# HI Governor signs bill all HI escrow closings to be handled by licensed HI agency



## Syed (Apr 28, 2010)

The Governor recently signed the SB 2921 bill into law which states all escrow or escrow depository, for all Hawaii real esate transactions, are to be handled by a licensed Hawaii company effective July 1, 2010. This includes timeshares. The bill states
No person shall act as an escrow depository from an out-of-state location for property located in this state unless licensed to act as a Hawaii escrow depository by the commissioner. "SB2921 HDI

 This will affect Mainland based escrow agencies handling Hawaii timeshare closings.


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## jehb2 (Apr 29, 2010)

Just out of curiosity.  Is this something they can actually regulate or does this fall under interstate commerce?


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## Syed (Apr 30, 2010)

Good Question.  When one is purchasing a HI timeshare now and chooses a Mainland closing agency and wants title insurance, that closing agent contracts for services of a HI based title company. According to the new law, a HI title company that will record a deed and provide title insurance will be required to escrow all the funds.  A mainland company could handle the right of first refusal (if applicable), get the estoppel, prepare the deed, submit the HRPTA, trasmit the recorded deed to the resort. Disbursement of funds? Seems more confusng with 2 agencies involved!


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## Syed (Apr 30, 2010)

Also, I think a HI title company wouldnt want to jeopardize it's license, by recording transactions and providing title insurance, without holding funds, for a mainland closing agent.


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## glypnirsgirl (Apr 30, 2010)

This is interesting. 

When I was purchasing at WPORV last year, I was told that all Hawaii real estate transactions for timesale purchases must be done in person. Was this just sales jargon for "you have to buy now, later will be too late" ?

elaine


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## Syed (Apr 30, 2010)

glypnirsgirl said:


> This is interesting.
> 
> When I was purchasing at WPORV last year, I was told that all Hawaii real estate transactions for timesale purchases must be done in person. Was this just sales jargon for "you have to buy now, later will be too late" ?
> 
> elaine



You can initiate and complete transactions from anywhere.  You dont have to be in Hawaii.


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## Dave H (May 11, 2010)

Syed said:


> You can initiate and complete transactions from anywhere.  You dont have to be in Hawaii.



As a closing company that has done and does business in Hawaii, the title issue has always been a Hawaii thing.  No matter where the title comapny is located, all Hawaii title policies had to be searched and issued by a Hawaii company.

The big issue on the new law as it reads, and as our Hawaii Real Estate Attorney has read it and the commentary of the law is that now all the funds related to closing have to be handled by one of the 7 or 8 LICENSED ESCROW COMPANIES in Hawaii.  The requirements to become a licensed Hawaii Escrow Company are many, with the main one being you have to have a real office and a real employee working there for them to come in and audit the books at their discretion.

You still do not have to have a Hawaii Title Company except for the title insurance.  You are required in the prepartion of deeds and what not use a Hawaii attorney as it is the practice of law to prepare a deed for OTHERS.  

What is going to happen, and I have had to research the law well, is that companies such as mine, will work with one of the approved escrow companies, the buyer or if the seller has to bring funds, will make those certified funds to the entity handling the escorw and once everything is ready to be recorded, the escrow company will disburse all the funds back to the closing company in the form of escrow checks from the escrow company  to disburse to sellers and the resort, or the closing company can choose to have the funds mailed direct to the parties from the Hawaii escrow account.  

The law while written was to protect the residential and commercial market in Hawaii on who can handle funds, but since they wrote it as any real property, it wil include timeshares.  The down side is expect the days of $300 closings to increase because of the costs of adding an escrow company into the mix.  

While the law is a severe restrant of trade to closing companies, it will take someone with a lot of money and a lot of time to bring action in Federal court to try to have the law ruled unconstitutional.  I have looked at some cost estimates to do that and your talking an investment that you might never win on for the first year in the tens of thousands of dollars.

Our company has put the necessary things in place that we will operate within the scope of the law, but it is something you will wnat to ask each and every closing company.


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## chester1122 (May 12, 2010)

Good information.

Does this apply to only those TS purchased after July 1 2010 as selfishly I am closing on a couple Hawaii TS now.


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## Dave H (May 12, 2010)

chester1122 said:


> Good information.
> 
> Does this apply to only those TS purchased after July 1 2010 as selfishly I am closing on a couple Hawaii TS now.



The Act as I was provided takes effect on 7/1  it does not address money or transactions currently in process.


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## dmg19 (Aug 21, 2010)

*Title Insurance*

We are in process of buying a resale through a company in Florida and they are using Hawaii Escrow and Title to handle the title policy.  They are  doing a "lot book" report as a title search for existing owners and the Florida escrow company can't provide a title insurance policy.  What should we do?  I think we should have the title insurance.


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