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Thread: Land Lease Renegotiation

  1. #1
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    Default Land Lease Renegotiation

    Aloha. My disabled, elderly friend owns a house on leased land in Kahalu'u. He has just been informed by the fee owner, Hawaii Housing Finance & Development Corp. (HHFDC), that his lease rent is going up from $500/year to $11,000/year.

    That's over 2,000% increase.

    Needless to say, living on disability, he can't even afford one month's lease payment at the new rate. Nor does he have any money to buy the fee.

    Does anyone know of any community associations that are helping folks in this situation? I suspect that this is going to be happening more and more, as some of these leases come up for renegotiation.

    Any leads would be much appreciated. Or links to places this has been discussed elsewhere? Mahalo.

  2. #2

    Default Re: Land Lease Renegotiation

    I think he's got two choices:

    1) Sell.
    2) Band together with neighbors and go to the media.

    But at the end of the day, they own the land. I'm not too sure how much community groups will be able to help out long-term. Everyone is under pressure.

  3. #3
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    Default Re: Land Lease Renegotiation

    Thanks, GG. I'm trying to identify which neighbor's lands are still leased, but the honolulupropertytax.com web site wasn't working yesterday.

    I think selling would be almost impossible at this point, with the lease rent being raised so high. Who in their right mind would buy a property with a lease like that?

  4. #4
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    Default Re: Land Lease Renegotiation

    If your friend has owned for many years, is elderly and, as you say, disabled it wouldn't hurt to ask the land owner if there are any provisions for your friend to be grandfathered in to the old lease rent.

    I once owned a LH property when the rent was renegotiated and went sky high. The fee price was sky high, too. I ended up selling the property and my list price included the fee purchase. I sold the property in fee while still owning it in lease. The fee purchase price was paid thru escrow.

  5. #5

    Default Re: Land Lease Renegotiation

    Quote Originally Posted by tutusue View Post
    If your friend has owned for many years, is elderly and, as you say, disabled it wouldn't hurt to ask the land owner if there are any provisions for your friend to be grandfathered in to the old lease rent.
    Absolutely can't hurk to ask. But if the owner already knows the leaseholder's age and went ahead with asking for a 2000% increase anyway, it sure doesn't sound like the owner wants that leaseholder to stick around. Sad, but what can you do?

    Organizations that can help your friend out with information and assistance? Here are some off the top of my head:

    Affordable Housing Alliance
    Kokua Council For Senior Citizens
    Catholic Charities Hawaii
    Salvation Army

    Making calls and inquiries to those good folks will get you started on the right track.

    Good luck to your friend.

  6. #6
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    Default Re: Land Lease Renegotiation

    Quote Originally Posted by Frankie's Market View Post
    Absolutely can't hurk to ask. But if the owner already knows the leaseholder's age and went ahead with asking for a 2000% increase anyway, it sure doesn't sound like the owner wants that leaseholder to stick around. Sad, but what can you do? [...]
    I'm hoping there are policies in place for situations like this that land owners take a don't ask/don't tell stand on. My guess is, if other homes in the area are involved, a blanket letter went out to all the lessees even if the lessor knew of any extenuating circumstances. This is a moot point if DMM's friend's house is the only one involved. Still, the friend should make an inquiry.

    There's always a risk to purchasing LH property but often the risk can be worth it.

  7. #7
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    Default Re: Land Lease Renegotiation

    if you check this link, you might find something helpful:

    http://hawaii.gov/dbedt/hhfdc/about/

  8. #8

    Default Re: Land Lease Renegotiation

    Whatever the written contract states is what will most likely prevail. The contract will state what options there are for renogotiation. And, sometimes the lease is not even open for renegotiation. Remember "The Kailuan" a year ago, those lease holders were completely out once the lease expired. In this current situation, it might be that the best outcome will just be a willingness by the owner to help relocate the leaseholder, which is not a perfect solution but something to consider as a backup plan.

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  9. #9
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    Default Re: Land Lease Renegotiation

    because the landowner appears to be a state government agency - there may be other remedies that will result in something other than final eviction. It will help if the gentleman in question has friends to help him (that looks to be the case) and is willing to fight back. A state agency has certain rules they must follow and guidelines to follow that may allow for some leeway. Also, contacting his legislators might help. Even contacting the newspapers can possibly help - the "power of the pen" can work wonders. Plus, this state agency is tasked with overseeing afforable housing, financing & development.

    Good Luck!

  10. #10

    Default Re: Land Lease Renegotiation

    Quote Originally Posted by anapuni808 View Post
    if you check this link, you might find something helpful:

    http://hawaii.gov/dbedt/hhfdc/about/
    Hmmmmm. I didn't realize who the owner was. I'm not sure what kind of property this is, but I'm wondering if it isn't a large lot. The plan may be to drive him off the property so it can be redeveloped with more houses to fulfill the agency's mission. Can't make an omelet without breaking eggs and all that.

  11. #11

    Default Re: Land Lease Renegotiation

    Their website has two bits of information that might give a lead:
    1)The Hawaii Housing Finance and Development Corporation (HHFDC), is tasked with developing and financing low- and moderate-income housing projects and administering homeownership programs
    2) Lease Rent Renegotiation Program
    Do you need help renegotiating your single-family residential lease? Call (808) 587-0521..
    Now run along and play, but donít get into trouble.

  12. #12

    Default Re: Land Lease Renegotiation

    Quote Originally Posted by Amati View Post
    Lease Rent Renegotiation Program
    Do you need help renegotiating your single-family residential lease? Call (808) 587-0521..
    So what happens when they try to negotiate with themselves? (cue the circus music.)

  13. #13

    Default Re: Land Lease Renegotiation

    Quote Originally Posted by anapuni808 View Post
    because the landowner appears to be a state government agency - there may be other remedies that will result in something other than final eviction. It will help if the gentleman in question has friends to help him (that looks to be the case) and is willing to fight back. A state agency has certain rules they must follow and guidelines to follow that may allow for some leeway. Also, contacting his legislators might help. Even contacting the newspapers can possibly help - the "power of the pen" can work wonders. Plus, this state agency is tasked with overseeing afforable housing, financing & development.
    Problem is, they are "tasked with overseeing affordable (sic) housing, financing & development" for all the people that are eligible to be serviced by them, not just one. (The old man who is the leaseholder.)

    If the old man talks to the right people, I am sure that the folks at this agency will help with finding him someplace to live, as per their mission. But that help might come in the form of arranging for him to relocate rather than help in staying in the house that he is presently in. I think Gecko is on the mark here re: the HHFDC's agenda.

    So if the old man is amenable to relocating, I think everything will turn out okay. He's not going to end up being homeless. But if he's determined to stay put in his old house, I don't know if he'll be able to count on help from the HHFDC for that, especially if they have a new project in mind for that property. If he wants to save his house, he may likely need assistance and counsel from someone outside that particular state agency.

  14. #14

    Default Re: Land Lease Renegotiation

    Quote Originally Posted by Amati View Post
    Whatever the written contract states is what will most likely prevail. The contract will state what options there are for renogotiation. And, sometimes the lease is not even open for renegotiation. Remember "The Kailuan" a year ago, those lease holders were completely out once the lease expired.
    The case of the Kailuan is slightly different from the situation DMM's friend is facing. The Kailuan was a co-op, and so it did not fall under the state's mandatory lease-to-fee conversion law. But DMM's friend lives in a house. So if he wanted to proceed with a mandatory lease-to-fee conversion with the land owner, he can. The problem (as the original post said) is that the leaseholder does not have the money to purchase the fee.

    Quote Originally Posted by Amati View Post
    In this current situation, it might be that the best outcome will just be a willingness by the owner to help relocate the leaseholder, which is not a perfect solution but something to consider as a backup plan.
    That was exactly what I was thinking. That, or hopefully appealing for a short-term lease extension at an affordable rent so that man can live out the rest of his life in that house. But it all depends on what the owner's plans are for the property. If it is a time sensitive matter (as it usually is whenever it comes to real estate development), it's not going to make it easy for that old house to be saved.

