long’s Drugs and a Fitness Center, this was a convenient but car dependent community. Then came the Saturday’s Farmer’s Market, followed by Food Trucks. A new brewery and a great pizza place in the last year are two great new additions. The Cottages at Kulamalu and Kulamalu Hilltop are now two neighborhoods where owners now have some great amenities within walking distance.

There are parts of Kihei where you may not need a car as much depending on your lifestyle. Areas of South Kihei and Central Kihei offer restaurants, shops, grocery stores and beaches within walking distance.

Contact The Maui Real Estate Team

Contact The Maui Real Estate Team if you are looking for a home that decreases your car dependence. We would welcome the chance to help you find a home or condo that might help change your lifestyle.

July 1 marks the start of the new fiscal year and that means updated property tax rates for Maui County. While there are quite a few rates that stayed the same this year, there were also a few notable changes.

Here are a couple of things to note about our tax rates before detailing the changes by property classification. Tax rates are impacted by the use and zoning of the property. The county has a tiered tax system based on the value of the property. Tier 1 is for properties assessed at a price of upto $800,000. Tier 2 is for properties assessed between $800,001 to $1,500,000. Tier 3 is for properties assessed for more than $1,500,000.

All tax rates below are per $1,000 of assessed value. Here are the tax rates for 21/22 with notes on any change in rate from the last fiscal year.

• Owner occupied Tier 1 $2.41 (down .10), Tier 2 $2.51 (down .10), Tier 3 $2.71 (up .10)
• Non-owner Occupied Tier 1 $5.45, Tier 2 $6.05, Tier 3 $8.00 (up $1.10)
• Apartment $5.55
• Short Term Rental Tier 1 $11.11 (up .03), Tier 2 $11.15 (up .07), Tier 3 $11.20 (up .12)
• Hotel & Resort $11.75 (up $1.05)
• Agricultural $5.94
• Conservation $6.43
• Timeshare $14.60 (up .20)
• Commercial $6.29
• Industrial $7.20
• Commercialized Residential $4.40

Property taxes are paid biannually in Maui county with payments due on August 20th and February 20th. Check out the Maui County Property Tax Frequently Asked Questions pages if you have additional questions on assessments and classifications.

I talked to a lender earlier this week to find out more about how Covid-19 impacts home loans. These were my five biggest takeaways from my conversation.

Rates are fluctuating like crazy

When the Federal Reserve dropped the borrowing rate to zero early in the Covid-19 crisis, rates dropped to new record lows. The result was a huge demand for refinancing. Since the initial drop, rates bounced all over the place. There are a variety of factors at play causing rate fluctuations. They include basic supply and demand, the purchase of federal mortgage backed bonds by the Federal reserve, and concerns about the financial impact of forbearance from the investors who buy mortgages .

Whether you want to refinance or you are looking for a mortgage for a purchase, the current situation requires working closely with your lender to determine when it is a good time to lock your rate. If you tend to go to your local bank for all things mortgage, it may pay to shop around a little. While most banks are typically competitive with each other when it comes to rates, consumers can expect to find a much broader range in rates with the current volatility.

Lenders are tightening standards for credit scores

With greater economic uncertainty, banks are raising minimum credit scores to qualify for a loan. The banks are concerned about greater potential for foreclosure. As a result, they are shying away from buyers with credit issues. If you had a lower credit score but still qualified for a loan before Covid-19, it might be worth checking in with your preferred lender. In some cases, buyers are finding they may no longer qualify for a loan or the lenders will be seeking higher interest rates.

Expect repeated scrutiny of your income when obtaining a mortgage

Specifically, banks are really going to scrutinize your employment. Lenders are looking at the status of your employment, your hours and your wages repeatedly during the borrowing process. They will check early in the loan process, and they typically check at least two more times. Lenders are requiring proof of your employment status prior to signing final loan documents and prior to funding the loan. This stems from the number of prospective borrowers who are being laid off or seeing their hours or wages reduced.

If you are self employed, the banks will be looking more closely at recent income. They want to see signs that checks are still coming in steadily during the pandemic. The banks want to continuously make sure your financial picture does not change prior to closing.

The Jumbo loan market is shrinking

This one impacts the Hawaii market with the large number of high priced homes. Loans of $765,000 or more are considered to be a Jumbo loan in Hawaii. While there are still some banks offering jumbo loans, the options are shrinking.

