Thursday, February 28, 2013

The Fiscal Cliff: Updates for Homeowners

If you own your home, here are important facts that may affect you:

  • The mortgage insurance premium deduction now extends through 2013 and is retroactive for 2012 for people who make less than $110,000.
  • Mortgage cancellation relief now extends until January 1, 2014.
  • The Capital Gains Tax exclusion for the sale of a Main Home remains unchanged at $250K for an individual, and $500K for married couples, as long as you have lived in the home 2 out of 5 years prior to the sale.
  • The first $5M of an individual estate ($10M of a family estate) is now exempt from estate taxes. After those amounts, the estate tax is 40%.
  • The Energy Efficiency Tax Credit of 10% up to $500 was extended through 2013 for improvements to existing homes.
    (from the National Association of Realtors)
Single Family Nov '12 - Jan '13 Nov '11 - Jan '12 % Change
 Number of Sales 814 699 16.5%
 Median Price $610,000 $595,000 2.5%
 Condominium Nov '12 - Jan '13 Nov '11 - Jan '12 % Change
 Number of Sales 1,045 931 12.2%
 Median Price $330,000 $290,500 13.6%
                                                                Information Provided by Prudential Locations

Sunday, February 24, 2013

Checklist for Finding and Hiring a Builder or Remodeler

By: Karen Nakamura, CEO

Doing your homework will help you have a more successful experience.

 Use this checklist to help you select a home builder or home remodeler to work on or build your home:

  • Contact the Building Industry Association of Hawaii for the names of member builders and remodelers: or go to You can also ask family, friends or coworkers for recommendations.
  • Make sure the builder or remodeler has a permanent business location and a good reputation with local banks and suppliers.
  • Find out how long they have been in the building business. It usually takes three to five years to establish a financially sound business. You want to make sure they will be around after the construction is complete to service any warranties.
  • Check out the company's rating and if there have been any complaints filed with your local Better Business Bureau: or the Department of Commerce and Consumer Affairs:
  • Make sure the builder has sufficient workers compensation and general liability insurance. If not, you may be liable for any construction-related accidents on your premises.
  • Ask the builder to provide you with names of previous customers. If they won't, beware. If they do, ask the customers if they would hire the builder/remodeler again.
  • Ask if you can see the builders work, both completed and in progress. Check for quality of workmanship and materials and cleanliness of job site.
  • Do you feel you can easily communicate with the builder? Remember you will be in close contact with them throughout the construction process and afterward as you live in your new home.
  • Make sure the builder provides you with a complete and clearly written contract. The contract will benefit both of you. If you are having a new home built, get and review a copy of the home warranty and homeowner manual as well.
  • Be cautious of unusually low-priced bids. If the builder is unable to pay for the materials and labor as the project proceeds, this may indicate a potential problem. Keep in mind that less expensive does not necessarily mean better!
  • Make sure your payments are spelled out progress payments that identify when payment is due upon completion of the specific phase of the work.
  • Make sure you sign a lien disclosure statement with the contract.
  • Make sure the Notice of Completion is filed in the newspaper this starts the 45 days of the lien period.
  • Make sure you get a Certificate of Occupancy and the permit is closed out. When the permit is not closed the work is not recorded with the building department so your plans are not updated. When you need an appraisal, a loan or go to sell, you may have a problem because what is recorded does not match the existing as built. When that happens, there are permit fees, and penalties to get the records corrected.
For more information contact me: or call 808-847-4666 x 7502

Thursday, February 21, 2013

"Building the Great Private University that Hawaii Deserves"

BIA General Membership Meeting - February 20, 2013

Guest Speaker - Todd Simmons, Vice President of Marketing & Communications, Hawaii Pacific University

On Wednesday, February 20, 2013, BIA-Hawaii held its first General Membership Luncheon Meeting of the year.  Guest speaker, Todd Simmons, Vice President of Marketing & Communications at Hawaii Pacific University, gave an informative presentation on the current direction of Hawaii Pacific University and its' new Aloha Tower Marketplace project.

