Hawaiʻi Island Seller Guide · Part 10 of 10
10
Closing
Closing is where the details come together: withholding, money movement, and recording. This part walks you through the things that surprise sellers most, so you walk into closing prepared.
Withholding, in plain language
HARPTA and FIRPTA
If you are a non-resident seller, Hawaiʻi and the federal government may withhold money from your sale at closing. HARPTA (the Hawaiʻi Real Property Tax Act) withholds 7.25% of the sales price for non-resident sellers, and FIRPTA (the federal law) generally withholds 15% for foreign sellers. These are withholdings, not your final tax bill. The amount withheld is often more than the tax you actually owe, and you may reclaim the difference later.
Ask escrow and your tax professional about withholding early, before closing, so there are no surprises in your proceeds. Whether you qualify for an exemption or a reduced withholding depends on your situation, and the paperwork must be handled on time. I'm not a tax or legal advisor, so please confirm what applies to your specific situation with a qualified professional.
Money movement
Good funds, buyer funding, and wire-fraud cautions
Good funds. A Hawaiʻi closing commonly ties to recordation with the Bureau of Conveyances, and some escrow companies require good funds by 11:00 a.m. two business days before the scheduled recording. Plan your money movement so funds are in place well ahead of closing.
Buyer funding timing. As a seller, you are not responsible for the buyer’s funds, but it helps to understand the timing. The buyer’s deadline for getting funds to escrow may be several days before the scheduled closing date. Weekends, holidays, bank processing times, lender requirements, and escrow requirements can move that deadline earlier than you might expect. For example, in one recent Hawaiʻi Island transaction, the scheduled closing was September 8, but escrow required the buyer’s funds by noon HST on September 3. September 7 was a holiday, with a weekend in between. That is why a buyer may be dealing with final funding requirements while the seller is still several calendar days away from 'closing day.' The exact deadline varies by transaction and escrow company. The important point for a seller is that buyer funding, final loan and escrow requirements, signing, recording, and closing are related — but they do not necessarily happen on the same day.
How the closing sequence can play out
- Buyer funding
- Final lender / escrow requirements
- Signing
- Recording
- Closing / proceeds
This sequence is conceptual only, not a guaranteed legal or contractual timeline. The exact order and timing vary by transaction, escrow company, lender, and the contract you sign.
Hawaiʻi Standard Time
Escrow and transaction deadlines may be stated in Hawaiʻi Standard Time (HST). That matters when a buyer, seller, lender, or bank is outside Hawaiʻi, and Hawaiʻi does not observe daylight saving time, so the time difference with the mainland shifts with the seasons.
Wire-fraud cautions
A fraudulent "new wiring instructions" email is a known real estate wire-fraud tactic. If you receive instructions to wire money, verify them independently by telephone, using a trusted, independently verified phone number you already have, not a number that arrives in the changed email. Confirm every instruction with your escrow officer by phone before sending anything.
Official references
Where to verify the details
Hawaiʻi law requires all cesspools to be converted to septic, sewer, or a director-approved system by January 1, 2050, with earlier deadlines for priority cesspools. If your property has a cesspool, confirm its status and any conversion timeline before closing.
Before you hand over the keys
Confirm the deed has been recorded with the Bureau of Conveyances before you hand over possession, unless the contract says otherwise. Recording completes the transfer of title.
Before You Move On
You should now understand the money movement, withholding, and recording steps that complete a Hawaiʻi Island sale, and know what you'll confirm before you hand over the keys. If any step is still unclear, ask about it before the deadline, not on closing day.