July 16th, 2008 categories: Rants & Riffs
In 1903, Hawaii adopted an alternative land recordation system, which is referred to as the Hawaii Torrens Land system-or more commonly referred to as “land Court”. Believe it or not, it was modeled after a system for registering ships. “Hypothetically” the government provides a guarantee for the title to a home, condo or piece of land. The key word in the last sentence is “hypothetically”, please don’t believe that the government will protect your title. As with all real property purchases, be sure to obtain title insurance (whether or not the property is in land court). I am not going to go into all of the nuances and challenges that one can face with property registered at the land Court, however, my purpose is to warn you to be sure to thoroughly investigate any property you may be purchasing which is registered in the land Court. The Land Court is especially relevant to Honolulu because Oahu has more land court registered land than any other island in Hawaii. I would like to focus on one aspect of the land Court that could impact parties making loans or obtaining judgments secured by Hawaii property.
In most other parts of the United States, in order to secure a mortgage or other type of lien against a property, one merely needs to go to the county recorder and record the appropriate document at the county seat. Once this is done, the lien becomes a public record and encumbers the property. If a property is registered in the land court and a lien is not properly registered with the court, then the person who holds the lien will not have a security interest in the property. Since Hawaii has two methods available for recording interests in property (regular system and land Court), theoretically, a party who was unaware of land Court could lend a borrower money, which is supposed to be secured to a piece of property, and at the end of the day not have an ability to get at the property.
When purchasing property in Honolulu it is a good idea to pay special attention to the preliminary title report and determine if the property is registered in the land court. If it is, then you may want to have an attorney review the title to give you an opinion concerning potential issues.