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11/13/12
Leasehold Inf ormation
LEASEHOLD
A leasehold interest is created when a fee simple landowner enters into an agreement or contract called
a ground lease with a lessee. A lessee buys leasehold rights much as one buys fee simple rights;
however, the leasehold interest differs from the fee simple interest in several important respects. First,
the buyer of residential leasehold property does not own the land and must pay ground rent. Second, his
use of the land is limited to the remaining years covered by the lease. Thereafter, the land returns to the
lessor, and is called reversion. Depending on the provisions of any surrender clause in the lease, the
buildings and other improvements on the land may also revert to the lessor. Finally, the use,
maintenance, and alteration of the leased premises are subject to any restrictions contained in the lease.
C onversion of leasehold property to fee simple ownership involves purchasing the landowner's remaining
interest, called the leased fee interest. The lessors of many, if not most, leasehold properties are
currently offering to sell their leased fee interests to their lessees or prospective buyers of a leasehold
property. There is a State of Hawaii law affecting the mandatory conversion of single family leasehold
properties.
© 1995-2005 Honolulu Board of REALTORS®. All rights reserved. Information herein deemed reliable but
not guaranteed.
www.hbrhawaii.com/tenur-lh.html
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11/13/12
Hawaii Condo’s owners can’t buy their land - Pacific Business News
From the Pacific Business News
:http://www.bizjournals.com/pacific/print-edition/2012/07/13/condos-owners-cant-buy-their-land.html
Condo’s owners can’t buy their land
Ruling brings decade-long Admiral Thomas case to end
Premium content from Pacific Business News by Duane Shimogawa, Reporter
Date: Friday, July 13, 2012, 12:00am HST
Duane Shimogawa
Reporter- Pacific Business News
Email | Facebook | Twitter | LinkedIn
Admiral Thomas condominium owners will not be able to purchase their land from the First United Methodist Church, now that courts have settled a
decade-long dispute by dismissing condemnation proceedings.
The condo at 1221 Victoria St. in Honolulu sits on land owned and used by the church for its sanctuary and classroom space.
The ruling marks the final case under the City and County of Honolulu’s 1991 Mandatory Condominium Lease-to-Fee Land Conversion ordinance (Chapter
38). The First United Methodist Church was represented by Ashford & Wriston partner Jim Mee, while the city acted on behalf of some Admiral Thomas
condo owners.
Mee said the church had asserted, for almost a decade, that there were not enough qualified lessees to trigger condemnation.
“While we are pleased that this 10-year journey has finally ended in our favor, the church never contemplated that allowing a condo to be built on its land
would result in the threatened loss of its property,” said church spokesman John Gibbs.
He also said that the judgment includes recovering its attorney fees and costs, which were substantial and will now be used to serve its members and the
surrounding community. The church has been known for its outreach to immigrants, at-risk families and the homeless.
The city law, modeled after the state’s Land Reform Act that broke up large landholding estates, had allowed owner-occupant lessees to direct the city to
condemn land underneath their condos and allow them to purchase the property for fair market value.
The ordinance was repealed in 2005, but this one final case continued in the courts until just a few weeks ago after the city did not file an appeal to the
decision, which favored the First United Methodist Church.
The ruling is important, Mee told PBN, because while the ordinance may have made sense for single-family homeowners it did not mean lessees should
be able to condemn “all types of private property. Condemnation is not necessarily a good tool to try to address what people perceive as being a
problem.”
The case began in December 2002 when the city designated the Admiral Thomas condo for condemnation. When the church refused to sell its property to
the lessees, the city filed a condemnation complaint in Circuit Court in May 2003.
The condemnation was first dismissed in September 2004 on the grounds that a mixed-use property was not covered by the ordinance and that there
were not enough qualified owner-occupant lessees to trigger a condemnation.
After being on appeal for two years, the Hawaii Supreme Court sent the case back for further consideration by the trial court, which after further hearings
again decided that there were not enough qualified lessees.
A second appeal by the city and lessees resulted in the Intermediate Court of Appeals upholding the lower court’s determination and awarding the church
its attorneys’ fees and costs that had been denied in an earlier judgment.
“It is the end of an era for this law,” Mee said. “It seems unlikely that government will ever try to do this kind of law in the future.”
In addition to the Admiral Thomas case, Mee successfully stopped the condemnation of the Kahala Beach Apartments.
“[The Kahala Beach property] was the hardest fought of all of those in court,” Mee said. “That is still a leasehold apartment project at this point. The
courts determined, like the Admiral Thomas, to uphold the law, dismissing condemnation.”
City and County of Honolulu officials could not be reached for comment.
