Real Property Ownership, Interests, and Land Use
The Hawaii ownership question: fee simple vs. leasehold
This distinction generates more Hawaii exam questions than any other. Fee simple is outright ownership of land and improvements. Leasehold means the buyer owns the building or unit but leases the land under a long-term ground lease, commonly 55 to 75 years, with fixed rent periods and renegotiation dates at which lease rent can jump sharply. A leasehold unit sells for less than the same unit in fee simple, and the gap widens as the renegotiation date approaches.
Forms of ownership and co-ownership
Condominium property regime (HRS 514B): title to a unit plus an undivided interest in the common elements. Cooperatives: shares in a corporation plus a proprietary lease. Planned unit developments, time shares (HRS 514E), tenancy in common, joint tenancy, and tenancy by the entirety each carry different severance, survivorship, and creditor consequences.
Government limits on land
The Land Use Commission assigns every parcel to urban, rural, agricultural, or conservation (HRS 205). Counties zone, impose shoreline setbacks, and require Special Management Area permits (HRS 205A) for development near the shoreline. Easements, licenses, and encroachments are nonpossessory interests that can survive a sale.
Traps: mixing leasehold comps with fee simple comps; assuming a fee simple unit includes the land; forgetting that a surrender clause can hand the building to the lessor at expiration; treating a tax assessed value as market value.
Rule of thumb: before pricing or writing an offer, ask three questions - what is the tenure, when does lease rent renegotiate, and how many years remain?