Hawaii Leasehold Real Estate


For most Americans and Canadians, there is one type of property ownership: Fee Simple, which is also commonly referred to as Freehold in some States.  When discussing Hawaii real estate, It is critical to keep in mind that properties may have another type of 'Land Tenure' besides being Fee Simple, the other form being Leasehold. The difference between these two types of ownership is wide, so it's important to know the difference and how it can impact viability in reach your Hawaii real estate goals.

So to start, let's define them:

FEE SIMPLE (a.k.a. Freehold or Fee Simple Absolute):  Commonly referred to as the most absolute and complete form of ownership, Fee Simple ownership entitles the owner with title (ownership) in perpetuity, including the land and all improvements thereon.  An owner of a Fee Simple property can feel more secure in ownership rights, he or she can make use of the land, occupy it, and/or dispose in whatever matter is deem appropriate. 

LEASEHOLD:  When the Fee Simple owner (as Lessor) of land leases the land via a ground lease with an individual or entity (Lessee), a leasehold interest is created.  As per terms on the lease, the Lessee can enjoy the land and improvements in the same manner as a Fee Simple owner, BUT there are some stark differences to keep in mind.  First, the Lessee and any Buyer who purchases a property subject to a lease does NOT own the land, but instead have the right to enjoy it as per terms on the lease.  Second, when a leasehold property is sold to a new owner, he/she then is subject to the same terms/conditions in the lease, including remaining time of lease. At the end of the lease period, in a process named 'Reversion', the land reverts back to the land owner and depening on the surrender clause in the lease (if any), the improvements on the land may revert back to the land owner at no cost or as per negotiated terms on lease.  Third, in exchange for use and enjoyment of the land, generally there is a lease payment due to the Lessor from the Lessee and likely there are provisions for periodic adjustments.

Leasehold properties on Maui were up to a large extent developed in the 1970’s and 1980’s. Commonly these are clustered in West Maui (particularly Lahaina to Napili area) and South Maui (Kihei and Maalaea areas). For properties sale throughout the State of Hawaii, prices will include whether the property is Leasehold or Fee Simple, as it plays a significant role in pricing and on-going costs of ownership.  It is worth noting that the lease payment is in addition to the monthly maintenance fees (HOA / Strata), property taxes, and any other costs associated with ownership - such as utilities, insurance policy, property management, etc. The main point to take away is that ownership of the land is separate from ownership of buildings and improvements constructed on the subject land.


Hawaii Luxury Home

When assessing a Leasehold property, take note of the following:

* Lease Term - This is the period of time for which the lease is in full effect. Most original leases were over 50 years, but as the lease term nears the expiration, that has an effect on valuation.

*  Lease Rent – This is the amount to be paid by the Lessee to the Lessor, including the frequency of payment - some are paid quarterly, whereas most are paid monthly.

*  Renegotiation Date – The original lease will detail specific timeframes when the lease payment is to be renegotiated, generally by a specific formula detailed. The purpose of this renegotiation is to ensure that lease payments are en par with fair market value and market conditions.

*  Expiration Date – This is an important date to note, as unless an extension or new lease are negotiated, then the original lease will have been completed and Reversion (more on that below) will come into effect. It's worth noting that for lenders, the expiration date is important as most will only finance mortgages that are 5 years less than the time remaining on the lease - as an example, if 20 years left on the lease, then lender will approve a mortgage for 15 years or less. 

*  Fee Interest – Keep in mind that when a Lessor leases his land, he/she retains an interest in the land, subject to the rights of the Lessee. Some leases will detail the amount of compensation for which the Lessor will accept to the sale of the Fee to the Lessee. 

*  Conversion - The process of converting a Leasehold property to Fee Simple by the Lessor / Land Owner selling the 'Fee' interest to the Lessee. In some properties, only part of the complex has gone through conversion, with the remaining units continuing to be Leasehold. 

*  Reversion – The lease will detail provision for reversion, which is the process of giving the land (and improvements thereon, if agreed) back from the Lessee to the Lessor. 

For any prospective Buyer interested in a leasehold property, note that during escrow, the Seller will furnish a fully copy of the lease and any applicable amendments. Things to be clear on include the amount of the lease rent, when lease rent is due and to whom is it payable, all future renegotiation dates, how the new lease rent will be calculated (typically there is a formula outlined), and what is to happen at the expiration of the lease as detailed on the surrender clause. Review the Hawaii Guide to Residential Leasehold as put out by a State of Hawaii agency and become more familiar with this type of ownership.

For some people, Leasehold is an attractive option that allows them to buy 'more' for a lower sales price. As an example, Kamaole Nalu is sandwiched between Royal Mauian and Hale Pau Hana, yet sales prices at Kamaole Nalu can be less than half per square foot than at the comparable Fee Simple neighbors. In addition, some leasehold properties such as Napili Point have remarkably low lease rent (at the time of this writing, in the $7 per month range). Lastly, when searching, take into account that some properties like Papakea Resort include both Fee Simple and Leasehold, which is then reflected in the price.

