Leilani is considering purchasing a condominium in Honolulu. The listing agent explains that the property is held in leasehold with 42 years remaining on the ground lease, and that Leilani would be required to pay monthly ground rent to the landowner in addition to her mortgage payment. Which of the following BEST describes what Leilani would own if she purchases this property?
Correct Answer
A) The right to use and occupy the land and improvements for the remaining lease term, while the landowner retains ownership of the underlying land
Under Hawaii's leasehold system, a leasehold purchaser acquires only the right to use and occupy the property for the duration of the lease term, not ownership of the underlying land. The fee simple landowner — often a large estate or trust such as Kamehameha Schools — retains title to the land. The lessee pays ground rent to the landowner and may also carry a mortgage on the improvements. This is a defining characteristic of leasehold ownership in Hawaii, which has one of the highest concentrations of leasehold residential property in the United States. HRS Chapter 516 governs leasehold conversion rights for eligible residential lessees.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Tenancy by the entirety is a form of co-ownership available only to married couples that includes the right of survivorship and protection from individual creditors. Neither spouse can unilaterally sell or encumber the property.
Tenancy in common is a form of co-ownership in which two or more persons hold separate, undivided interests in property without the right of survivorship. Each owner can hold unequal shares and can independently transfer their interest.
A freehold estate conveys ownership rights, while a leasehold estate grants the right to possess and use property for a specific period without ownership.
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