Understanding Hawaii’s Unique Closing Timelines

Hawaii’s real estate market is unique, attracting buyers from all over the world. While purchasing property in Hawaii can be exciting, the closing process differs significantly from many mainland states. Understanding Hawaii’s closing timeline ensures a smoother purchase or sale.

Unlike in other states where final signing and closing often happen simultaneously, Hawaii has a mandatory waiting period before a sale is officially recorded. To avoid surprises, let’s break down what buyers need to know about Hawaii’s closing process.

Contingent vs. Pending: Understanding the Difference

When searching for a home, you may see properties listed as contingent or pending—but what do these terms mean?

• Contingent: The seller has accepted an offer, but certain conditions must be met before closing. These could include financing approval, a home inspection, or an appraisal contingency. The sale is not final until these contingencies are satisfied. When a property is contingent, the seller is still looking for a possible backup offer, and they can still show the property.
• Pending: In Hawaii, we don’t use the word pending. We use the word “contingent,” which means the same as pending for most states.
• Under Contract: You have been watching a home with a “contingent” status, and suddenly, it disappears on Zillow.com. This is because the home is “under contract,” all contingencies have been met, and the house is set to close.

Buyers must understand these distinctions when considering backup offers or negotiating contracts.

Final Funds: Hawaii’s “Good Funds” Law

Hawaii operates under a “Good Funds” law, which means that escrow must receive and clear all funds before closing can occur. Unlike in many mainland states where closing and final signing happen the same day, Hawaii requires that closing occurs two full business days after escrow receives the buyer’s final funds.

What This Means for Buyers:

• You must wire your funds in advance to allow time for processing.
• Closing does not happen on the same day as signing, so plan accordingly if you coordinate travel, move, or schedule contractors.
• Escrow cannot distribute the official closing statement until funds have cleared and after Oahu has processed all the needed paperwork, which takes two days.

Sign in Person: Is It Required?

Hawaii still requires in-person notarized signatures for real estate transactions. While some states allow digital closings, Hawaii’s system is more traditional.

Signing Process for Buyers:

• Buyers need to schedule an in-person signing appointment with an escrow officer or a mobile notary if they are off the Island.
• If you are out of state, remote signings can be arranged, but they must be notarized and mailed back to escrow before the two-day deadline.
• Plan if you will be traveling, as delays in notarized documents can push back the closing date.

Closing Timeline: What to Expect

Hawaii’s closing timeline is structured differently than in other states. Here’s a simplified breakdown:

1. Final signing: You will sign the closing documents before closing, typically 3-4 days in advance if you are on the island and 6 days if you are off the island.
2. Final funds wired: The buyer’s funds must be received two days before closing and verified by escrow. Don’t wait until the last minute!
3. Official closing time: Escrow records the sale around 8:00 AM on closing day, at which point ownership is legally transferred.

Key Takeaways for Buyers:

• Closing in Hawaii takes longer than on the mainland due to the Good Funds law.
• You must wire funds in advance and allow time for processing.
• Signing must be notarized in person, so plan if you are out of state.
• Expect at least two business days between your final deposit and official closing.

Final Thoughts

Hawaii’s real estate closing process is unique, but buyers can navigate it smoothly with proper planning. Understanding contingencies, funding requirements, signing procedures, and the closing timeline will help ensure a happier buying experience.

If you’re considering purchasing a home in Hawaii’s resort communities, I’m here to help guide you through every step. Contact me today to start your journey toward owning a home in paradise!

Mahalo,
Leeana