(L to R) Karen Nakamura, CEO, BIA-Hawaii;  Guest Speaker - Todd Simmons, VP of Marketing & Communications, HPU; 2013 BIA President - Greg Thielen; 2013 President-Elect - Brian Adachi; Mark Hertel

Mahalo to our Advertising Sponsors:

HiEmployment - Barbara Guss (left) and Ann Manabat
simplicity HR by Altres - Maureen Kelly (left) and Stephen Hanson

Wednesday, February 20, 2013

What Contractors and Home Owners Need to Know About Lead Paint

The U.S. Environmental Protection Agency's Lead: Renovation, Repair and Painting rule governing the work of professional remodelers in homes built before 1978 took effect on April 22, 2010.

The rule addresses remodeling and renovation projects for all residential and multifamily structures built prior to 1978 that disturb more than six square feet of painted surfaces inside the home or 20 square feet on the exterior of the home, due to possible lead paint contamination.

The EPA rule lists prohibited work practices, including open-torch burning and using high-heat guns and high-speed equipment such as grinders and sanders unless equipped with a HEPA filter. It also requires a cleaning inspection after the work is completed.

Additionally, the rule establishes required lead-safe work practices, including sharing a copy of Renovate Right with the home owner, posting warning signs for occupants and visitors; using disposable plastic drop cloths; cleaning the work area with HEPA vacuuming and wet washing; and individual certification through a training course.

The full rule and brochures for consumers can be downloaded from the EPA’s Web site.

A 2006 NAHB study on lead-safe work practices showed that a home was better off after a remodel than before, as long as the work was performed by trained remodelers who clean the work area with HEPA-equipped vacuums, wet washing and disposable drop cloths.

Tips for Home Owners

  1. Hire a Certified Renovator for your home remodeling project.
    Professional remodelers who have achieved EPA Lead-Safe Certification are trained and prepared to work in pre-1978 homes for minimizing dust and potential lead paint exposures. These workers also have certified their firms and will carry an EPA seal verifying their qualifications to follow lead-safe work practices. Certified Renovators have the knowledge and tools to contain dust and keep your family safe. Do not attempt remodeling work yourself or hire an uncertified remodeler as this puts you at risk of lead poisoning.
  2. Read Renovate Right.
    Your Certified Renovator will provide you a copy of the
    Renovate Right brochure produced by the EPA. This brochure describes the dangers of lead poisoning and how the practices of the remodeler will be employed to contain dust, clean, and minimize the dangers of lead paint exposure.
  3. Pay attention to warning signs and do not enter containment areas.
    The Certified Renovator will post warning signs and set up areas of containment using plastic to keep dust under control. Pay attention to these notices and stay away from these areas. The remodeler uses these techniques and lead-safe work practices to minimize lead dust exposure.
  4. Consider testing for lead.
    You may ask the Certified Renovator to use LeadCheck test kits for testing certain surfaces for lead. If the test comes back negative, the remodeler will not need to use lead safe work practices because the component has tested lead-free. A home owner may alternatively hire a certified risk assessor or lead inspector to conduct testing in the home for lead. Any pre-1978 home can be tested for lead and if the results are negative, the EPA lead rule does not apply.
  5. Maintain records about your home remodel.
    After the remodeling job is complete the EPA Certified Renovator will share records with you, such as a checklist describing the work practices used and any results from lead testing. Be sure to keep these records and share them with the next home owner if you should sell your home.
Learn more about EPA's lead paint rule by visiting or by downloading the pamphlet, Renovate Right.

Sunday, February 17, 2013

The Hidden Risks and Liabilities to the Owner Builder

By: Karen T. Nakamura, CEO
Building Industry Association of Hawaii

HRS – 444 is the State Law that regulates Contractor Licensing. This law is meant to protect consumers from liability, fraud and workmanship that does not meet building codes and building standards. Contractor’s who are licensed are registered with the State Department of Commerce and Consumer Affairs, (DCCA). The State has their name, address, social security number or FEIN number and the State can find them to get restitution.

The Owner Builder Exemption fosters unlicensed individuals to shift liability on to the Owner without the Owner knowing the consequences. Complaints have been filed with Regulated Industries and Complaints Office (RICO) and in many cases it takes years of investigation to substantiate the cases. The result: Owners cannot get restitution for their losses and are left with a situation that devalues their investment.

Yes, we are all “related” in Hawaii or someone we know works in the construction industry.  Yes, building costs in Hawaii are the highest in the Nation. Is the risk worth taking when the values of our homes exceed $625,000? Is the risk worth it when the new building materials and building systems require specialized training?  Is the risk worth taking when your net worth and lives are impacted?

Steel wall studs and engineered wood floor joist, foam insulation in the walls, and the
 fiberglass insulation in the ceiling prior to drywall installation
Owners, please educate yourself before signing the Owner Builder Building Permit Application. When you sign this permit application, you are the contractor of record and you are liable for the safety of all workers as well as compliance to the environmental (EPA) and (OSHA) regulations. Violations of Federal regulations, (EPA and OSHA) are not excusable and the daily fines and penalties are expensive. The buck stops with you. The Owner Builder Exemption of the Contractor’s Licensing Law allows owners or lessees of property to build or improve residential, farm, industrial, or commercial buildings or structures on property for their own use, or for use by their grandparents, parents, siblings, or children and who do not offer the buildings or structures for sale or lease. When Owners are advised by individuals to sign the Owner Builder permit application, the Owner can hire employees and contract directly with subcontractors to construct the improvements on their property. The Owner then takes on all the responsibilities and the liabilities of a general contractor.

Do not be confused: The Contractor Licensing Law HRS-444, is regulated by the State Regulated Industries Complaints Office (RICO). RICO assists the public and licensees through education and through enforcement of the state’s professional licensing laws.

Building Permits are regulated by the City and County Department of Planning and Permitting, (DPP). A building permit is not required for repairs using similar or same materials for the purpose of maintenance and which are not more than $1,000 in valuation in any 12-month period and do not affect any electrical or plumbing installations.

The Building Industry Association of Hawaii has introduced SB-1077 to improve the ability of RICO to investigate violations of the Owner Builder Exemptions and to offer additional disclosures for Owner Builders when they enter into agreements with licensed subcontractors.

Please call or email your legislator to support SB-1077. For more information contact me at

Thursday, February 14, 2013

How Does Hawaii’s General Excise Tax Impact Our Construction Costs?

By: Karen T. Nakamura, CEO
Building Industry Association of Hawaii

In 2011, Act 105 became law and disallowed the exemption of Hawaii’s General Excise Tax (“GET”) on subcontractor work by the general contractor. This law is scheduled to sunset on June 30, 2013.
Act 105 causes the GET to be charged multiple times on the same GET already paid. This practice is called tax pyramiding. Since the inception of Hawaii’s GET, pyramiding was cautiously avoided by exempting services that triggers tax on tax situations.

In Hawaii, the number of subcontractor licenses continues to grow with every new product or new way of work, due to a current state law. We have two types of General Contractor licenses, “A” for general engineering contractors, and “B” for general building contractors, and over 168 subcontractor licenses. Each type of license identifies work dedicated to a specific jurisdiction. For example there are different licenses for fencing depending on the type of fence: wood, vinyl, stone, glass, and more. There are different licenses for roofing depending on the type of roof: wood shake, asphalt shingles, hot tar, metal, tile, and more. Each type of license can be subject to multiple taxing of the GET depending on if a subcontractor uses other subcontractors to get the final product to the general contractors.

Example: When a cabinet maker sells to a cabinet installer (1), and the installer sells the same cabinet with installation to a general contractor (2), and the general contractor sells the total job with cabinets and the installation to you, the consumer (3), the State Tax Collector gets the 4.5% GET three times on the same cabinet, which is ultimately passed on to the buyer.

By allowing Act 105 to sunset on June 30, 2013, contractors will be allowed to pay the 4.5% GET at the first level, just once, and not continuously add the tax at each level. Contractors identify the amount the previous subcontractor has paid and deducts that from the amount due on the total sale. This practice lowers the cost of construction to you, the buyer.

The State Tax Collector is in favor of allowing this law to sunset on June 30, 2013.

Representative Sharon Har introduced HB 1194, which allows for the sunset of the subcontractor exemption. The Committee on Consumer Protection & Commerce has scheduled this bill for hearing on Wednesday, February 6, 2:30, in room 325 of the State Capitol.

Representative Sylvia Luke has introduced HB 1360, which would make permanent the suspension of the subcontractor exemption. It has a single-referral to the Finance Committee, of which she is Chair, and no hearing has yet been scheduled.

Please write to your representative to tell them to allow this law to sunset so construction costs can remain affordable in Hawaii.