Fee Simple vs. Leasehold in Hawaii: What’s the Difference?

You’re browsing listings and keep seeing “Leasehold” on condos for sale. But what does it mean? Some condos in the same building are listed as “Fee Simple,” “Leasehold,” or “Fee Available.”

On Oahu, both ownership types are common. But they come with key differences that impact your investment.

What Is Fee Simple Ownership?

Fee simple is the most complete and common type of ownership. When you buy a fee simple property, you own:
✅ The land and any buildings on it
✅ The right to sell, rent, or pass it to heirs
✅ Full control, except for zoning laws and HOA rules

There is no time limit on ownership. This makes it the preferred choice for most buyers.

What Is Leasehold Ownership?

Leasehold means you own the home but not the land. Instead, you lease the land for a set time, usually 30 to 99 years.

Key Leasehold Features:

⚠️ You pay monthly or annual lease rent to use the land.
⚠️ The lease has an expiration date when the land returns to the owner.
⚠️ Lease terms do not reset when selling the home.

For example:

• Buyer Ka’ia purchases a leasehold condo with 55 years remaining on the lease.

• 12 years later, Ka’ia sells to Buyer Keoni, who now has 43 years left.

• Even if they later marry, the lease still expires in 43 years.

Lease Rent Adjustments

Lease rent is usually adjusted every 10 to 15 years. If land values rise, rent increases.

Why Buy Leasehold?

Leasehold homes have some advantages:
✔️ Lower prices than fee simple homes
✔️ Possible lease extensions (not always guaranteed)
✔️ Chance to buy the land and convert to fee simple
✔️ Lower mortgage payments compared to rent
✔️ Tax deductions for depreciation

Which One Is Right for You?

✔️ Fee Simple: Best for long-term investment and ownership security.
✔️ Leasehold: A budget-friendly option but with risks.

Final Thoughts

Understanding these differences is key to buying in Hawaii. Both options have benefits. The right choice depends on your budget and future plans.

👉 Thinking about buying? Let’s talk!