Fee Simple is the type of ownership that most people are familiar with.  Fee Simple is recognized as the highest and very best form of ownership in Maui Real Estate.  The property Owner is entitled to full enjoyment of the property, limited only by zoning laws, deed or subdivision restrictions, and covenants.  Fee simple ownership is still the predominate method of holding title to property throughout the United States including the State of Hawaii.  Most properties on Maui are offered for sale in fee simple.



Lease Hold is an ownership of a temporary right to hold property wherein a Lessee has the right to use the property owned by the Lessor.  There is a lease offered by the Lessor to the Lessee for a term of a set number of years and at the end of the lease it reverts back to the Lessor.  The Lessee pays a monthly lease rent during the course of the lease.  Much like a leased car, apartment or office space, the owner of the property agrees to let a third party use it for a period of time in exchange for payment.  At the end of the lease term, the Lessor may or may not agree to extend the lease under a new lease agreement.  If the lease is not extended, the Lessor will retain the property and the Lessee has no further rights to use of the property.  During the lease term, the lease rent may periodically increase.  Typically a 50 year lease has a set fee for the first 25 years and then is negotiated every subsequent 5 to 10 years after that.  However, it is important to remember that all Leasehold Agreements can be different so it is very important to review the lease documents if you are considering purchasing a Lease Hold Property.


Things to consider for LEASEHOLD.

Since Leasehold is uncommon in the United States a lot of buyers tend to shy away from it.  Since a leasehold estate is not the highest form of ownership, the asking prices of leasehold properties are typically less than the Fee Simple equivalent property.  It is important to consider your long term goals for the property.  If you only intend to hold the property for a short period of time the reduced price might be advantageous.  Keep in mind that any loan you take on a Leasehold property will need to have a shorter term than the length of the lease.  For example a 30 year loan will not be available on a Leasehold that only has 25 years remaining.  Also remember that the lease rent is in addition to the condominium association maintenance fees and local property taxes.  It is important to keep all these costs in mind.  Finally, keep in mind that the value of the property will begin to decline as the lease gets closer to expiring.


Where to Find LEASEHOLD Properties?

On Maui, leasehold estates were most commonly created in condominium developments during the 1970′s and 1980′s.  Since then there has been a push to convert most properties into Fee Simple.  Today, remnants of leasehold estates are mostly seen in Honokawai, Kahana, Napili, Kihei and Maalaea.