 Welcome to Inside Hawaii Real Estate. I'm Will Tanaka. And I am Milani Lam. We are so honored to be your hosts for this show, Inside Hawaii Real Estate, where we are committed to taking a deeper dive together with you into our local Hawaii Real Estate industry across all Hawaiian Islands. There are so many topics to cover and we'd love to hear from you. So feel free to make suggestions directly to us. We have a couple of goals during this time together with you every two weeks. We wanna inform, share information and perspectives providing you with local and sometimes national real estate related information. Everything real estate. We're gonna also bring on guest speakers that are experts in different areas to provide you with real estate insider information. That's right. Leone is a real estate broker and vice president of Benahom's and Garden's Real Estate and has been working in the Oahu Real Estate industry for over 20 years. That's right, 20 years. She's very active within our local real estate industry is currently serving in our leadership as a director with the Honolulu Border Realtors and as the treasurer for Hawaii's Real Estate Business Institute. Wow, that's a lot. And then you've got our co-host, Will Tanaka. He's a full-time real estate professional serving his clients. And did you know that he's also a licensed attorney who attended William S. Richardson School of Law at the University of Hawaii. Will practice law as a real estate litigation attorney as a very prominent law firm right here in Honolulu. For many years, he was the president of a local escrow and title company also here in Hawaii. And he was general counsel with the nation's largest title company. Basically, Will has been involved in all corners and aspects of Hawaii's real estate industry over the last 15 years. And he really knows how to resolve complex issues. Well, our combined experience has led to this show. So let's get inside Hawaii real estate. What time is it? It's show time, baby. So today we have a very special guest the state escrow manager of first Hawaii title, Shannon Cortez. And she's also a very good friend. And this is gonna be a fun topic, escrow and title. Well, escrow and title, I feel like not many consumers may know much about escrow and title. Yet they represent such a vital and essential part of any real estate transaction. To me, they're reminiscent of unsung heroes, totally behind the scenes. Will, why would you say this is a fun topic? Well, it's fun because today is the day we get to bring them to the forefront. And when we're talking about escrow, it's about interacting with people. It's about problem solving, putting the little pieces of puzzles together by dealing with all parts of the transaction. It's about helping buyers become first time home buyers. It's about helping sellers navigate their emotional process when they have to sell their generational home. So it's exciting, it's fun, it's all of everything. That's right. Shannon Cortez will be joining us in just a few minutes. But, you know, before she dies, Will, did you know? Wait, did you know what? Did you know about the sea level rise disclosure law? Oh, that's right, Leone. That's a great topic and very timely too. It's actually the state of Hawaii law that's currently in effect across all islands where it requires sellers to disclose any risk of sea level rise exposure to the property. This law took effect this year, May 1st, 2022. It applies only to residential homes, condos, town homes. It does not apply to commercial properties. Those are good points. So if a property is located near the ocean, streams, canals or areas likely to flood in a heavy rainfall, it falls within the 3.2 feet sea level rise projections. That's right. 3.2 feet, then the seller has to disclose that the property being sold is in a sea level rise exposure area. You know, I think this matters because 20,000 people are projected to be displaced and 28 miles of coastline will be impossible with a 3.2 foot sea level rise. Wow. Making it back a step, five years ago in 2017, the state actually published a report saying that our sea level is rising at an increasing rate due to global warming. And it's expected to rise up to 3.2 feet by the year 2100, which is about 78 years from now. So it could be an ocean from property in Lanakai, a condo near the Alawai Canal, homes near Waianae Elementary School. But basically, if you're selling any home and it's an area where the sea level rise could potentially rise up to 3.2 feet, then you must disclose that. And that's pretty easy to figure out if your home is located in a sea live rise exposure area. There's a state website, interior address, if your property is in a blue affected area, you have to disclose that in a sea level rise exposure area. So simple as that. And you know what, Will? Now we know about sea level disclosure. You know what? I actually like this digital section. So let's make it part of the show. Sounds good, okay. Well, I think let's welcome on Shannon Cortez. Shannon, I am a huge fan of yours. Aloha, Shannon, and welcome. Hey Will, hey Leonie. Hey, Shannon. All right, so Shannon is an industry veteran. Over 20 plus years, I don't know how that's possible. You must start it when you were in elementary, 60, okay, I was gonna say elementary school. So she's the vice president of Hawaii as for operations of First Hawaii Title, born and raised on Maui, and she oversees Oahu, Maui, Big Island, six offices and over 30 people. Wow, that's incredible. Fun stuff, very fun stuff. Okay, so we're gonna start with a very hard question. Okay, tell us one thing not too many people know about you. Let's start with that. Yeah, tough question. I wanna say not too many of even my close friends know that my family were livestock junkies. I was born and raised in Waikapu on the island of Maui and basically my grandfather and his brothers started one of the few Piggeries on the island, which are still in existence. So lots of hard work, tiring days, even more tiring nights, but it was fun. Growing up with my cousins and all of our family on 15 acres, I wouldn't take that back, anything back at all. You said Piggery, right? I did say Piggery, which expanded over the years. So we went from Piggery and like I said, livestock junkies. So expanded to goats, horses, cows, anything. That's out there, you name it, they had it. And you said that your family still owns it today? They do, yes. So it got passed down, of course, generation to my uncles, still run the Piggery up there. So our kids, our family, they still get to enjoy, if you wanna say enjoy the lifestyle of being raised on a farm. That is so cool. Well, so from farm to real estate. Yes, huge, right? Turn of the tides, different side of the spectrum. Everything in between, yes, total offset. So how did you get into that? You know, so I never shared this before, but my aunt, she has been in the industry, she's still in the industry. I always found it when we would have family gatherings. I would be so intrigued of her day to day. She was an escrow officer, project officer, and it was always something that I just found very interesting, and I love accounting. So the money aspect, bringing that into play with, you know, hearing some of her stories, I was like, you know what, that's what I wanna do. So after college, it got my degree in accounting, tried the banking scene for a tad bit, and within two years, I made my way into the escrow and title industry. Look at this. Sorry, kind of starting us off, I mean, do you have to use escrow and title in all real estate transactions in Hawaii? Yes, you do, because Hawaii is considered an escrow state, so yes. And so is it different in other states? And we mentioned Hawaii is an escrow and title state. Is it different in other states? Yeah, good question, Leone. It does differ, and it does vary. There are some states that would be considered an attorney state. So in Hawaii, we would say escrow, where they would say settlement. Oh, got it, got it. So in a Hawaiian situation where someone doesn't wanna use escrow, a family member wants to transfer title to another family member, what happens in that situation where they don't wanna use escrow? Yeah, that's another good question. I would always recommend that they consult with an attorney, because there may be some implication on the back end where they're conveying from, you know, one family member to the next and it might have an impact on the title insurance that was issued during their initial transaction. That's a great point. You know, because it's Halloween month, do you have any horror stories to share for us in escrow? Oh, for sure. So I'm in escrow, there's a bunch of them. But one that really sticks in my mind is actually just a couple of years back was, you know, we had a seller who was in a distressed situation, had to relocate back to the mainland. We had a buyer moving in, coming in from the mainland and it was law of attraction when there's a transaction that's going a certain way, if you know where I'm going with that, it will always veer that course. And this one transaction, it was the basically complicated transaction, we got everything in line, lender was ready in a position to fund, we packaged up our recording package ready to send it to our title team. I get a call from the funder saying, you know, hold the funding, hold the recording, we are not funding alone. And they went into detail, yes, they went into detail as to, you know, the why, came down to it that the buyer placed a resignation with their current employer. Oh no. Current employer, exactly. Current employer, buyer didn't anticipate, right, being let go, turning in my resignation. Employer then turned around and basically terminated the buyer's employment that day. Lender called in to confirm and re-verify employment and they couldn't do it because of the termination. Oh my gosh. Yeah, obviously they couldn't go through with funding the loan, it was a complete mess of the entire situation. Buyers actually already moved into the property. So that in itself led to, you know, some pre, some legal matters that they had to address. And bottom line, basically, don't terminate your employment if you're in escrow. If you're purchasing a property, you know, get the advice from your agent, get the advice from your lenders, you know, don't make crazy moves without consulting the experts in the field because it definitely can lead to some crazy and unexpected situations. Hey, Shana, you mentioned that the buyers who resigned, they actually moved in during escrow. Can you get into that a little bit more? How's that possible? Yeah, no, it's definitely possible, you know, that that's some pre-work that goes into the negotiation stage or the contract stage. So there was a pre-occupancy agreement that was done, early occupancy agreement that was done, sorry about that, where there were terms and negotiations made between the parties. So seller and buyer basically came to an agreement to allow the buyer access to the property without closing escrow. So yes, it definitely can be done. Wow, this is a huge lesson for any potential buyers. Do not change jobs, don't buy new cars, don't change your financial situation, right, Shana? 