Hawaii Agency Law: What Real Estate Exam Candidates Must Know

Agency law is a major portion of both the national and state sections of the Hawaii real estate exam. Hawaii follows many general agency principles but has its own disclosure requirements and agency rules under HRS Chapter 467 and related administrative rules.

What Is Agency in Hawaii Real Estate?

In Hawaii, a real estate licensee acts as the agent of their client (the principal). The broker is the legal agent. Salespersons are subagents of the broker and work under the broker's supervision and responsibility.

Types of Agency in Hawaii

Seller's Agency (Listing Agency) The listing broker and affiliated salespersons represent the seller. Fiduciary duties run to the seller: - **Loyalty** — put the seller's interests first - **Obedience** — follow lawful seller instructions - **Disclosure** — reveal all material facts to the seller - **Confidentiality** — protect the seller's private information - **Accounting** — account for all money and property - **Reasonable care** — apply professional skill

A seller's agent cannot disclose to the buyer: the seller's minimum acceptable price, the seller's reason for selling, or willingness to negotiate.

Buyer's Agency A buyer's agent represents the buyer and owes full fiduciary duties to the buyer. Written buyer representation agreements are required to establish this relationship formally in Hawaii.

A buyer's agent must disclose to the buyer any known defects in the property, the seller's situation if known, and must negotiate in the buyer's best interest.

Dual Agency Occurs when the same broker or brokerage represents both buyer and seller. Hawaii law allows dual agency only with **informed written consent** from both parties.

In dual agency, the licensee cannot: - Disclose the seller's minimum price to the buyer - Disclose the buyer's maximum price to the seller - Advocate for either party's position in price negotiations

Designated Agency Hawaii permits designated agency, where the broker designates separate licensees within the same firm to represent buyer and seller. Each designated agent owes full fiduciary duties to their client, avoiding the limitations of dual agency.

Hawaii Agency Disclosure Requirements

Hawaii law requires licensees to provide a written agency disclosure to all parties at the beginning of any substantive contact. The disclosure must explain: - The type of agency relationship the licensee has - What duties the licensee owes to each party - Who the licensee represents

Key exam point: If a buyer contacts a listing agent for information about a property, the listing agent must disclose that they represent the seller — and cannot represent the buyer without triggering dual agency or designated agency.

Subagency in Hawaii

In subagency, cooperating brokers and their salespersons act as subagents of the listing broker — meaning they also represent the seller (not the buyer). Subagency is rare in modern practice but exists in Hawaii law.

Cooperating brokers must disclose their subagent status to buyers before showing property.

Leasehold and Agency — A Hawaii Nuance

When representing a buyer considering a leasehold property, the buyer's agent has a duty to explain: - The difference between fee simple and leasehold ownership - The terms of the ground lease (expiration date, rent escalation clauses) - The potential difficulty of financing leasehold properties - The risk of lease expiration and renewal uncertainty

Failure to adequately explain leasehold issues is a source of liability for Hawaii agents — and a potential exam topic.

Fiduciary Duties — OLD CAR

All agents in Hawaii owe clients the full set of fiduciary duties:

• Obedience
• Loyalty
• Disclosure
• Confidentiality
• Accounting
• Reasonable care

For Hawaii agency scenario practice questions, visit [CARealestate.com/states/hawaii](https://carealestate.com/states/hawaii).