Harold Chu, Attoney at Law, ALC

There is a great temptation to use an unlicensed contractor because of the expectation of lower costs. The actual costs, however, for dealing with an unlicensed contractor can be substantially greater that any cost savings. Typical complaints involving unlicensed contractors are the quality of the construction, unfinished work, long unscheduled delays in construction and the poor quality of the materials used.

Since an unlicensed contractor is not licensed, the State of Hawaii and the Contractor's License Board have little control over the unlicensed contractor. Licensed contractors are generally bonded and there is a fund from which you can seek recovery. You can sue the unlicensed contractor, but there is no bond or recovery fund available.

The State of Hawaii encourages contractors to be licensed. The unlicensed contractor cannot sue you for unlicensed services rendered or materials provided. In a 1999 Supreme Court case, Jones v. Phillipson, the Supreme Court held that the owner can recover against an unlicensed contractor even if the owner knew the contractor was unlicensed.

Our office has recently filed a brief in the Supreme Court of Hawaii seeking to extend the current laws to require the return of all monies paid to the unlicensed contractor.

While we can assist an owner in dealing with an unlicensed contractor, the best advice is to avoid this situation.

Trivial Fact.....Artichokes are actually flower buds. If allowed to reach full maturity, they would become a large blue-purple flower!

In celebration of our 20th Anniversary, we shall, commencing with the October 1999 statement and throughout the remainder of 1999, offer a 3% Prompt Payment Discount off of the total attorney's fees and general excise tax. The discount does not apply to costs and is subject to the following terms and conditions.

We hope you find this incentive beneficial to you. If you have any questions about the discount, please feel free to contact our office manager, Fran, at 523-7544.

DO WE NEED IT?

We have said on numerous occasions that real property is generally the biggest investment one makes. We are often asked to prepare documents to transfer title from one party to another. This may involve a gift from a parent to a child, a transfer from one's individual name into one's trust, a transfer due to a marriage or a divorce, or a transfer due to the death of a party.

We routinely suggest that the parties order a preliminary title report as part of the transfer process. The cost for such a report is approximately $200. This amount is paid to an outside title company who will search the title to the property. The present economic climate has forced many people to carefully weigh all costs involved in a real estate transaction. People often tell us that they don't want to incur the costs of a title report. If a client instructs us to do so, we can and will prepare a transfer document based upon the information that a client provides, but the information is sometimes old and may not be complete or reliable.

We caution our clients not to be penny-wise and pound foolish. The report can confirm whether there are any unknown claims or encumbrances.

The title report may reveal an unknown claim against one of the parties. This is especially true in divorce cases. There have been instances when prior liens, mortgages, etc. have been satisfied but the claim still appears of record against the title.

Checking the preliminary title report is like checking your credit reference. You may have an excellent payment history, but here may be an unknown error affecting your credit. If there are errors, you want to correct them. It is almost always easier, faster and cheaper to correct any errors sooner rather than later.

Joyce Stratton, 51, won an age discrimination lawsuit against the New York City Department for the Aging. She had worked for this agency which helps the elderly secure benefits &a,p; legal rights for 21 years. Ironically, she lost her $51,000 per salary, plus pension benefits when she was fired in favor of a younger person.

RECENT APPELLATE DECISIONS

State Farm Fire and Casualty Company v. Pacific Rent-All., No. 19854:
The Supreme Court of Hawaii held that the court would not look to outside factors to interpret a contract when the contract is definite and unambiguous. In determining whether an ambiguity exists, the court should look only to the contract. Disagreement as to the meaning of a contract or its terms will not render clear language ambiguous. Except in cases involving fraud, duress, mistake or ambiguity, you look only to the contract and the clear meaning of the terms in the in cases Thus, ignorance is not bliss. There is no relief from the contract if you were not aware of or did not understand the terms of an unambiguous contract.

Effect:
Contracts should be prepared very carefully. It is important to use clear unambiguous language. While a lay person can draft a clear and unambiguous contract, normally this is a task best left to counsel. You should read every contract you sign and understand it. This recent case confirms that you are presumed to understand what you signed.

Atahan v. Maramoto, No. 21073:
The Intermediate Court of Appeals decided that an owner of beachfront property is protected by the recreational use statute. The recreational use statute is Hawaii Revised Statutes Chapter 520. This statue protects owners from liability to recreational users. An example of this is when people use the property to access the beach. The court in Atahan held the owner of a beachfront property is not liable to a person who parked his car on the owner's property, walked across the owner's property to the public beach, went into the ocean and was injured.

Effect:
The above reinforces the statutory protection for those of you who own beachfront property. You are still liable if your actions caused damage or personal injury to others.

"I JUST WANT TO ADD A NAME..."

People routinely ask us to "add a name or take a name off of title". The requests are normally fueled by (1) concerns about one's mortality, (2) the desire to avoid the costs of probate, and (3) to save taxes.

Adding another person's name to the title may avoid the need for probate, but it does not save any taxes. If property is owned in joint names and a person dies, the property is initially valued as being completely in the estate of the deceased. Thus, there is no tax savings. There is also the additional concern that the new co-owner may make decisions pertaining to the property that is contrary to your wishes. The additional owner may create problems for your title. There may be creditors or a soon-to-be-ex-spouse.

A better solution is to use a revocable living trust. Placing your real property in a revocable living trust will avoid the costs of probate. If your net taxable estate asset is under the federal estate credit amount, you would not have to pay any taxes. The amount of the credit for 1999 is $650,000 and will be $675,000 for the years 2000 and 2001. This amount will gradually increase to $1,000,000 by the year 2006.

Yes, it is possible to add another person's name to title. Clients should consider, however, whether they can afford to lose control of the property and whether there are any actual tax savings.

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Down south, there was a man who owned a big pickup truck. For fun, he would drive the backroads, looking for lawyers to run down. One day as he was driving along, he spied the local priest, walking along the side of the road. He decided to be charitable to the priest so he stopped to give him a ride. As he was driving down the road with the priest in his truck, he saw a lawyer walking by the side of the road. As a reflex, he swerved over to run the lawyer down, then realizing he had the priest in his passenger seat, swerved back onto the road. The man, feeling repentant, turned to the priest and said, "Father forgive me, I almost ran over that lawyer back there!"

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The information you obtained at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.