Contract for Deed (Land Contract)

AGREEMENT OF SALE (CONTRACT FOR DEED / LAND CONTRACT)

State of Hawaii — Installment Sale with Retained Legal Title

1. PARTIES

This Agreement of Sale (known in other states as a "Contract for Deed," "Land Contract," or "Installment Sales Agreement," and referred to herein as this "Agreement") is made on [__/__/____] by and between:

SELLER: [________________________________], whose address is [________________________________] ("Seller"); and

BUYER: [________________________________], whose address is [________________________________] ("Buyer").

Seller and Buyer are referred to collectively as the "Parties." As used in HRS § 502-85, an "agreement of sale" is an executory contract for the sale and purchase of real estate in which the seller retains legal title.

2. PROPERTY AND LEGAL DESCRIPTION

Seller agrees to sell and Buyer agrees to buy, on the installment terms below, the real property located on the Island of [________________], County of [________________], State of Hawaii, commonly known as:

Street Address: [________________________________]

Tax Map Key (TMK): [________________________________]

Land Tenure: ☐ Fee simple ☐ Leasehold (lease expiration [__/__/____])

Title System: ☐ Regular System (Bureau of Conveyances) ☐ Land Court (Torrens / HRS Chapter 501) ☐ Double System

Legal Description: (insert full legal description or attach as Exhibit A)

[____________________________________________________________]

together with all improvements, fixtures, easements, and appurtenances (the "Property").

3. PURCHASE PRICE, DOWN PAYMENT, AND INSTALLMENT TERMS

3.1 Application of Payments. Payments shall be applied first to accrued late charges, then to accrued interest, then to principal.

3.2 Balloon Payment Disclosure. ☐ This Agreement requires a balloon payment of $[________________] on the maturity date. Buyer acknowledges Buyer may need to refinance to pay it.

3.3 Collection / Escrow Agent. ☐ The Parties appoint [collection agent / escrow] to collect installments and disburse carrying costs and any payments on Seller's underlying mortgage.

3.4 Interest Rate Compliance. The interest rate shall not exceed the maximum permitted under HRS § 478-4 and other applicable law.

4. TITLE; DEED HELD PENDING PAYOFF; HOLDING ESCROW

4.1 Retention of Legal Title. Seller retains legal title until Buyer has paid the Purchase Price in full and performed all obligations. Buyer holds equitable title and is entitled to possession.

4.2 Delivery of Deed at Satisfaction. Upon "satisfaction of the agreement of sale" (full performance, including all payments) within the meaning of HRS § 502-85, Seller shall execute and deliver to Buyer a [Warranty Deed / Limited Warranty Deed] conveying marketable, fee-simple title subject only to the Permitted Encumbrances on Exhibit B.

4.3 Holding Escrow (Recommended). ☐ Seller shall deposit a pre-signed Satisfaction of Agreement of Sale / deed with [neutral escrow agent] to be recorded when all conditions are met. Recording of the transfer of title extinguishes intervening claims as provided in HRS § 502-85(b).

4.4 Title Insurance. ☐ Buyer may obtain an owner's title insurance policy at Buyer's expense.

5. RECORDING

5.1 Recording in Hawaii. Under HRS § 502-85 and HRS Chapter 502, a duly recorded agreement of sale gives the Buyer priority over later-recorded conveyances by Seller and over judgments against Seller not recorded before the agreement. Recording is made at the Bureau of Conveyances (Regular System) or, for Land Court property, in the Office of the Assistant Registrar of the Land Court under HRS Chapter 501.

5.2 Buyer Protection. ☐ Buyer SHOULD record this Agreement (or a memorandum) promptly to protect Buyer's interest against future liens, transfers, and judgments against Seller.

5.3 Conveyance Tax. Hawaii conveyance tax under HRS Chapter 247 applies to transfers of realty.

6. POSSESSION

Buyer is entitled to possession of the Property on [__/__/____] and shall maintain possession so long as Buyer is not in default. Possession does not transfer legal title.

7. TAXES, INSURANCE, AND MAINTENANCE

7.1 Real Property Taxes. ☐ Buyer shall pay all real property taxes directly when due. ☐ Buyer shall pay taxes to the collection agent in escrow.

7.2 Insurance. Buyer shall keep the Property insured against fire and casualty (and hurricane coverage where available/required) for not less than $[________________], naming Seller as additional insured / loss payee.

7.3 Maintenance. Buyer shall keep the Property in good repair, shall not commit waste, and shall comply with all applicable laws and ordinances, including any condominium or association governing documents.

7.4 Utilities. Buyer shall pay all utility charges from the date of possession.

8. DEFAULT AND REMEDIES

8.1 Events of Default. Buyer is in default if Buyer (a) fails to make any payment when due beyond the grace period; (b) fails to pay taxes or insurance; (c) commits waste; or (d) breaches any other material term and fails to cure within [____] days after written notice.

8.2 Grace Period / Notice and Cure. Seller shall give Buyer written notice of default and a period of [____] days to cure by paying all past-due amounts plus late charges.

