Hawaii’s Awkward Title Systems

The State of Hawaii uses two very different systems to recognize the rightful ownership of property. Today we’ll touch onto this complicated topic. If you have questions, consult an attorney licensed in Hawaii, and who specializes in real estate law.

The two systems are the Regular System and Land Court. In general, properties that were once owned by the Hawaiian monarchy will utilize Land Court, and the rest will fall into the Regular System. Some properties in our state require documents be recorded using both systems, and those properties as called Dual System properties.

When you purchase a property the Escrow Officer will consult with the company’s Title Officer to determine the system used for your property and make sure the right system is used, and all the right documents for that system are completed. If subsequent to your purchase you decide to make changes to the title of your property, you will need to work with a real estate attorney licensed in Hawaii and who specializes in real estate, to prepare and file your documents. Just recently I had a client whose property utilized the Dual System. A few years ago they decided to place the property in their trust. Unfortunately, the attorney they used was not one whose primary focus was real estate. That attorney for whatever reason was unaware of the Dual System requirement, and only recorded the trust in the Regular System. While it was not the end of the world, it did require the trust to be recorded in Land Court, which did add some additional time and expense to the process. That is why I strongly suggest utilizing an attorney who knows what they are doing.

Hawaii Regular System:
To get technical for a moment, the Regular system is officially known as a “race-notice” system of land registration. This type of system protects future purchasers of the property from prior claims that have never been filed with the Bureau of Conveyances. In other words, if you buy a property with a clean title, but them some years later someone comes along and says they have an unrecorded deed, and that they rightfully own the property – you are protected against this. That’s the good part. The bad part is where this system differs significantly with Land Court. In the Regular System, ANY document can be recorded against the property even if the person or entity filing the document has no legal interest in that property. Documents being filed for recordation at the Bureau of Conveyances are accepted without question by the registrar. In addition, a document with defects will still be accepted as long as it meets Hawaii’s statutory requirements for recording. The Registrar makes no determination as to the ownership or priority of interests. In plain language, someone could fraudulently record a deed transferring your property to them without your signature, or file a lien without your consent. Of course you can get it fixed, but it is a hassle.

The Regular System is also where Tax Liens and UCC (Uniform Commercial Code) Financing Statements are filed, unless the property is under the jurisdiction of Land Court.

Land Court:
Land Court in Hawaii is a “race” system, and sometimes referred to as a “Torrens” system of land registration. Only a few states have this kind of recording statute. These statutes make a prior interest void against a later interest if the later interest is recorded first.

When documents are presented to the Land Court Judge and the registration is completed, meaning the documents were accepted, the State of Hawaii issues in the landowner’s name a Certificate of Title. The Certificate of Title will note any document that affects the ownership of that property, such as mortgages, mechanic’s liens, judgements, and leases. The order of when these documents are filed in the Land Court System determines its priority. Even notice of a prior encumbrance or claim will not change the priority of claims. Unlike the Regular System, Land Court is very specific and picky on the documents presented. With the issuance of the Certificate of Title, the State of Hawaii guarantees ownership of the land set forth in the certificate. That is why Land Court will reject documents for filing if the strict requirements of Hawaii’s Land Court statute are not met.

Marriages, divorces, name changes, and deaths are also dealt with differently in Land Court versus the Regular System. If an update or correction is required, a Petition is filed with the Land Court to update the Certificate of Title. All petitions require original documentation. Be aware that copies of marriage certificates, divorce decrees, death certificates, or notices of name changes are not acceptable. Go dig out those originals.

Dual System:
As noted earlier in this article, some properties in Hawaii require recordation in both the Regular System and Land Court. The process is to record first in the Regular System, then present it to the Land Court for the issuance of the Certificate of Title. If you fail to file in Land Court, the property is technically unencumbered.

I hope the above sheds some light, versus making the system we have in Hawaii even more confusing. The simple rule is this: Be as educated as you can be. If you have questions or concerns on this topic, ask an attorney who specializes in this type of law. When it comes to the legal ownership of the most valuable thing you possess, it is important to make sure everything is done properly.

I hope this article helps with your education!