Question 1

What is fee simple ownership in Hawai‘i?

Accepted Answer

Fee simple means you own both the land and the improvements (home or condo) with no set end date. It is the most complete form of ownership and is generally the simplest structure for financing, resale, and long-term planning.

Question 2

What is leasehold ownership in Hawai‘i?

Accepted Answer

Leasehold typically means you own the improvements but lease the land for a fixed period under a contract. You may pay ground rent, and the remaining lease term and rent reset schedule can affect financing and resale value.

Question 3

Why are leasehold properties often cheaper?

Accepted Answer

Leasehold properties are often priced lower because the buyer is not purchasing the land. The discount reflects the lease’s time limit, ground rent, future rent resets, and a smaller buyer pool as the lease shortens.

Question 4

Is it harder to get a mortgage for leasehold?

Accepted Answer

It can be harder. Many lenders consider the remaining lease term when deciding whether to lend and on what terms. Shorter remaining leases can limit financing options or require higher down payments. Generally, local lenders are more willing to finance leasehold properties.

Question 5

What happens when a leasehold lease ends?

Accepted Answer

It depends on the lease contract. Some leases allow renewal, while others do not. In some cases, rights to the land and potentially the improvements may revert to the landowner if the lease is not renewed or converted.

Question 6

Can a leasehold property be converted to fee simple?

Accepted Answer

Sometimes. Conversion depends on the landowner’s willingness to sell the fee interest and the terms offered. Not all leasehold properties have a realistic or economical path to conversion.

Question 7

What is a rent reset in a leasehold property?

Accepted Answer

A rent reset or renegotiation is a scheduled point in the lease when ground rent can be recalculated or renegotiated. These resets can materially change monthly costs, so buyers should review the schedule and calculation method carefully.

Question 8

Do fee simple and leasehold exist on the Big Island, Kona, and the Kohala Coast?

Accepted Answer

Yes. Fee simple is more common, but leasehold still exists in certain developments and legacy land arrangements on the Big Island, including Kona and the Kohala Coast. Ownership type should be verified early in the buying process.

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Archive for December 28, 2025

Hawaii Real Estate 101: Fee Simple vs. Leasehold — What Buyers Must Know