What are Leasehold and Fee Simple properties in Hawaii?
Leaseholds
Leaseholds are properties where an owner (lessor) leases real estate to buyers (lessees) for specific time periods. The lessee is permitted to occupy the property for the lease period and pays rent on the lease. The lessee may be responsible for paying the property taxes. Lease periods are typically very long and can extend beyond the term of a typical 30-year mortgage.
Fee Simple
Fee Simple is the type of ownership where a buyer purchases a property outright and has the right to use the property indefinitely. The buyer pays the mortgage, property taxes, and association/maintenance fees to stay in good standing.
Common Land Tenure statuses
In Hawaii, Leasehold and Fee Simple are the two common “Land Tenure” statuses. Hawaii leasehold properties are usually less expensive than comparable fee simple properties. Almost every buyer prefers fee simple, however, not everyone can afford them.
Comparing Properties
It is very difficult to compare leasehold properties unless they are two condos in the same building or two land parcels of similar size and lease terms. There are many lessors in Hawaii, and each property can have a different lease term, monthly payment, and fee purchase price.
RPR does not take land tenure into account in our RVM® or AVM estimates. This means that leasehold properties will almost always be overvalued.
Public Record
Hawaii, unlike other areas of the United States, has two property recording systems: the Land Court system and the “regular” system. RPR receives public records data from both systems.
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