Lani is considering purchasing a condominium unit in Waikiki. The listing agent discloses that the underlying land is held in leasehold with 35 years remaining on the lease and a ground rent of $450 per month. Which of the following statements about this leasehold condominium is most accurate?
Correct Answer
B) Lani's ownership rights to the unit will expire when the lease term ends unless the lease is extended or converted
In a leasehold condominium, the buyer acquires ownership of the unit and the right to use the underlying land for the remaining lease term. When the lease expires, the lessee's rights terminate unless the lease is renewed or converted to fee simple ownership. With only 35 years remaining, Lani's ownership rights would expire at the end of the lease term. This is a critical risk in leasehold properties that affects financing, resale value, and long-term ownership.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In a cooperative (co-op), the building is owned by a corporation, and residents purchase shares of stock in the corporation that entitle them to a proprietary lease on a specific unit. Residents are shareholders, not property owners.
Fee simple absolute is the highest and most complete form of property ownership, giving the owner unrestricted rights to use, possess, enjoy, and dispose of the property. It is of unlimited duration and fully inheritable.
Community property is a system where property acquired during a marriage is owned equally by both spouses.
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