Broker Alana is conducting a real estate transaction involving a leasehold property on Oahu. The buyer, a recent transplant from Texas, is unfamiliar with Hawaii's leasehold system. The buyer does not ask about the lease terms, and Alana does not volunteer information about the lease expiration date, ground rent escalation clauses, or the buyer's leasehold conversion rights under HRS Chapter 516. Under Hawaii license law, Alana's conduct is best characterized as:
Correct Answer
A) A violation because brokers in Hawaii have an affirmative duty to disclose material facts about leasehold properties, including lease terms and conversion rights
Under HRS Chapter 467 and Hawaii's agency disclosure rules, real estate licensees have an affirmative duty to disclose all material facts affecting the property, regardless of whether the buyer asks. For leasehold properties — which are unique to Hawaii — material facts include the lease expiration date, ground rent amount, escalation clauses, and the buyer's potential conversion rights under HRS Chapter 516. Failing to proactively disclose these facts is a violation of Hawaii license law and the licensee's duty to the client.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.
Commingling is the illegal act of mixing client funds with a broker's personal or business operating funds, while conversion is the unauthorized use of client funds for the broker's own benefit. Both are serious violations that can result in license revocation.
Commingling is the illegal act of mixing client trust funds with a broker's personal or business operating funds; conversion is the misappropriation of those funds.
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