Fee Simple Vs. Leasehold In Honolulu Explained

Looking at condos in Honolulu and wondering why some listings say fee simple and others say leasehold? Happens to almost everyone shopping here. In Hawaii, these two ownership types can change your monthly payments, your loan options, and how long you might want to stay in the unit. Here’s an easy breakdown so you know what you’re getting into before writing an offer.

Fee simple (the one most folks prefer)

Fee simple is the straightforward one. You own the land and the unit on it. Your ownership doesn’t expire, and aside from taxes and normal rules, it’s yours for as long as you want.

Most single-family homes and a lot of the newer condos around Honolulu are fee simple. Lenders like it because it’s simple, so getting a mortgage is usually pretty smooth.

Leasehold (the one with more moving parts)

With leasehold, you own the unit but not the land underneath. A landowner—sometimes a trust or large estate—owns the land, and you lease it for a set amount of years. When the lease runs out, unless there’s a renewal or extension, the landowner gets back control. Depending on what the lease says, they might also get rights to the building or improvements.

Hawaii leaseholds can be long-term, but every lease is different. The number of years left, how rent goes up, and whether the lease can be renewed all affect the price, your loan, and even resale.

Where leasehold shows up in Honolulu

Leasehold is part of Hawaii’s real estate history, especially in older parts of town. You’ll mostly see it in:

• Older Waikiki condos

• Hotel-to-condo conversions in Waikiki and Ala Moana

• Some higher-density buildings in the Ala Moana / Kapiolani / town area

Newer neighborhoods and most single-family areas farther from Waikiki are usually fee simple, but always check the title to be sure.

Financing: what you really need to know

Lenders look at the lease closely

They care about:

• How many years are left

• If there are renewal options

• Ground rent increases

• What happens at the end of the lease

When the remaining term drops below around 30 years, some lenders get picky. That’s why you want a lender who works with leasehold properties regularly.

Appraisal is different too

Appraisers value a leasehold unit based on the lease terms. If the lease is short or uncertain, the value goes down. They also have to compare your unit to other leasehold sales, not fee simple ones.

Monthly costs & important lease terms

With leasehold, your monthly payment might include more things than a normal mortgage. Look out for:

• Ground rent

• Rent increases (sometimes scheduled, sometimes tied to market rates)

• Taxes or insurance you’re responsible for under the lease

• HOA involvement — some associations help negotiate the ground lease

Make sure you understand how these costs change over time, not just today.

Renewal terms & what happens at the end

The biggest question with leasehold is: what happens when the lease gets close to expiring?

Some leases have clear renewal options. Others need to be renegotiated — and the new terms might not be cheap. If no agreement is made, the landowner can take back the land and sometimes the building, depending on the lease language.

The clearer the renewal terms, the safer the deal. The vaguer the lease, the riskier the purchase.

Red flags to watch for

Be careful if you see:

• A short remaining lease with no renewal plan

• Big or unpredictable rent bumps

• Restrictions on renting or transferring the unit

• Weak protections for your lender

• Confusing rules about taxes, insurance, or special assessments

Checklist before you write an offer

• Confirm fee simple vs. leasehold in both the listing and title

• Get the full ground lease + all amendments

• Check remaining years, renewal options, and rent schedules

• Ask for recent ground rent statements

• Ask the HOA about any upcoming lease negotiations

• Talk with a Hawaii real estate attorney who knows leaseholds

• Use a lender experienced with Hawaii leasehold loans

• Order a full title report

• Confirm lender protections in the lease

• Calculate total monthly cost including escalations

• Review HOA reserves and legal budgets

• Make sure your appraisal uses leasehold comps

• Confirm what insurance is required

So which one fits your situation?

If you want easy resale and long-term flexibility

Go fee simple when you can.

If you’re seriously looking at Waikiki or Ala Moana leaseholds

Start with a leasehold-savvy lender and focus on remaining years and renewal terms.

If you’re planning to stay 5–10 years

A leasehold can work if the numbers and the lease terms make sense. Think about your exit plan early.

If you want something long-term or for the family

Fee simple usually wins unless the lease is long, clean, and has solid renewal terms.

Local help makes a difference

Hawaii real estate is unique, and leasehold adds a whole other layer. Having someone local who knows the buildings, the ground leases, and which lenders handle them well can save you headaches. If you want a plan tailored to your goals, reach out to Diane Ito to request a Personal Consultation.

FAQs 

What’s the difference between fee simple and leasehold?
Fee simple = you own the land and the unit.
Leasehold = you own the unit, but lease the land for a set number of years.

Can you get a mortgage on a Waikiki leasehold?
Yes, but it depends on how many years are left and the lease terms. Use a lender who does Hawaii leaseholds regularly.

Does a shorter lease lower resale value?
Yes buyers and lenders both look closely at the remaining term.

What should I ask before offering on a leasehold?
Remaining lease years, renewal options, ground rent, rent increases, taxes, insurance, and whether big lease negotiations are coming up.

Are single-family homes in Honolulu usually fee simple?
Most are fee simple, especially outside Waikiki and Ala Moana, but always double-check the title.