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A Texas man who bought a home in Portlock earlier this year for $2.3 million as an investment is suing the seller and broker for not disclosing that he cannot legally rent out the property for periods shorter than 30 days. Read more

A Texas man who bought a home in Portlock earlier this year for $2.3 million as an investment is suing the seller and broker for not disclosing that he cannot legally rent out the property for periods shorter than 30 days.

Carsten Mikkelsen filed a lawsuit in U.S. District Court on Tuesday against the seller, Hank C.K. Wuh, and Locations Hawaii.

According to Honolulu property tax records, the six-bedroom, three-and-a-half bath home with swimming pool at 28 Hanapepe Loop sold for $2.3 million on June 6. Mikkelsen said the sale closed on June 14.

Three days after the sale closed, Honolulu City Council members approved tougher regulations of transient vacation units and stiffer fines for illegal short-term rentals.

Mikkelsen’s lawsuit said he was unaware of the controversy over short-term rentals on Oahu and that Wuh and Locations never mentioned it during negotiations. On the contrary, he said Wuh — either directly or through agents — presented him estimates from Locations of yearly gross income and expenses the property would generate as a short-term vacation rental.

He said the sales contract even includes a section that contains existing rental bookings that he was required to assume when he purchased the property. The rental bookings were for 63 nights between June and November.

Mikkelsen said Wuh’s seller disclosure statement failed to mention that the property was not licensed for short-term rentals. And even though it contained the specific question, “is the property licensed for any transient accommodations,” he said the “no” box next to the question was not checked.

Wuh could not be reached for comment.

Locations Principal Broker John Connelley said he has not seen the lawsuit but did read Mikkelsen’s letter to the editor that was published in the Honolulu Star-Advertiser last month.

Mikkelsen made the same claims in the letter that are contained in the lawsuit.

Connelley said the claims in Mikkelsen’s letter are without merit.

“All of the disclosures were made to him in writing and he accepted them,” Connelley said.

According to property tax records, Wuh purchased the property in 2008 for $1.85 million.

The property was put up for sale in May 2015 for $2.8 million. It was taken off the market in January 2016. It was then listed again in April for $2.39 million.