Now that armed with all this information, how to use our site to search (or exclude) leasehold properties?

Searching:

We have taken great care to provide our site visitors with the most comprehensive yet easy-to-use user experience available. For Maui and Oahu we offer the ability to search by Land Tenure. On the Maui MLS search page, click on 'More Options' then scroll down to the Land Tenure drop down menu. 

Search Hawaii leasehold real estate


Identifying:

When looking at search results, we add the Land Tenure prominently for each listing. Between the price and the Listing Brokerage, please find the land tenure for quick indexing.

Hawaii leasehold search results


Important Information:

In an effort to provide all pertinent information quickly and easy to find, we are one of the very few sites that displays relevant details regarding leasehold properties, to include the amount of the lease and lease expiration. On a leasehold details page, scroll down to view details. 

Hawaii leasehold information details


Our team is well acquainted with the unique nuances of Hawaii Leasehold real estate throughout the entire State. For more information about a specific property, contact our team of Realtors today.

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Interested in Leasehold properties? Take a look below at some pertinent new listings, added to the market within the past month. For a more comprehensive search, view our Hawaii MLS Search page. 

Hawaii Leasehold Properties For Sale

New Listing
Photo of Listing #642276

KIAHUNA PH I 2253 Poipu Rd 28, Koloa

$575,000 - 1 Beds, 1.00 Baths, 640 Sf

MLS® # 642276

RE/MAX Kauai Living - Poipu
Active
Photo of Listing #642189

Kona West 75-5680 Kuakini Hwy 204, North Kona

$73,000 - 1.00 Baths, 338 Sf

MLS® # 642189

Joseph M Przygodinski, Sole Proprietor
New Listing
Photo of Listing #642571

Hilo Terrace 485 Waianuenue Ave F145, South Hilo

$55,000 - 2 Beds, 1.00 Baths, 695 Sf

MLS® # 642571

Arruda Properties Ltd
New Listing
Photo of Listing #642597

Kona Kai 74-5618 Palani Rd L5, North Kona

$99,999 - 1 Beds, 1.00 Baths, 535 Sf

MLS® # 642597

Venture Sotheby's International Realty
New Listing
Photo of Listing #388592
Vacation Rental

Kealia 303 191 N Kihei Rd 303, Kihei

$325,000 - 1 Beds, 1.00 Baths, 556 Sf

MLS® # 388592

Leasehold
Wailea Realty+WindermereRE (W)
Active
Photo of Listing #642530
Vacation Rental

KIAHUNA PLANTATION 2253 Poipu Rd 433, Koloa

$150,000 - 1 Beds, 1.00 Baths, 640 Sf

MLS® # 642530

KW Kauai
Active
Photo of Listing #642197
3-D Tour

KIAHUNA PH II 2253 Poipu Rd 86, Koloa

$180,000 - 1 Beds, 1.00 Baths, 640 Sf

MLS® # 642197

KW Kauai
Active
Photo of Listing #642231
Virtual Tour

KAHALUU FARM LOTS 78-6440 Mamalahoa Hwy, North Kona

$510,000 - 2 Beds, 2.00 Baths, 1,792 Sf

MLS® # 642231

Romvari Realty
Active
Photo of Listing #642457
Virtual Tour

Kona Makai 75-6026 Alii Dr 5105, North Kona

$179,000 - 1 Beds, 1.00 Baths, 687 Sf

MLS® # 642457

Knutson & Associates
Active
Photo of Listing #642431

KALAKAUAN 1911 Kalakaua Ave 406, Honolulu

$129,000 - 1 Beds, 1.00 Baths, 437 Sf

MLS® # 642431

NextHome Hale Realty Inc
Active
Photo of Listing #388533
Vacation Rental

Kahana Village 2 4531 Lower Honoapiilani Rd 2, Napili/Kahana/Honokowai

$825,000 - 2 Beds, 2.00 Baths, 1,118 Sf

MLS® # 388533

Leasehold
Hawaii Life (KAP)
Active
Photo of Listing #642262

KIAHUNA PH II 2253 Poipu Rd 57, Koloa

$150,000 - 1 Beds, 1.00 Baths, 640 Sf

MLS® # 642262

RE/MAX Kauai Living - Poipu
Pending
Photo of Listing #388521
Vacation Rental

Kealia 408 191 N Kihei Rd 408, Kihei

$249,000 - 1 Beds, 1.00 Baths, 556 Sf

MLS® # 388521

Leasehold
Wailea Realty+WindermereRE (W)
Active
Photo of Listing #388503
Vacation Rental

