On Tuesday May 28th, The Maui County Council is expected to raise property tax rates for all classifications but residential for the 2013-2014 fiscal year. The council has gone back and forth quite a bit this year over tax rates. There were advocates for rates to stay the same and advocates for stronger increases. The end result appears to be a compromise that allows for a modest increase in the county budget. Here is an outline of the proposed rates for next year.

• The residential rate will remain the same at $5.75.
• The apartment rate will go from $6.20 to $6.40.
• The commercial rate will increase from $6.90 to $7.05.
• The industrial rate increases from $7.10 to $7.30.
• The agriculture rate will go from from $6 to $6.05.
• The conservation rate will rise from from $6.20 to $6.25.
• The hotel and resort rate will see the biggest increase from $9.15 to $9.40.
• The time share rate will increase from $15.50 to $15.55.
• The homeowner rate bumps up from $2.75 to $2.87.
• commercial residential increases from $4.50 to $4.60.

The rates above are per $1,000 of assessed value. These rates will go into effect on July 1, 2013. Payments are made in two installments with one in August and the other in February. Assessments for the next fiscal year are provided in March.

Hawaii Real Estate Terms and Their Canadian Equivalents

With relative strength of the Canadian economy and the Loonie, we continue to enjoy working with a substantial number of Canadian Buyers and Sellers.  Canadians and Americans usually become fast friends.  We share a border, similar values and for the most part we speak the same language.  However, there are some differences in terminology and process when it comes to real estate transactions.

I wrote a previous blog post that served as A Primer for International Buyers. In this post we are going to specifically focus on some of the different terms used in some provinces of Canada and what they translate to here in Hawaii.  We understand that condominium and real estate laws do vary by province and we are by no means Canadian real estate experts, but we do hope that this may help shed some light on the differences in real estate terminology. Without further ado:

Canadian Term	Maui Equivalent
Strata Fees	Maintenance Fees
Garburator	Garbage Disposal
Freehold	Fee Simple
Hydro	Electric
Subjects	Contingencies
Washroom	Bathroom

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Aside from these minor differences in the terminology, there are also differences in the purchase process as explained in the Primer for International Buyers.

To highlight a few of those differences:

1. Buyers usually take a minimum of 10 to 14 days to remove their inspection contingencies (subjects) via the use of professional property inspections which may include home, pool, mold and other inspections if necessary. We know the best inspectors on Maui and can coordinate the inspection process for you. There are no laws in the Hawaii that prevent a Seller from transferring a property that is not up to code or that has defects. In other words, it is a Seller’s legal obligation to disclose these, but not necessarily fix them. This can become a negotiating point during the escrow process. If a Seller asks a Buyer to sign an “as-is” addendum, this is a statement that the Seller is unwilling to make any improvements to the property.
2. Financing in the US is often done via fixed rate mortgages that amortize over a period of 30 years. Many Canadians opt to use their own financing from Canada for US properties, however, if you decide to finance here on Maui, we have lenders with years of experience helping our many Canadian clients obtain loans. Note that they will most likely require 35% down payment and full income documentation for at least two years. The documents needed include T-1’s, T-4’s, corporation and business returns, and current pay stubs.
3. Signing documents. Some documents will have to be notarized by a US notary. The instructions will likely direct you to do the signing at the US Embassy. That will likely require scheduling an appointment and can be time consuming. If you live close enough, it may be easier to make the drive across the border to a US Notary.
4. Closing. Many of our Canadian buyers have already returned home prior to closing. Once appropriate documents are signed, notarized and returned to escrow, closing takes place two days after all funds are received.
5. Utilities. We’ll provide you with the appropriate phone numbers to change all utilities into your name including electric, telephone, liquid propane, cable, alarm and any other services. It is often customary for Maui Electric and some of the other utilities to require security deposits for Buyers just establishing credit in Hawaii.

We hope to hear from you soon. As always, feel free to Contact The Maui Real Estate Team with questions or check out this week’s new listings.

Finally, if you’re still reading this post, we think that you ought to choose a Realtor with at least a modicum of understanding of Canadian Culture and perhaps a bit of a sense of humor. To that end, we recommend that you screen your prospective Realtors with The Following Test.

The new Hawaii Association of Realtors purchase contract that goes into effect on May 1, 2012 is dramatically different than the current purchase contract. The new purchase contract is meant to flow and read more naturally; groups like contingencies and provisions together; and more clearly defines roles, responsibilities, time frames and obligations of Buyers, Sellers and their Realtors.

I would imagine that the first 30 to 60 days after implementation will involve some back and forth between brokerages as we adapt to the new purchase contracts. The Maui Real Estate Team is taking a proactive approach to understanding how the new purchase contract impacts Buyers and Sellers by taking the following actions:

1. Attending the Realtors Association of Maui training session the other day.
2. Discussing the implications of the new purchase contract with our corporate attorney.
3. Spending several hours this weekend analyzing the changes.
4. We will have a company meeting / training session regarding the new purchase contract.
5. We will create a Buyer’s Guide to the New Hawaii Purchase Contract and a Seller’s Guide to the New Hawaii Purchase Contract which will be available to registered users of The Maui Real Estate Team’s website in the next 30 days.

As with any document that has undergone a major revision/ re-write, the new document isn’t perfect. In fact, in some ways it is more complex and requires more written communications between Realtors, Buyers and Sellers.  The new Hawaii Purchase Contract requires Sellers to be more organized and diligent in their approach to selling their Maui properties.  For instance, upon closing, under the “cleaning clause”, carpets are now designated as needing to be professionally cleaned.  An odd addition, but one to be aware of.  Did someone on the purchase contract committee have a cousin in the carpet cleaning business?

As for Buyers there are potentially additional “Buyer safeguards”, some of which require intimate knowledge of the new purchase contract.  However, there are also different “options” for cash transactions which need to be carefully handled.  There is also the mention of several types of resources that Buyers should use whenever purchasing a home, condo or land on Maui.  We are in the process of updating our list of resources.

If you are thinking of buying or selling Maui property at this time, please consider contacting The Maui Real Estate Team for a free consultation regarding how the new Hawaii Purchase Contract will impact your purchase or sale.  Our experience and insights will help you minimize headaches and surprises and help you execute your real estate transaction without a hitch.

This post may be of interest if you are thinking of building or engaging in a significant remodel of a home on or near Maui’s shoreline. The State of Hawaii has a program in place called called Coastal Zone Management (CZM) which attempts to balance the preservation of land and water resources in coastal areas with economic growth. One of the critical elements of the CZM program is the designation of special management areas (SMA) where a combination of county and the state agencies regulate development. Within Maui, SMA areas can extend from a few hundred yards to a few miles from the coastline depending on the location around the island. Construction and development in SMA areas are held to higher standards than regular development with a longer permitting process. Depending on the size and scope of the development going on within the SMA area, you may be subject to an SMA minor permit or an SMA major permit. The difference in the process between the two types of SMA permits can be significant. SMA minor permits have a limited review and require no public hearing. SMA major permits have more extensive reviews and can require a public hearing.

The threshold between SMA minor and major has been based on an estimate of construction costs. In 1991, that number was established at $125,000. Up until today, that number had not changed despite significant changes in construction costs. The state legislature just approved a new threshold of $500,000 in estimated construction costs as the threshold between SMA minor and SMA major. Also of significance, they established a threshold for the size of residences impacted by these rules. According to the county press release, “Homes of less than 7,500 square feet, with a valuation of less than $500,000, will be exempt from SMA permitting requirements altogether. Larger homes, depending on their valuation, will still be required to obtain either SMA minor or major permits.” This should substantially improve the speed of permits for home improvements within these coastal zones.

The Maui County Real Property Tax Department is now accepting electronic tax payments. Local property owners should have received their most recent property tax bill for the second installment of their 2010-2011 fiscal year tax payment sometime in the last week. The next payment is due on February 20th. You now have the option of paying your bill online or by phone using your Visa, MasterCard, American Express and Discover credit cards, debit cards or electronic checks (the check must be drawn on a US bank, in US dollars).

Their is an administrative fee for online payments. The fees apply to each property tax payment processed (you can not pay taxes for two or more parcels at a time). The fee is 2.35% of the total amount being paid for credit cards. Fees for debit card payments are $3.95. Fees for electronic check payments drawn on US Banks are $1.49. Non-US banks are not accepted. The fee will be disclosed to you when you confirm the payment.

When using these electronic payment options, it is a good idea to have your tax bill in front of you. Tax bills are mailed to property owners July 20th and January 20th each year. If you do not have a tax bill you will need your tax map key (TMK). To find your TMK visit The Maui Property Tax website. The TMK used to make electronic payments is 13 digits and begins with the number 2. If you obtain your TMK from the Maui Property Tax Site you will need to add the number 2 to the beginning of your TMK.

Here is the link tommake online Maui County Property Tax Payments. You must have an email address to use the online payment service. Buyers may still pay by the traditional methods via mail or in person at the county tax office.

The new fiscal year for the county of Maui started on July 1. The start of the new year means a change in property tax rates. The change in rates has been on the radar for some time. Local politicians had suggested this was forthcoming as the county has struggled with shrinking revenues and reduced assessed values for properties. After deliberation in April, the new rates were set in May. Here are the new property tax rates:

• Homeowner tax rates increased from $2.00 per $1,000 of assessed value to $2.50.
• Improved residential rates were raised from $4.85 to $5.00.
• Apartment rates were raised from $4.55 to $5.00.
• Unimproved residential was raised from $5.35 to $6.25.

There was also a new property tax classification created called commercialized residential. The commercialized residential rate of $4.00 per $1,000 applies to permitted Bed and Breakfast owners. There is a small but growing pool of homeowners who are approved for bed and breakfasts. There are more being processed through the county’s bed and breakfast application process. Here is a link to the county website with a complete list of all of the Maui County Property Tax Classifications and Rates.