COVID19 UPDATE
Buying Advice

A Simple Concept – Leasehold vs. Fee Simple

Pictured: a fee simple home recently sold at 19-4242 Wright Rd, Volcano, HI.

Whether online or in print, real estate ads are subject to a couple of sets of regulations. Disclosing the “value” of an estate is fairly unique to Hawai`i. Until a few years ago, designation of an estate quality as either “fee simple” (FS) or “leasehold” (LH) was required on all forms of advertisement. While leasehold ownership must still be specifically noted, properties not so designated are now assumed to be fee simple. Because the concept of leasehold ownership is fairly unique, it should be no surprise that people always question the distinction between the two.

Fee Simple vs. Leasehold

In most basic terms, fee simple means you own the property. As the name implies, Leasehold properties include a lease as part of the conveyance (transfer). There are various forms of leases. Every lease is different.

Behold the Leasehold

Conveyance of a leasehold property may include not only a transfer but a possible renegotiation of the ground lease as well. Additionally, leasehold conveyances involve both a lease transfer and a conveyance of the real property interests. Sales of leasehold properties are much more involved than fee simple transfers. Disclosures are much more involved. Leasehold properties in East Hawai`i are basically limited to Hawaiian Homes, condo units along Banyan Drive, and homes along Oceanview Drive. There may be a few remaining leasehold condos in Hale Moana as well.

A common belief is that leasehold properties belong to either the State or one of the large estates such as Bishop Estate. In fact, churches and individual families own many. For this reason, from time to time a leasehold home will pop up in a residential neighborhood. As relates to ownership, property is always conveyed along with a “bundle of rights” regarded as the ownership “estate.”

Simply Put

Fee simple ownership encompasses the largest bundle of rights available. It is generally assumed that fee simple ownership rights include the right to use the property for any legal purpose not otherwise limited by deed or subdivision restrictions. Fee simple ownership exists indefinitely. Leasehold estates have a definite duration. While the ownership concepts are simple, the details of any property transfer are not.

Understanding the differences is key to choosing not only the property but also the agent who will help guide you through this not-so-simple process!

About the Author

Denise Nakanishi

Denise Nakanishi is a REALTOR Broker with Hawai'i Life. Denise Nakanishi is one of Hilo's most acclaimed real estate agents. She reached the rank of Major in the US Army and is now known by many as "Major Mom." The nickname fits–not only does Denise bring the discipline and mission-oriented attitude you'd expect, she's also caring and compassionate, always looking out for her clients like they're her own family. Having made the Big Island her home since 1987, Denise combines her extensive knowledge of the area with a sharp focus on customer service and the results speak for themselves. She's the recent recipient of the Best East Hawai`i, Best of Zillow, Chairman's Circle Award, President's Circle, Top Producing Agent since 2001, and Realtor of the Year awards. Denise stays ahead of the curve because she's passionate about education–she served as Education Chair for Hawaii Island REALTORS® for many years. She's one of Big Island's best real estate resources, known for her weekly article in the Hawaii Tribune Herald. Denise leads Team Nakanishi for Hawai`i Life, who is committed to their family, work, and community. In her little time away from work, Denise is a committed runner and Grandy. She also devotes many hours to various Veterans' Organizations, the East Hawaii Cultural Center, and the Hawaii Island REALTORS®. You can email me at denise@hawaiilife.com or via phone at (808) 936-5100.

Comments (2) 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.

Guido

June 17, 2021

…Thank’s : Nice stuff!!

Denise Nakanishi, R(B)

June 27, 2021

> Thanks for reading!

More Articles from Hawaii Life