100%. Yes, always consult with the experts. Don't get yourself into a bind that will be hard for you to get out of. Well, good thing that there was escrow entitled to protect all the parties through transaction. Yes. Totally, totally. You know, Shana, what happens if you're in escrow and in a transaction in real estate and someone passes away? What if the seller passes away? Then what happens? Well, that's a very good question and it happens more often than we think it does occur. But it's not the end of the road for you. You know, there's different recording systems in the state of Hawaii. So we have land court and we have regular system. If in regular system, if the deed was executed prior to the death, it may be so considered a valid conveyance or a valid deed. If it is in the land court system, definitely that would be something that you would have to consult with your escrow and title folks on because a petition may be required, but there's always an option out there. That is good to hear that there's always an option. You know, Hawaii is so unique, right? Because Hawaii is one of probably the two states where there's two recording systems. You mentioned the land court system. I think the other one's a regular system. So wow, this is something really unique about Hawaii. Yes, very unique to Hawaii. And there's other, you know, there's transactions that may lie in both. So that would be considered a double system recording. So we are very unique in a lot of different manners when it comes to escrow and title in the state of Hawaii. You know, we've been talking about escrow for a while. And you know, people throw out the word escrow in a real estate transaction. Can you let's kind of dig deeper into what escrow is all about? Yeah, so I mean, escrow is basically a neutral third party. We facilitate the closing of real estate transactions by handling all incoming funds, you know, initial deposit, additional deposit, closing funds. We deal with the lender. So we hold the, we accept the lender's funds and we basically draft and facilitate the execution of the required closing documentations for both all parties, buyer and seller. And of course, at the end, when we receive recording clearance, the best part of escrow is releasing those funds, those proceeds over to the seller. So at any given time, we will be handling a lot of different aspects of the transaction. Very cool. You guys do so much, right? Because I think escrow is the only party, the neutral third party that handles millions and millions of dollars every single day. You're entrusted with very confidential information like our buyers and sellers, social security numbers. They don't even give it to the real estate professionals, right? So I think, you know, a lot of respect goes to you and your staff and the escrow industry for holding down the transaction and making sure that the seller gets the proceeds, the buyers get the keys to a new house. Yeah. And you know, it's such a rewarding time, right? Like you said, Will, at the beginning of the interview is you are dealing with, there's so many life changes that may be occurring that we don't know, you know, for the seller, for the buyers. So it's always, it's the best part of my job. And I'm sure I can speaking for the rest of our escrow staff is, you know, we hold the key for the next chapter in someone's life or the beginning chapter of another party's life. So it's very, I love it. You know, it's very rewarding, but there's definitely a lot that goes into play that we see on a daily, daily basis. And you know, Shannon, you kind of mentioned in the beginning, you know, we're talking about your background and that you had kind of had a background in accounting and then you got involved in real estate and escrow and everything like that. I know that you ran a successful desk of your own, you know, before you decided to get into the leadership aspect. But what would you say, if someone wanted to become an escrow officer and what kind of traits would be essential for them to get started in something like that? Yeah, you know, I think ultimately it's the love of people, customer service, right, communication is a big part of the real estate industry in general. So having those people skills, being able to communicate effectively, that's out the gate, number one. Being able to multitask, you know, there's times that you're working on one transaction and you get that crazy call or the hectic call from a buyer or seller and you have to stop and be able to pivot. So being able to multitask is another trait that we look for. And just being an overall great team player because you are working with the principals, you are working with lenders, you know, real estate agents, attorneys, we can be dealing with 10 to 15 people at any given time. So being able to work as a team to get to the ultimate goal and it's closing your transaction. So that would be three key things that I would look for in an individual who's interested in becoming or stepping into the escrow or title industry. That makes sense. Multitask, whoa, that's a hard one. I'm not sure if I could ever become an escrow officer. It's one thing at a time. You know, we've talked about escrow and we hear about this title insurance. I know that it's one of the most unique types of insurance because we all understand car insurance, for example, VP, annual premiums to protect us in the event of a car accident, right? So car insurance, it protects us for future events. But can you go into a little bit more about what is title insurance? Yeah, title insurance is a very important piece of the puzzle when it comes to escrow and title. You pay a one-time premium, one-time premium unlike car insurance or homeowners insurance where you're paying monthly and that premium will actually give you a policy that ensures you for any matters that occurred prior to you taking ownership and during your course of the ownership of the property. So very important. I can share that there have been times where we hear there's someone that comes to the property and knocks on that door and says, hey, Mr. Wiltonaka, that's my property that you're in, right? You immediately start to panic. Like, oh my gosh, what am I gonna do? I just invested in this huge part of my life, right? Purchasing your home the first time, whether it's your first time, second time, third time, it's still a huge investment. And just having that title insurance will make you feel secured. You know that you can go back to the company that issued you that policy and you're protected. We would basically come into the picture and we would defend your right to that property. So very important. In Hawaii, who pays for that? Like would it be buyer or seller? Good question. And the norm, it would be a 60% split to the seller, 40% over to the buyer. That's interesting, yeah? That the seller pays 