A developer in Kailua-Kona is building a new single-family residential subdivision. A prospective buyer asks whether the homes will be fee simple or leasehold. The developer confirms they are fee simple. Which of the following correctly distinguishes the buyer's obligations in a fee simple purchase compared to a leasehold purchase in Hawaii?
Correct Answer
B) The fee simple buyer owns the land outright and has no ground rent obligation to any underlying landowner
In a fee simple purchase in Hawaii, the buyer acquires complete ownership of both the land and all improvements. There is no ground rent obligation because there is no underlying landowner retaining ownership of the land. This is the fundamental distinction from leasehold ownership, where the buyer owns only the improvements and the right to use the land for a fixed term, and must pay ground rent to the fee simple landowner.
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Related Topics & Key Terms
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The bundle of rights describes the rights associated with property ownership, allowing owners to use, control, enjoy, exclude others from, and dispose of the property.
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