For residential properties in Hawaii, an encroachment of six inches or less is considered "de minimis". For purposes of buying and selling real estate in Hawaii, de minimis encroachments do not require encroachment agreements by statute.
The de minimis law was enacted by Hawaii's legislature in 1997. Prior to that, any measured encroachment would require an encroachment agreement to protect the owners of encroaching properties along with the the title companies.
While the de minimis law reduces the number of encroachment agreements filed, note that a neighbor still has the right to tear down an encroachment going onto his property if an encroachment agreement is not in place. So if a wall encroaches onto a neighbor's property by one inch and there is no encroachment agreement, the neighbor can remove that one inch of wall.
Often, the lending company's lawyers may require an encroachment agreement to approve the loan. That depends on (1) if the lender sees the encroachment when reviewing the survey and (2) how strict the lender is.
With the agreement, the neighbor has the right of use, and you can't change that. Without the agreement, the neighbor is risking you removing the encroachment one day without their approval.