Hale Mahina B304 3875 Lower Honoapiilani Rd B304, Napili/Kahana/Honokowai

$349,000 - 1 Beds, 1.00 Baths, 799 Sf

MLS® # 388503

Leasehold
West Maui Luxury Property
Pending
Photo of Listing #642101

74-5090 Haleolono St, North Kona

$320,000 - 3 Beds, 1.00 Baths, 1,056 Sf

MLS® # 642101

eXp Realty
Active
Photo of Listing #641896
Virtual Tour

Kona Makai 75-6026 Alii Dr 3204, North Kona

$229,000 - 1 Beds, 1.00 Baths, 687 Sf

MLS® # 641896

Corcoran Pacific Properties
Active
Photo of Listing #642158

MOLOKAI SHORES 1000 Kamehameha V Hwy 316a, Molokai

$100,000 - 1 Beds, 1.00 Baths, 730 Sf

MLS® # 642158

Nathalie Mullinix Realty Universal, Inc.
Active
Photo of Listing #388454

Molokai Shores 316A 1000 Kamehameha V Hwy 316a, Molokai

$100,000 - 1 Beds, 1.00 Baths, 730 Sf

MLS® # 388454

Leasehold
Nathalie Mullinix Rlty Univers
Active
Photo of Listing #388433
Vacation Rental

Maui Sands I 2A 3559 Lower Honoapiilani Rd 2a, Napili/Kahana/Honokowai

$111,000 - 1 Beds, 1.00 Baths, 562 Sf

MLS® # 388433

Leasehold
Keller Williams Realty Maui-Ka
Active
Photo of Listing #388431

Pohailani Maui 118 4440 Lower Honoapiilani Rd 118, Napili/Kahana/Honokowai

$189,000 - 2 Beds, 1.00 Baths, 641 Sf

MLS® # 388431

Leasehold
Sullivan Properties Inc
Active
Photo of Listing #641818

KEANUIOMANO Keanuiomano, South Kohala

$349,000 - 76,535 Sf

MLS® # 641818

Corcoran Pacific Properties
Active
Photo of Listing #388414
Virtual Tour
Vacation Rental

Papakea Resort I II H201 3543 Lower Honoapiilani Rd H201, Napili/Kahana/Honokowai

$350,000 - 1 Beds, 1.00 Baths, 597 Sf

MLS® # 388414

Leasehold
Coldwell Banker Island Prop(L)
Active
Photo of Listing #640759

Kona Islander Inn 75-5776 Kuakini Hwy 123, North Kona

$140,000 - 1.00 Baths, 372 Sf

MLS® # 640759

RE/MAX Brokers
Active
Photo of Listing #641973

KIAHUNA PH I 2253 Poipu Rd 2, Koloa

$750,000 - 1 Beds, 1.00 Baths, 640 Sf

MLS® # 641973

RE/MAX Kauai Living - Poipu
Active
Photo of Listing #642009
Vacation Rental

KIAHUNA PLANTATION 2253 Poipu Rd 448, Koloa

$175,000 - 1 Beds, 1.00 Baths, 640 Sf

MLS® # 642009

eXp Realty
Active
Photo of Listing #642000
Vacation Rental

KIAHUNA PLANTATION 2253 Poipu Rd 446, Koloa

$170,000 - 1 Beds, 1.00 Baths, 640 Sf

MLS® # 642000

eXp Realty
Active
Photo of Listing #641998
Vacation Rental

KIAHUNA PLANTATION 2253 Poipu Rd 437, Koloa

$175,000 - 1 Beds, 1.00 Baths, 640 Sf

MLS® # 641998

eXp Realty
Active
Photo of Listing #641989
Vacation Rental

KIAHUNA PLANTATION 2253 Poipu Rd 443, Koloa

$175,000 - 1 Beds, 1.00 Baths, 640 Sf

MLS® # 641989

eXp Realty
Active
Photo of Listing #641501

Hilo Terrace 485 Waianuenue Ave 133, South Hilo

$50,000 - 2 Beds, 1.00 Baths, 695 Sf

MLS® # 641501

Coldwell Banker Island Properties - Hilo
Pending
Photo of Listing #388371
Virtual Tour
Vacation Rental

Milowai 310 50 Hauoli St 310, Maalaea

$299,000 - 1 Beds, 1.00 Baths, 579 Sf

MLS® # 388371

Leasehold
Coldwell Banker Island Prop(S)
Pending
Photo of Listing #641811

SUN VILLAGE-KAUAI 3-3400 Kuhio Hwy C311, Lihue

$164,000 - 1 Beds, 1.00 Baths, 554 Sf

MLS® # 641811

eXp Realty
Pending
Photo of Listing #388261
Vacation Rental

Maui Eldorado I J121 2661 Kekaa Dr J121, Kaanapali

$375,000 - 1.00 Baths, 570 Sf

MLS® # 388261

Leasehold
Berkshire Hathaway Maui Prop-L
Active
Photo of Listing #641539

Kona Islander Inn 75-5776 Kuakini Hwy 221, North Kona

$160,000 - 1.00 Baths, 372 Sf

MLS® # 641539

eXp Realty

IDX and Information provided herein is deemed reliable but is not guaranteed by the Hawaii Information Service, Inc. Listing Service. © 2020 Hawaii Information Service. All Rights Reserved. This website is for personal, non-commercial use only.

Listing information last updated on September 19th, 2020 at 2:25pm HST.

Listings provided courtesy of the REALTORS® Association of Maui.

IDX information is provided exclusively for consumers' personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing.