who the heck buys leasehold properties? (leases, hotel, home)

[YoungTraveler2011]

they are so pointless. i dont get it.

[Ralph_Kirk]

Originally Posted by YoungTraveler2011

they are so pointless. i dont get it.

Go downtown in anytown CA and check how many businesses don't have the equivalent of leaseholds.

I know that Hawaii laws changed some time during the 80s, but when I was in Hawaii in the 70s, you bought leasehold because the land owners had zero intention of selling.

I suspect that even now, the price of land is so high that residents of normal income cannot always buy it.

[rya96797]

say if I'm 70 years old and want to live in Hawaii. I can buy a 30 year leasehold property for way cheaper than fee simple. the lease doesn't matter because I'd be dead anyways. leaseholds have their place, but not for everyone.

[hotzcatz]

I think by original Hawaiian law, the land stayed in the family and the person selling it could only sell it for his lifetime. After the seller died, then the land went to the seller's heirs which is where it was supposed to have gone if it hadn't been sold. Which may have been what started leasehold in the first place.

[Ralph_Kirk]

Originally Posted by hotzcatz

I think by original Hawaiian law, the land stayed in the family and the person selling it could only sell it for his lifetime. After the seller died, then the land went to the seller's heirs which is where it was supposed to have gone if it hadn't been sold. Which may have been what started leasehold in the first place.

That's everyplace's law.

Leasehold was started after major European/Americans took control of the major portions of Hawaii from the native Hawaiians and their families became major corporations. In the 70s, most of Oahu was owned by either the government(s) or by 13 corporations. Trace the names of those corporations back a hundred years and you see that they were major wealthy Guilded Age robber barons. They clung to the land because they realized on an island their wealth was in the land.

I remember when the Mililani area was opened in the late 70s for fee simple sales, it was like a doggoned land rush. The only problem was that interest rates for home buyers were in the double digits.

[whtviper1]

Originally Posted by hotzcatz

I think by original Hawaiian law, the land stayed in the family and the person selling it could only sell it for his lifetime. After the seller died, then the land went to the seller's heirs which is where it was supposed to have gone if it hadn't been sold. Which may have been what started leasehold in the first place.

No.

This article sums it up well.

Maui Now : The History of Hawai

"In the early1800s, all of the land in the Hawaiian Islands was owned by Kamehameha III. In the mid-1800s (approximately 1845), various land ownership legislation was created, and for the first time, Hawai‘i’s lands could be bought and sold to private owners.

This occurred during the Great Mahele of 1848, a land commission that divided all of the king’s land into a joint ownership between the king and the royal government (konohiki).

With new land ownership legislation, the Great Mahele confirmed that buyers had the right of possession to the land, but there was still more work to do to secure title ownership through the Land Commission. It could take many years.

In any event, the great majority of the konohiki land was not sold to Hawaiian owners, but mostly to Western missionary owners and land trusts, including Bishop Estates the Queen Emma Foundation and others.

The main interest of the land trust was to keep the land, not to buy and sell. So, leasehold became a popular way to “temporarily sell” land through a lease, which limits ownership to a predetermined number of years."

[KaraBenNemsi]

Best coffee farming land in Kona is owned by Kamehameha Schools. So is the land with the large resorts on the Kona Gold coast.

On ag leases the buildings are owned outright, only the land is leased (If it's constructed to be mobile i.e. a container house, you can take it with you when the lease is up).

The annual lease is tax deductible and also the purchase cost (if you buy someone's lease).

Lease hold in farming gives you nearly always leasehold neighbors. Meaning your neighbors can't build a hotel, create a junkyard, keep a zoo, build a church, cook meth, etc without having the lessor coming down on them.

You source the farm labor out and make little to no profit, but own a 3-5 acre parcel with a view, total privacy, $100-200 property tax, surrounded by trees and nature. All for the same money you pay for a quarter acre property in a development with the charm of a faceless San Diego suburb.

Leaseholds are the way to live a rich man's life in Hawaii at a fraction of the cost. :-)

[peta2013]

What does this situation mean in the long run?

“HOA bought 20% of the land so the complex is 20% fee simple and 80% leasehold”

From a Zillow listing in Maui. Don’t think I can post the link to CD.

[leilaniguy]

Apparently it means the public areas; lanes, driveways, shrubbery, lawns, etc. that have no income value to the lessor were sold off easily and cheap so the lessees could at least legally maintain it at their own cost.