Duane Shimogawa covers energy, real estate and economic development for Pacific Business News.
www.bizjournals.com/pacific/print-edition/2012/07/13/condos-owners-cant-buy-their-land.html?s=print
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11/13/12
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— ADVERT ISEMENT —
— ADVERT ISEMENT S —
NEWS
NO FRAMES
Thursday,
January 27, 2005
27 Kaneohe
Marines die
Thursday, January 27, 2005
Isle military
families seized by
uncertainty
War-zone
crashes had
killed 7 with isle
ties
LEASE-TO-FEE CONVERSION
Elections could
present more
dangers
Lease-to-fee law
repealed
UH to quadruple
tuition waivers
HPD officer
honored
Fallen isle soldier
honored
Judge punts on
issue of open
court
$95M sought for
courts
CRAIG T. KOJIMA / [email protected]
Supporters of a bill to repeal the city's condo leasehold reform law
marched yesterday from Kawaiaha'o Church to City Hall, where
they chanted and danced.
Maui facility to
retrain exconvicts
Hawaii unit sent
to aid ship
Volcanologist
George Walker
dies
archives.starbulletin.com/2005/01/27/new s/story5.html
FEE LAW
REPEALED
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11/13/12
Honolulu Star-Bulletin New s /2005/01/27/
Newswatch,
Police & Courts
Kokua Line
by June Watanabe
Repeal supporters cheer
the 6-3 Council vote, but
lessees fear loss of their homes
Obituaries
By Crystal Kua
[email protected]
Island Images
Corky's Hawaii
Corrections
Weather
Community Calendar
Neighborhood Boards
Volunteers
NO FRAMES
The City Council voted yesterday to void the controversial ordinance
that allows condominium owners to use the city's condemnation powers
to buy title to the land under their buildings.
The Council voted 6-3 to repeal
the mandatory lease-to-fee
conversion law known as
Chapter 38. The measure now
goes to Mayor Mufi Hannemann,
who has said that he would sign
a repeal bill.
"To me, Chapter 38 promotes
unfairness, and that is why it has
been so controversial," said
Councilman Nestor Garcia, who
voted to repeal the law.
"I love my home and I
don't really want to give it
up, and I really don't
think that it's fair that we
should have to after the
many years we have been
there."
Melba Maxwell
Owner of a unit in the Kalia in
Waikiki
After the vote, repeal supporters,
including representatives of
charitable trusts, small landowners, charter school students and teachers,
and native Hawaiian activists applauded the Council's action.
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They stood and broke into a chorus of "Hawaii Pono'i."
"We won. I'm just so happy. ... We've been fighting for this for the
longest," said 17-year-old Helena Crawford, a senior at Waianae High
School who has taken part in programs sponsored by the Queen
Liliuokalani Trust, which owns land in Waikiki with leasehold
condominium units.
— ADVERT ISEMENT S —
"This means we can continue to protect our lands, we can continue to
rely on our ownership into the future, rely on its cash flow and take care
of our educational programs," said Ray Soon, vice president of
community relations with Kamehameha Schools, which also fought to kill
the law.
Chapter 38 harms charitable trusts like Kamehameha Schools and
Queen Liliuokalani by taking away needed revenue generated from the
condominium leases, its detractors said. Small landowners also said they
have been at a disadvantage with lessees who have had City Hall on their
side.
archives.starbulletin.com/2005/01/27/new s/story5.html
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11/13/12
Honolulu Star-Bulletin New s /2005/01/27/
"Today is a wonder day in Hawaii nei for our children, our alii trust and
protection of landownership for all of Hawaii's people," testified LeRoy
Akamine, a Kamehameha Schools alumnus.
But lessees said they fear they will face high lease payments or lose their
homes as a result of the law being voided.
"I love my home and I don't really want to give it up, and I really don't
think that it's fair that we should have to after the many years we have
been there," Melba Maxwell, who owns a unit in the Kalia in Waikiki,
testified.
They also contend the city is liable for its decision to not only repeal the
law, but to cut off applicants close to converting.
"We assumed that the City and County of Honolulu would live up to its
obligations under its contract. This is just a flagrant breach by the Council
of that," said Robert Dupire-Nelson. A resident of the Kahala Beach
apartment, he is one of the plaintiffs who filed suit Monday against the
city over the anticipated repeal of the law.
Another lawsuit was filed Tuesday by lessees at the Admiral Thomas
condominium.
"I think we're placing every faith that the courts of Hawaii will uphold the
law and uphold reason and allow actions to continue," Dupire-Nelson
said. "If the courts do not allow the (conversion) action to continue, I
think ... it puts a great deal of questions into how long you can remain
somewhere."
The Council rejected an amendment introduced by Councilman Charles
Djou that would have permitted some lessees in cases close to Council
approval to complete the conversion process. Djou and other members
said the amendment would have helped limit the city's exposure to
liability.
The mandatory leasehold conversion law was passed in 1991 to help
condominium leasehold owner-occupants gain title to the land under their
units. The city uses its powers of eminent domain to condemn the land
and turn over the fee interests to the eligible unit owners.
City Council
www.co.honolulu.hi.us/council/index1.htm
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