60%, the buyer pays 40%. And I don't think that's another unique aspect about Hawaii, right? And I think part of it is, you know, the seller is giving a warranty deed to the buyer. So they're guaranteeing certain aspects of title. And you would definitely want the buyer to get title insurance because as a seller, you don't want to be liable for it. So it's in the best interest of the seller to pay at least a portion of it in Hawaii pays 60%. And then let's have, you know, the title insurance and oversee everything that happened in the past that you were saying, Shannon. Yep, exactly. Well, see, isn't escrow and title pretty fun, Leonie? Actually, it's a lot of fun. I can see Shannon has so much passion for it, you know? And I'm just so grateful for the time that she's spending with us kind of sharing the knowledge, right? Because this is such an important aspect of real estate, especially Hawaii real estate. Yeah, and then you know, when it comes to choosing an escrow company in a transaction, who makes the call? Who chooses the escrow officer to use in any given transaction? Well, according to the contract, the buyer basically sets forth the title of an escrow company. Okay, so it could be negotiable? Definitely, and it all depends, you know, we see, it depends on where the market is, you know, the current conditions of the market, who dictates the market, right? So we're basically seeing currently right now that it could be construed as a seller's market. So a lot of the time the seller is kind of dictating who the escrow and title company are and a lot of the back end story would be because of title work. Sometimes the pre-title work is completed prior to the contract actually making its way into escrow. That's a very good point to have really good relationships with the escrow and title company because, you know, sometimes there's death in the family, marriages, divorce, a change in trusteeships and there's some pre-title work before the agent listed on the market. Yeah, very, very good point. Well, and that's important, right? Because for a lot of agents, you wanna make sure that first off, you know, who you're going out to your listing appointment that you're actually having the correct party executing that listing agreement and having the title report in advance can bring you up a couple of levels and get you prepared for what may be in store and what you may be having to deal with down the line once you enter into escrow. So for a consumer, instead of the real estate professionals, realtors choosing the escrow and title company, how about can a buyer or seller choose as well? As far, yes, yeah, no, definitely that could be established, yes. Okay, wow. So, you know, in terms of what makes a great escrow officer, so we talked about the traits that, you know, what you need to become a solid escrow officer, what makes you go above and beyond? Who are the A-level escrow officers? What makes them so great? Well, it's communication, you know, I am such a strong believer in communication. Having that constant teamwork communication, being ahead of the game, right? We're always anticipating, we see something happening and this may be happening if we could foresee, you know, A or B, so always having, being solution-based, going above and beyond, having constant communication and always providing a solution and having the knowledge that this may occur and we want to prepare you for this so that you folks as agents are aware of the options that you can provide over to your clients. And the relationship, right? It's like, you know, with you and Leonie, well, I know that I could come to you and be like, okay, these are the things that I can foresee happening and you would take that to heart and already start working on what you can gather, what information you can gather for me so I can present it to my title officers. Oh, right on. So true, so true. Well, should I segue over to ask Shannon a special question? Let's do it. Shannon, what is your favorite or unique household product? What is your must-have go-to? Clorox wipes. And why is that? Every room, every room there's a bottle in there by my front door and my kitchen. It's just because, you know, I'm with COVID and everything we're extra cautious. So especially having, you know, grandkids and I have a 11 year old, I'm constantly walking behind her and making sure everything is just thick and span because we don't want dirty hands in the house. Wait, I don't think you're too young to have grandkids. Yeah, I just heard the word grandkids, but that's not possible. I have four, three granddaughters and one grandson. Yeah. Wow. Wow. I know. It's fun. It's just like Espoir, they keep you on top of your toes. Every little bit of it. And he said you have an 11 year old also. I do. She's my youngest, yes. So 26, 20 to 20 and the 11 year old. Oh my goodness. That is a busy life. It is. It's fun. It's really fun. I enjoy them a lot. Well, I thought our life was busy. You have double the trouble. So Shannon, thank you so much for joining us today as we explore inside Hawaii real estate, you know, and for being together with Will and myself. And we just, we appreciate your time and value so much. Thank you for being our guest on the show today. And thank you to my co-host, Will. You are such an amazing partner. Thank you so much, Leone. Thank you, Shannon, for being our very first guest. And this is really excited to be, to host Inside Hawaii Real Estate. And you know, we had a company meeting today and we'll leave with this because with the COVID getting over it, there's a lot of things going on, people making changes. And, you know, my life model is risk and no regrets. So I thought this was timely that someone brought this up. So regrets won't change your past. Anxiety won't change your future. Action is the only way for you to change everything. So thank you so much and we'll see you in a couple of weeks. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, Twitter and LinkedIn and donate to us at thinktechhawaii.com. Mahalo.