Hawaii Real Estate State Practice Exam

In what situation would you likely attach a Plain Language Addendum to the Purchase Contract?

1. A time share unit selling for $27,500

2. An oceanfront leasehold condo selling for $85,000

3. An undeveloped vacant lot near Puna selling for $21,000

4. A three bedroom home in Kula purchased by Korean nationals

The correct answer is: An undeveloped vacant lot near Puna selling for $21,000

The Plain Language Addendum is typically used to provide clarity and simplicity in the language of a contract, making it easier for all parties to understand their rights and obligations. This is particularly important in real estate transactions that may involve complexities or specific nuances that might not be understood by all parties involved. In the case of undeveloped vacant land, such as the vacant lot near Puna, unique issues may arise related to zoning, land use, and development potential that could benefit from clearer language. Buyers of vacant lots often require more detailed explanations concerning what they can and cannot do with the property. Additionally, these types of transactions might involve nuances in local regulations that are crucial for the buyer to understand fully, so using a Plain Language Addendum can help ensure the buyer comprehends the extent of their purchase and any limitations associated with it. In contrast, while other situations may also seem complex, the nature of real estate products like time shares, leasehold properties, and homes typically come with more standardized terms that can be understood even without specialized language. This makes the need for a Plain Language Addendum less critical in those cases.