A seller provides the HRS 508D disclosure statement to the buyer on Day 1. The buyer signs the purchase contract on Day 3. On Day 10, the seller discovers a previously unknown water intrusion issue in the basement and informs the buyer. The buyer, who has not yet closed, now wishes to rescind the contract. Under HRS Chapter 508D, which statement most accurately describes the buyer's legal position?

Correct Answer

D) The buyer may rescind within five business days of receiving the updated disclosure of the newly discovered water intrusion

Under HRS Chapter 508D, a seller has a continuing duty to disclose material facts that become known after the initial disclosure statement is delivered but before closing. When a seller discovers and discloses a new material defect after the initial disclosure — as occurred here on Day 10 — this amended or supplemental disclosure triggers a new rescission period for the buyer. The buyer may rescind within five business days of receiving the updated disclosure of the newly discovered material fact. This continuing disclosure duty and the associated rescission right is one of the most nuanced and heavily tested aspects of HRS 508D.