For Sale

Should I Buy a Hawaii Leasehold Property?

There was a recent article in the Star Bulletin about the Queen Emma Land Company taking back a leasehold property in Waikiki. The property in question was the White Sands Waikiki Resort Club run as a time-share property by Celebrity Resorts. Negotiations to renew the long term lease were not successful, most likely because, “(t)he rent has gone up substantially,” said Les Goya, vice president of Queen Emma.

In most circumstances, it doesn’t make sense to buy leasehold.  The Queen Emma story is a perfect example why – the Landowner can (and has the right to) take back the property at the end of the lease.

When Honolulu Mayor Mufi Hanneman came into office, he revamped the old mandatory “lease to fee” conversion, which used to say if you had a % of owners that wanted to buy the fee interest in a property, the seller would be forced to sell. A monumental case regarding this revamped law took place back in January of 2008, where Kaneohe Ranch took back property from home owners to redevelop in a partnership with DR Horton.

“…a historic landmark for leasehold ownership in Hawaii.  The landowner (lessor), Kaneohe Ranch prevailed in a suit between themselves and the individual owners (lessees) of the Kailuan in Kailua.  Over a dozen owners will be forced to surrender their homes…”

While leasehold properties are attractive because they tend to be less expensive then their fee simple counter parts, there are risks involved when buying these types of properties. For one, you don’t own the leasehold property – you are only leasing it. We get a lot of inquiries on leasehold property for people using our Hawaii real estate search engine.  What’s great about our real estate search tool, is you have the option to uncheck the leasehold checkbox under “more options” which brings up the advanced search. If you don’t want to look at property where someone else owns or will own the land you’re looking to purchase, I would suggest unchecking leasehold. When in doubt, I always advise my clients to buy fee simple!

Comments (5) Show CommentsHide Comments (Remember)

Cool. Add your comment...

Your email address will not be published. Required fields are marked *

Leave your opinion here. Please be nice. Your Email address will be kept private, this form is secure and we never spam you.

Susanna Kunkel

May 27, 2009

David, thanks for the helpful update. On Kauai, we only have a few properties that offer leasehold, but it does confuse people. Kiahuna Plantation in Poipu continues to sell leasehold units successfully, as well as Kapaa Sands on the Eastside. Personally, I’ve never been comfortable with representing leasehold, and am grateful none of my clients have pursued these opportunities. Call me old fashioned, but real estate for me has always been tied to the land…one way or another.

Matt Beall, PB

May 27, 2009

Thanks for your post David. Personally, I’ve owned leasehold properties in the past, and represented buyers and sellers of leasehold property as well. The most important thing is to clearly understand that leasehold properties are depreciating assets, with the lease clearly spelling out the lease “rent” and it’s period(s). The bonus is that Leasehold, compared to Fee Simple, is often FAR more affordable. For some buyers, that affordability is everything. So, I definitely wouldn’t rule it out altogether… but it certainly will appeal to a small group of buyers.


June 18, 2009


My parents in VA got totally ripped off. They wanted to buy a nice affordable piece of property in Hawaii for the tax breaks (they don’t have a mortgage) and to go visit during the winters since they are retired. They bought a condo at the Waikiki Banyan Hotel from a real estate lady 2 months ago… then decided to buy another one at the same place from the same realtor a month later. Then they realized they couldn’t afford the payments (they took out over $100k in credit card debt plus a home equity loan).. and then they learned that these condos are LEASEHOLD. They were not told this from the realtor before they bought either of them. They want to sell one of them right now.. and plan to hang on the other one with hopes that the value will go up in the future and they can sell later for a profit. My immediate concern is for them to sell 1 of them now since they are in financial trouble. They are thinking of using the same realtor who was not open and honest with them to sell the 2nd condo since she’s willing to take a 4% commission. I personally believe she is a crook and my parents should not be doing any more business with her. Do you have any advice? Do you know anyone that would be willing to help sell their condo for less than 4% commission? Or should my parents demand that the realtor sell it for them for 0 commission since she deceived them? Thanks in advance for your help.
~Distraught daughter in CA

theresa andrade

August 27, 2010

thank you for the data. I am currently looking for another home and my family lives in Hawaii and I in Virginia. I saw a very nice property for sale than began to read the fine print on lease hold. ??came to mind and this site helped me understand that it would not be something I am interested in. I would like my family to be able to live there for a very long long time.

Tim Henrich

February 6, 2013

Who came up with this leasehold BS anyway. Was it around before Hawaii became a state. Looks like something Burnie Madoff created or Alan Stanford. Do you think it will ever go away?


More Articles from Hawaii Life