MAUI REAL ESTATE: THE RISKS OF BUYING AND HOW TO NAVIGATE THEM

 BUYER'S GUIDE

MAUI REAL ESTATE: THE RISKS OF BUYING AND HOW TO NAVIGATE THEM

By Harrison McCandless, REALTOR® · Coldwell Banker Global Luxury

The lanai does most of the selling. You stand at the rail in Wailea with an iced coffee in your hand, the water flat and shimmering at seven in the morning, a pod of whales playing in the channel off Molokini, and behind you a listing sheet promises quietly that all of this can pay for itself. It is a persuasive room. I have stood in it with a good many buyers, and the view works on me too; my wife and I honeymooned on this island years before we moved here. But I sell Maui for a living, and the part of the job that earns the fee is the fine print underneath the view.

The view is real. So is the fine print. Both close escrow.

What follows are the seven risks I walk buyers through before an offer goes in, and the move that defuses each. Buying here is worth doing. It is worth doing with your eyes open.

Most days my job is to be the person in the room who has already read the paperwork. What follows is some of what I say out loud.

RISK 01

The rule for renting a Maui condo by the week changed on a date you can look up. On December 15, 2025, following a 5–3 Council vote, Mayor Bissen signed Bill 9 into law as Ordinance 5909. It phases transient vacation rentals out of the A-1 and A-2 apartment-zoned districts, with a deadline of January 1, 2029 in West Maui and January 1, 2031 across the rest of the county. Roughly 6,200 units fall inside the line. Operate past the deadline and county penalties start at $20,000 and run $10,000 a day thereafter. About 94 percent of the affected units belong to owners who live somewhere other than Maui County, which tells you who the law is built to move.

The lawyers arrived four days after the ink dried. On December 19, owners at the Kāʻanapali Royal sued the county in Second Circuit Court, Malter v. County of Maui, No. 2CCV-25-0003778. Their argument is that erasing some forty-five years of permitted rental use without paying for it amounts to a regulatory taking under Article I, Section 20 of the Hawaiʻi Constitution. A second challenge has since followed. No court has granted an injunction, so the ordinance governs while the lawyers work. Plan around the law on the books, not the ruling you are rooting for.

Then the county did the thing only a county can do. It wrote a second law to soften the first. Bill 88 became Ordinance 6008, effective June 22, 2026, and created two hotel-zoning categories, H-3 and H-4, that a qualifying condo can apply to enter so it may resume the very use Bill 9 had just ended. All three planning commissions recommended denying the framework (not a surprise). The Council advanced it anyway, reasoning that the commissioners had misread what was in front of them. It’s important to note that all who sit in the planning department except for the planning director are volunteers! Resolutions 26-110 and 26-111 are now escorting specific complexes through that door, Kāʻanapali Royal among the named.

The effect on a buyer is concrete. Two condos in the same zip code no longer carry the same risk. A unit in a building that already holds hotel zoning keeps its rental income and trades at a premium. An apartment-zoned unit on the Minatoya List trades at a discount that prices in a countdown, and whether that countdown ever stops depends on a rezoning vote still to come.

Here is the fact worth acting on. A short-term-rental permission attaches to the building’s zoning and its grandfathered status, and it does not follow the deed to you just because the last owner rented the place. Before a unit gets its hooks in, get three answers in writing: the building’s current zoning, its Minatoya status, and whether it appears in Resolutions 26-110 or 26-111. That same zoning answer sets up the next risk, because the county taxes you on it.

RISK 02

Maui assesses property at its “highest and best use,” the county’s cheerful phrase for taxing your bedroom at the rate of the business you could in theory run out of it. Buy a resort-area condo, use it purely as a second home, and the county still lands it in the short-term-rental class (TVR-STRH) unless the unit qualifies for an exemption. For fiscal 2026–27 that rate runs $13.00, $15.00, and $17.00 per $1,000 of assessed value across three tiers, and the first tier now tops out at $900,000 rather than a million. Non-owner-occupied treats you better and still bites: $6.25, $9.00, and $17.00, with the top tier now reaching down to $2.5 million from $3 million.

Whatever the seller pays, budget for the rate you will carry. Model it before the offer goes in.

RISK 03

Here is the line item that ambushes mainland buyers. After the August 2023 Lahaina fire, condo master-policy premiums across Hawaiʻi climbed by figures that read like typos. Governor Green has cited jumps as high as 1,000 percent, and the state insurance division counts roughly 400 buildings carrying less than full replacement coverage. That shortfall reaches past the premium. Fannie Mae and Freddie Mac decline to buy a mortgage on a building insured below 100 percent of value, so an under-insured building slides quietly into cash-only territory, which shrinks the buyer pool and softens the resale you will one day want.

I have watched a buyer fall for a unit on a Tuesday and meet its master policy on a Thursday. The Thursday is the one that reorganizes the budget.

RISK 04

Some of Maui’s prettiest addresses are leasehold. You own the improvements and rent the ground beneath them for a fixed term. The lease rent resets on a schedule, and at expiration the land reverts to the fee owner, sometimes with your building attached. A leasehold price that looks like a bargain beside a fee-simple neighbor is usually charging you for that finite horizon, and a buyer who misses the distinction pays full freight for a dwindling count of years.

I spent a career shaping light before I ever wrote a purchase contract, so the west-facing lanai at five o’clock will always catch my eye first. I have also learned to read the lease before I fall for the light.

RISK 05

Every buyer is a future seller, and Hawaiʻi has arranged to collect on the way out. Sell as a non-resident and the state withholds 7.25 percent of the gross sale price under HARPTA. Sell as a foreign national above a million dollars and FIRPTA adds 15 percent at the federal level. Stack the two and a foreign seller watches 22.25 percent of the gross park at closing, refundable later against the tax actually owed, a line that has quieted more than one celebratory dinner.

I have written the full mechanics of both elsewhere, forms and thresholds and exemptions included. The point here is smaller: this is a cost you plan for at purchase, well before the week you are trying to close.

RISK 06

If you are buying land rather than a finished house, Upcountry most of all, ask about water before anything else. The Upcountry meter moratorium remains in place with no near-term fix. A lot without a committed meter is scenery with a property line, and no architect can draw you out of it.

RISK 07

The last risk is the oldest one, which is paying too much. Maui sits in a buyer’s market for the first time in a while. RAM’s July 2026 figures put the median condo sale at $690,000, up 2.2 percent from a year earlier, on a sharp jump in volume: 82 condos closed, up almost 55 percent. Units still took a median of 153 days to sell. Buyers are transacting in numbers and taking five months to do it, which tells you who holds the leverage. The single islandwide median also hides two markets. Bill 9 leans on apartment-zoned inventory while hotel-zoned product holds its ground, so the composite figure drifts while the two halves move apart.

Two comp traps earn a mention. First, keep a discounted apartment-zoned sale from setting the price of a hotel-zoned unit, and keep the reverse from happening too; wall those comparables off from one another. Second, on small units the price-per-square-foot number misleads, since a base-price floor makes a tiny unit read expensive by the foot. Segment comps by zoning, footnote the outliers, and let the longer days on market carry part of your negotiation.

Back to the lanai. The whale is still breaching in the channel; the coffee is empty. I can make a strong argument that buying on Maui is one of the most rewarding opportunities in life, and I love sharing those stories with clients. The move is to buy with the zoning letter, the master policy, and the tax classification read before the view has its way with you. The view keeps until the diligence is done. Enjoying it afterward, without a knot in your stomach, is the entire point.

Can I still buy a Maui condo and rent it short-term?

Yes, in hotel-zoned buildings and other permitted categories. Apartment-zoned Minatoya units face the Bill 9 phase-out — January 1, 2029 in West Maui, January 1, 2031 elsewhere — unless they are rezoned into the new H-3/H-4 districts. Verify the specific building before you assume anything.

How do I tell whether a building is affected by Bill 9?

Check three things: its zoning class (A-1/A-2 apartment versus hotel), whether it sits on the Minatoya List, and whether it is named in Resolutions 26-110 or 26-111. Reach out and I’ll get you those answers in writing.

What will I owe in tax when I sell as a non-resident?

HARPTA withholds 7.25 percent of the gross sale price from non-Hawaiʻi residents. Foreign sellers above $1 million add 15 percent under FIRPTA, refundable later against the tax actually owed. Plan for it at purchase.

Should I worry about condo insurance and special assessments?

Yes. Post-2023 premiums rose sharply, and under-insured buildings can be hard to finance. Read the master policy, reserve study, and assessment history before you commit, and carry loss-assessment coverage on your own policy.