Growing up in Huntington Beach, California, I never once heard the word “leasehold” when it came to buying property. But here in Hawaii, it’s part of the real estate landscape — and understanding where it comes from helps make sense of why it still exists today.
Before 1840, land in Hawaii wasn’t privately owned. It belonged to the king and high-ranking chiefs. That changed in 1848 with the Great Māhele, when King Kamehameha III divided land among the royal family, the government, and select chiefs.
Two years later, the Kuleana Act of 1850 introduced fee simple ownership — finally allowing individuals to own land outright. But alongside that, leasehold ownership also took hold — essentially allowing people to “buy” land for long-term use through leases with expiration dates.
Over time, large landowners — like Bishop Estate and, here on Kauai, the Knudsons — leased out vast amounts of land. This is what led to the widespread development of leasehold properties. After World War II, Hawaii experienced a major boom: statehood, a growing tourism industry, and a surge in housing demand. Many new developments were built on leasehold land during that time.
In 1967, the Land Reform Act gave homeowners the chance to purchase the land beneath their single-family homes. Similar legislation followed for condo owners. Then in 2000, tax incentives nudged landowners to sell to leaseholders, and as a result, many leasehold properties converted to fee simple.
Today, most properties in Hawaii are fee simple — but leasehold properties still exist. And here’s the key difference: with leasehold, you own the unit but lease the land beneath it. Fee simple means you own both the structure and the land — no expiration date, no ground rent.
Not all leaseholds are created equal. Some have already converted to fee simple, and some never will. If you’re looking at property in Hawaii, it’s important to know the difference.
Make sure to like this video and subscribe to whatever channel you’re watching on, because in my next one, I’ll go deeper into what to look for when considering a leasehold property.
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Aloha! 
Lynda Gill RS Lic. #63088
Hawai’i Life Real Estate Brokers 808.346.0056
LyndaGill@HawaiiLife.com
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