Loans are taking longer

The demand for refinancing means that a lot of banks are taking a long time to process the volume of mortgages in their pipeline. Appraisal is a particularly big bottle neck. In some cases, banks are having staffing issues as employees balance work and kids at home due to school cancellations. The big take away for buyers is that you should give yourself room for delays in closing.

Other Covid-19 Impacts on Financing

This is not a comprehensive list. Don’t be surprised if we see additional changes in criteria for loans. The one thing I heard in my discussion with a lender was that mortgage standards, loan programs and the process remain in flux. It pays to have an experienced and capable lender in these circumstances.

Published April 19, 2020

Maui depends on tourism for a significant part of its economy. Covid-19 and the ensuing shut down means a big loss of income for a number of Maui homeowners. If you are a Maui resident unable to pay your mortgage, there may be some mortgage relief options for you based on the CARES act.

Eligibility

To be eligible, your mortgage needs to be federally owned or backed by a federal agency. Relevant federal agencies include:

• HUD
• USDA
• FHA
• VA
• Fannie Mae
• Freddie Mac

It’s pretty clear when your loan is HUD, USDA, FHA or VA. Fannie and Freddie back over 50% of the nation’s mortgages, but not all homeowners know or remember who backs their loan. You can check to see if your loan is backed by Fannie or if it is backed by Freddie.

Forbearance

If you are unable to pay your mortgage due to financial difficulties related to Covid-19, you can contact your mortgage servicer to request forbearance for 180 days. Forbearance allows you to pause or reduce your mortgage for that 180 day period. To be clear, this does not reduce the principal on your loan. You would still need to pay off the missed payments or the difference on the reduced payment in the future. You may apply for an additional 180 day forbearance if your financial situation does not improve by the end of the first 180 days. Your forebearance options may depend in part on your loan program. If you are concerned by impacts on your credit score, servicers must not report to the credit agencies a Borrower who is on an active forbearance, repayment, or trial period plan due to COVID-19 related hardship.

Foreclosure

If you are facing foreclosure due to existing loan challenges, your loan servicer or lender may not foreclose on you for 60 days after March 18th. The CARES Act forbids beginning either judicial or non-judicial foreclosure proceedings. The Act also prohibits finalizing a foreclosure judgement or sale during this period.

Still Confused or Need Help?

The Consumer Finance Protection Board offers a guide to Coronavirus mortgage relief options that gives advice and provides a lot more detail. They provide important suggestions like questions to ask your mortgage servicer. You may also find your nearest housing councilor by calling by calling (800) 569-4287. If you don’t have a federally backed mortgage and you are not able to pay your mortgage, you should still contact your mortgage servicer to see what options they may have available to you. Last, but not least be wary of scams. Unscrupulous Sleazeballs will try to take advantage of the current situation. Lean heavily on the advice of the CFPB.

If you browse through enough home or land listings on Maui, you may encounter some terms that may leave you scratching your head. Words like residential condominium, condominium home or CPR seem out of place when it comes to home and land listings. That said, these aren’t typos. Residential Condominiums are an increasingly popular form of ownership. This post attempts to define residential condos and answer some of the most frequently asked questions we receive from prospective residential condo buyers.

Frequently Asked Questions on Maui Residential Condos

What exactly is a residential condo?

I think it is safe to say that most understand how condos work in an apartment building setting. At a basic level, Residential condos takes the same principles and apply them to land that is zoned to allow multiple structures. For example, zoning rules for an agriculturally zoned lot allow the potential for a main house and a cottage. With the residential condo process, the main house and a surrounding area of land becomes one unit of the condo. The cottage and a surrounding area of land becomes the other unit of the condo.

I have seen the term CPR before in listing remarks. What does that mean?

CPR is not just an abbreviation for cardio pulmonary resuscitation. In a Hawaii real estate context, it is an abbreviation for Condominium Property Regime. The CPR process is how condominium homes are created. A CPR is the legal mechanism where a single property can be divided into two separate units of ownership. Each unit of ownership has its own deed, it may have its own mortgage and it has its own Tax Map Key.

How does a CPR process differ from a subdivision?

A CPR is not the same as a subdivision. The CPR process takes one property and divides it into two or more separate units of ownership. The process does not create additional entitlements to build more structures. For example, if you subdivided a five acre piece of agricultural land into to two lots, each lot would then have the potential for a home and a cottage. If the same five acre parcel were to go through the CPR process, one unit might have the rights to build a main house and the other unit may have the rights to the ohana unit.

Do I Own the Underlying Land with a Residential Condo?

