What is the difference between the Regular System and the Land Court
Hawaii’s Bureau of Conveyances has two different recording systems, one is called the Regular System, and the other is called the Land Court System. Properties can also be in both Systems, also known as the Dual System. You will be required to record all documents in the recording system that your property is currently located in. It is important to hire an experienced Hawaii Deed drafting Attorney, to determine which recording system your property is in, as each System has different requirements to be approved for recording, and improperly prepared or executed documents may be rejected or considered completely invalid.
The Regular System of hawaii
The Regular System is a race-notice system. Under a Race-notice recording system, the best evidence that the Deed was delivered, is to determine who records the Deed first. This System is all about notice to the Bona fide Purchaser, and whether a purchaser indeed had notice of another person’s right to own the property, will determine the prevailing party, and therefore the best evidence for that is to record the Deed or document, even if not required, as in the Land Court System. The Regular System has less requirements, and does not usually require any additional obligations and petitions, when there is a name change, marital status change, or the death of an Owner or Grantee. Recording fees in this System are usually more expensive than the Land Court System.
The Land Court of Hawaii
The Land Court System is a pure-race or Torrens system. Under Pure-race or Torrens system, the person that records the document first is the owner period. If the Deed is not recorded on the Certificate of Title, it is not a conveyance that is valid, regardless if the Deed or document is signed and drafted properly. The Land Court System’s requirements are strict and if any changes have been made to the Owner, such as name change, marital status change, or the death of an Owner or Grantee, the Land Court System will require the current Owner petition the Land Court for a Transfer Certificate of Title, before any future conveyance will be accepted and recorded. Recording fees in this System are usually less expensive, however usually require an additional Certificate of Title fee, along with the potential for expensive petitions for Transfer Certificates of Title.
The Dual System of hawaii
It is possible for your property to be in both the Regular System and the Land Court. In a Dual Recording System, the Deed or document will need to be recorded in both Systems. Drafting requirements that suffice for the Regular System will not suffice for the Land Court System, and therefore if the property is in the Dual System and the Deed or document is poorly drafted if might be accepted by the Regular System and rejected by the Land Court. This could be problematic, requiring a Correction Deed, Petition for Transfer Certificate of Title, extra time and Attorney fees, and the re-notarizing of the Deed or document by all the parties. In this System, both the Regular System and the Land Court System’s recording and certificate fees are required.
HAWAII CONVEYANCE TAX
When Real Property has been conveyed and a value has been exchanged, that value is taxed by the State of Hawaii and due upon the recordation of the Deed or document, unless an exemption to the conveyance tax applies, via a P64-A or P64-B Form. Working with an experienced Hawaii Real Estate Attorney can save time, cost, and in some cases be the difference between a valid conveyance, and a conveyance that creates problematic issues during a pending or future interest conveyance, or a conveyance that is unacceptable and unrecordable.
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