8.3 Seller's Remedies — Hawaii Rule (Equity Protection). Upon an uncured default, Seller may pursue the remedies available under Hawaii law:

(a) Cancellation / Forfeiture (Limited). Seller may seek to cancel the Agreement and recover possession only where Buyer does NOT have substantial equity. Under Hawaii case law, cancellation/forfeiture may NOT be available where the Buyer has accumulated substantial equity through prior payments; in that situation a court may require Seller to give Buyer the benefit of that equity.

(b) Foreclosure / Judicial Sale. Where Buyer has substantial equity, Seller may be required to foreclose the agreement of sale judicially (or by power of sale, if provided and permitted) and apply sale proceeds, returning surplus to Buyer — protecting Buyer's equity in the same manner as a mortgage.

(c) Action for the Price / Specific Performance. Seller may alternatively sue for the unpaid balance or for specific performance.

8.4 Acceleration. Upon an uncured default, Seller may, to the extent permitted by law and this Agreement, declare the entire unpaid balance immediately due and payable.

8.5 Buyer's Right to Reinstate / Redeem. Buyer may reinstate by curing within the grace period, or redeem by paying the full balance and Seller's reasonable costs before cancellation or a foreclosure sale is completed.

8.6 Cumulative Remedies; Attorney's Fees. Remedies are cumulative. The prevailing party may recover reasonable attorney's fees and costs to the extent permitted by law.

9. PREPAYMENT

Buyer may prepay all or any part of the unpaid balance at any time ☐ without penalty / ☐ subject to: [________________________________]. Prepayments are applied to principal.

10. RISK OF LOSS

Risk of loss shall be on [Buyer / Seller] during the term. Insurance proceeds shall be applied to restoration or to the unpaid balance as the Parties agree in writing.

11. ASSIGNMENT

11.1 By Buyer. Buyer shall not assign this Agreement (including by subagreement of sale) without Seller's prior written consent, not unreasonably withheld. ☐ Consent not required.

11.2 By Seller. Seller may assign Seller's rights to payment, subject to Buyer's rights under this Agreement.

12. DUE-ON-SALE / GARN–ST. GERMAIN WARNING

WARNING: If Seller has an existing mortgage on the Property, it likely contains a due-on-sale clause. Entering into this Agreement may allow Seller's lender to accelerate the loan. The federal Garn–St. Germain Act (12 U.S.C. § 1701j-3) exempts certain transfers, but an agreement of sale generally is not an exempt transfer. Both Parties should review Seller's loan documents and obtain lender consent where required.

13. DISCLOSURES

13.1 Lead-Based Paint (Pre-1978 Housing). ☐ If the dwelling was built before 1978, Seller must provide the EPA/HUD lead-based paint disclosure and pamphlet, and the lead warning statement must be included (42 U.S.C. § 4852d; 24 C.F.R. Part 35). ☐ Not applicable (built 1978 or later).

13.2 Property Condition. Seller shall provide the Hawaii Seller's Real Property Disclosure Statement required for residential resales (HRS Chapter 508D) and shall disclose known material facts.

13.3 Other Disclosures. [Flood zone / lava zone / association documents / other: ________________________________].

14. GENERAL PROVISIONS

14.1 Time of Essence. Time is of the essence as to all payment obligations.

14.2 Entire Agreement. This Agreement, with its Exhibits, is the entire agreement.

14.3 Governing Law. This Agreement is governed by the laws of the State of Hawaii.

14.4 Severability. If any provision is held invalid, the remainder stays in effect.

14.5 Notices. Notices shall be in writing and delivered to the addresses in Section 1.

14.6 Counterparts. This Agreement may be executed in counterparts, including electronic signatures.

15. SIGNATURES AND ACKNOWLEDGMENT

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

SELLER:

Signature: [________________________________] Date: [__/__/____]

Printed Name: [________________________________]

BUYER:

Signature: [________________________________] Date: [__/__/____]

Printed Name: [________________________________]

NOTARY ACKNOWLEDGMENT

STATE OF HAWAII, [________________] COUNTY (First/Second/Third/Fifth Circuit)

On this [____] day of [____________], 20[____], before me personally appeared the above-named person(s), known to me or proven to be the person(s) who executed the foregoing Agreement, and acknowledged it to be their free act and deed.

Signature of Notary Public: [________________________________]

Print Name: [________________________________]

My commission expires: [__/__/____] [NOTARY SEAL]

EXHIBIT A — Legal Description

[____________________________________________________________]

EXHIBIT B — Permitted Encumbrances

[____________________________________________________________]

SOURCES AND REFERENCES

• HRS § 502-85 — Agreements of sale; priority: https://law.justia.com/codes/hawaii/title-28/chapter-502/section-502-85/
• HRS Chapter 502 — Bureau of Conveyances: https://dlnr.hawaii.gov/boc/
• HRS Chapter 501 — Land Court (Torrens registered land)
• HRS Chapter 247 — Conveyance tax: https://tax.hawaii.gov/
• HRS Chapter 508D — Mandatory Seller Disclosures in Real Estate Transactions
• HUD/EPA Lead-Based Paint Disclosure Rule, 24 C.F.R. Part 35: https://www.epa.gov/lead
• Garn–St. Germain Act, 12 U.S.C. § 1701j-3: https://www.law.cornell.edu/uscode/text/12/1701j-3