The owners of the condominum units collectively own the underlying land. That said, limited common elements may be designated for the exclusive use of each unit. Exclusive is the key term. That means your partner in the condo can’t just meander into your yard area when they see fit.

Do Residential Condos have Common Elements?

Sometimes. The most frequent common elements relate to water and access. Two or more condos will sometimes share a single water meter. Two or more units might share a driveway or a portion of a driveway. In some cases, they may share both. Some residential condo properties on island have an area of common land shared by all of the different condo owners. There are some condo developments on island where almost all of the property is considered to be common element. In those cases, each unit may have a very small limited common element around the structure.

Do Residential Condos have Maintenance fees?

It is typical to have a nominal maintenance fee. Most frequently, the fee goes towards liability insurance for any common areas and the maintenance and maintenance reserves for those common areas. The larger and more elaborate the common area, the higher the fee. If there is nothing shared between the units of a condo, there may be no fee at all.

Are There More Rules with Residential Condos than a conventional home?

That depends on the intention of the people who created the condo. Some condo associations impose rules above and beyond county zoning. That said, most of the residential condo bylaws create no additional rules or regulations above and beyond county code.

Can any property go through the CPR process?

Some homeowners associations restrict CPR properties. For properties with existing structures, all homes need to go through miscellaneous inspections with the county. The structures need to comply with county zoning with all necessary permits in place. If the improvements on the property aren’t fully permitted, that could delay or prohibit the CPR process.

Is there a difference between a CPR property that is vacant land and a CPR property that has homes?

At a base level, they are similar. It is the same general process. I know some attorneys believe that CPRing raw land (sometimes called a spatial CPR) carries a little more risk. The risk is that one unit owner’s construction efforts could impact the construction efforts of the other unit owner. An owner who builds too much home or uses too many water fixtures could limit the plans of the other owner.

Typically, units of land sold as CPRs come with defined entitlements. Again, I will use an agricultural lot as an example. One unit of land receives entitlements to build a main house. The other unit of land receives entitlements to build an ohana of 1,000 square feet or less. If the ohana unit owner were to build first, and to build a structure larger than 1,000 square feet of living space, the owner of the main house unit may find themselves in a situation where they aren’t able to build over 1,000 square feet.

There is also some risk if the two unit owners share a county water meter. If the first person to build goes a little overboard with the number of plumbing fixtures for their unit, it could leave the other owner with fewer fixtures than anticipated.

I know of just one circumstance where the ohana side of the CPR overbuilt. I haven’t heard first hand of any issues with someone hogging all of the water fixtures. That said, I want to help illuminate potential risks even if they aren’t likely to occur. Condo documents should spell out the entitlements available to each unit. They should also offer some means to mitigate against the above risks. If there are any questions about the documents, hire a Hawaii Real Estate attorney to assist with document review.

Is there anything else I should know about the process of buying a residential condo?

There are a couple of things to note. If it is the first time the condo is being sold, the buyer has a 30 day rescission period. Not all attorneys are equal when it comes to the creation of condominium documents. More specifically, some do a great job and others write confusing documents with too many loop holes and ambiguities. Repeating the advice from the question above, it is worth the investment to hire a qualified Hawaii Real Estate attorney to review the condo documents. They can answer the legal questions about the condo documents that are outside the scope of your Realtor’s services.

Why do people choose to CPR a property?

There are a number of reasons why people choose to condo.

• Statistics show that the CPR process creates equity. The sum of selling the units of a CPR minus the cost of the CPR exceeds the value of a whole property that has not been through the CPR process.
• Not everyone wants or needs all of the building entitlements that come with a property. Some don’t want or need an ohana on their property.
• The units of a CPR tend to create more affordable options for buyers.
• CPRs allow for the split of a property in a tenants in common situation or among family members.
• It does not typically require the improvements necessary for a subdivision.
• It is typically faster than the subdivision process.

Are there any downsides to CPRing a property?

• We mentioned the potential risk with a spatial CPR above.
• The CPR process requires some sort of ongoing relationship between unit owners.
• There is the potential for shared liability with building or zoning violations. The County could attribute the violation to the whole property instead of citing just the specific unit.
• Taxes could go up on the property if you retain both units. This is particularly the case if you have a homeowner tax assessment.

Hopefully, this answers some of our reader’s questions on CPRs. Special thanks to Jacob Wormser, Attorney at Law. His letter to prospective condominium clients helped clarify some of my own questions on the CPR process. Still have questions? Contact the Maui Real Estate Team and we will do our best to provide answers or direct you to the right resources if we can’t do it ourselves.

Published August 13, 2019