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.
Money movement
Good funds and wire-fraud cautions
Wire fraud is real. If you receive instructions to wire money, verify them through a trusted phone number you already have, not through a changed email alone. A fraudulent "new wiring instructions" email is one of the most common ways closing funds are lost. Confirm every instruction with your escrow officer by phone before sending anything.
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.
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 is what completes the transfer of title, and it is the moment that protects you.