When looking to purchase property in Hawai’I there are a few critical details to know about that make buying real estate in the Aloha State different from any other state. One of these details is the way in which you will hold ownership. In Hawai’I there are two types of ownership for property. One type is Fee Simple Ownership, which is the most common form of ownership, and the most complete type of ownership that exists. The title of the property, which includes the land and the improvements on the land, belongs to the Owner. When a property sells and it is Fee Simple Ownership, the title to the land is transferred to the Buyer upon closing. The land and any improvements on the land will then belong to the new Buyer.
The other type of ownership that you will see is called Leasehold Ownership. With Leasehold Ownership, there is a lessee and a lessor. A lessee is the tenant or person who holds the lease, and the lessor is a landlord or the person who leases the property out to another. When a leasehold property is sold, the Buyer would become the lessee or tenant of the property. The owner of the land does not change to the new Buyer, but instead the new Buyer of the leasehold property has the right to use the land and any improvements on the land for a specific amount of time. Most leases are 40 or 50 years and as the lease inches towards the end date, the value of the property will typically decline.
Talk with your LUVA Realtor to find out which type of ownership is the best fit for your real estate needs.