Hawaii DROA Purchase Contract Made Simple
The Hawaii Association of Realtors (HAR) recently published an updated version of its standard form of contract for the buying and selling of residential property in the State of Hawaii. Without a doubt, the most obvious change to the standard form is its new title – "Purchase Contract" – which replaced the form known as "Deposit Receipt Offer and Acceptance" or "DROA." This outline is meant to assist real estate brokers and salespersons, lawyers, and Buyers and Sellers to better understand the new Hawaii DROA or Hawaii Purchase Contract.
HAWAII PURCHASE CONTRACT OVERVIEW
The old Hawaii DROA now called the Purchase Contract is organized broadly into an introductory section followed by four major sections. The latter are designated as Section A, Section B, Section C, and Section D. The terms of the Offer are located in Section C and is the main portion of the Purchase Contract. Section C begins on page two of the Form and its seventy-nine paragraphs continue almost to the end of what has now become a twelve-page single-spaced document.
The major sections in brief:
- Section A has "Agency Disclosures," which each Brokerage Firm must make to the involved parties when that Firm acts as a representative of some kind or as an agent of a Party in the transaction.
- Section B is used as a receipt of the Buyer's initial deposit and is normally signed by the Buyer's agent. Section B also addresses whether the Buyer or Escrow will earn interest on the Buyer's deposit in instances when the deposit is put into an interest bearing account.
- Section C, as aforementioned, is the major part of the Purchase Contract. It constitutes the Offer to buy the Property and has the Offer's terms and conditions, numbered C-1 through C-79. Section C also includes a list of additional documents (called "addendum" when there is one document and "addenda" when there is more than one). Those documents can either be physically adhered or incorporated by reference. In either case, they are meant to become part of the Purchase Contract.
- Section D is the portion of the Purchase Contract where the Seller will have the option to accept the Buyer's Offer or make a Counter Offer to it (thereby rejecting the Buyer's original Offer) . If the Seller would like to submit a Counter Offer, the Seller would usually do so by attaching HAR's standard form of "Counter Offer." Section D also confirms the Seller's agreement to pay the commission they agreed to pay to the Brokerage Firm with the listing to sell the Property.
Lastly, although not legally part of the Purchase Contract, the HAR standard form "Cooperating Brokerage Firm's Separate Agreement" is typically attached to the Purchase Contract by a Hawaii Real Estate Lawyer. This agreement is between the Brokerage Firm that represents the Seller and the Buyer's Brokerage Firm (if different). It provides for the splitting of the listing commission to compensate the Brokerage Firm serving to the Buyer. Typically, but not necessarily, the commission is divided equally between both Brokerage Firms.
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