  15. #15
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    Default Re: Land Lease Renegotiation

    Quote Originally Posted by Frankie's Market View Post
    [...]But it all depends on what the owner's plans are for the property. If it is a time sensitive matter (as it usually is whenever it comes to real estate development), it's not going to make it easy for that old house to be saved.
    IF the lessor has plans for the property, would the lessor even offer the lessee the option of purchasing his fee simple interest? Or, is offering that option legally mandated? Again, if the lessor has plans for the property what would happen if the lessee had the money and opted to purchase the fee? I know the lessee doesn't have the money. It's just a hypothetical question!

  16. #16

    Default Re: Land Lease Renegotiation

    Quote Originally Posted by tutusue View Post
    IF the lessor has plans for the property, would the lessor even offer the lessee the option of purchasing his fee simple interest? Or, is offering that option legally mandated? Again, if the lessor has plans for the property what would happen if the lessee had the money and opted to purchase the fee? I know the lessee doesn't have the money. It's just a hypothetical question!
    In 1967, the state legislature passed the Hawaii Land Reform Act, which called for mandatory conversion of leasehold to fee simple via eminent domain. Note that this law only applied to single family residential homes, not to condos or co-ops.

    http://www.capitol.hawaii.gov/sessio...B1606_HD1_.HTM

    Accordingly, in 1967, the legislature enacted Act 307, Session Laws of Hawaii 1967, that allowed lessees of long-term leasehold interests in single family residential development tracts the right to purchase the fee interest in their residential lots through a condemnation process involving the fee simple landowners and what is now the Hawaii housing finance and development corporation, where the latter would condemn the fee interest, pay the fee owner fair compensation for the fee interest, and in turn, sell the acquired fee interest to the leasehold homeowner.

    So yes, once a fair compensation price has been established, then the land owner would be compelled to sell if the leaseholder comes up with the amount necessary to purchase the fee interest.
    Last edited by Frankie's Market; April 8th, 2009 at 12:54 PM.

  17. #17
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    Default Re: Land Lease Renegotiation

    Duh on my part. Forgot about condemnation. Thanks, FM.

  18. #18

    Default Re: Land Lease Renegotiation

    Quote Originally Posted by Frankie's Market View Post
    Accordingly, in 1967, the legislature enacted Act 307, Session Laws of Hawaii 1967, that allowed lessees of long-term leasehold interests in single family residential development tracts the right to purchase the fee interest in their residential lots through a condemnation process involving the fee simple landowners and what is now the Hawaii housing finance and development corporation, where the latter would condemn the fee interest, pay the fee owner fair compensation for the fee interest, and in turn, sell the acquired fee interest to the leasehold homeowner.
    That would apply to someone in Makakilo, but is the problem presented in this thread part of a "development tract"? [Gee, maybe we HTers can band together and hire out as shade-tree-legal-advisors. ]
    Now run along and play, but donít get into trouble.

  19. #19
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    Post Re: Land Lease Renegotiation

    The Laau St. area is on leasehold land which runs up 2012!
    This will affect at least 2,500 people including my wife and I.
    Honolulu can not absorb that many working poor. Help!!!
    Laau St. is off of Date St. near Kapiolani Blvd.

    When is the state and especially Honolulu gonna realize that every city needs these kinds of neighborhoods to house the folks that do the "Blue Collar" jobs?
    Last edited by Menehune Man; May 31st, 2009 at 10:14 AM. Reason: Link to map didn't work?
    Life is either an adventure... or you're not doing it right!!!

  20. #20
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    Thumbs up Re: Land Lease Renegotiation



    Captured photo of the area map.
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  21. #21
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    Post Re: Land Lease Renegotiation

    Oh well... Iolani School has purchased the entire Laau St. area.
    honolulu advertiser article

    Guess we will be booted out Dec. 2012.
    Maybe they'll let more time since it's stated that there are no set plans yet and believe nothing will be started for years... we'll see.
    Life is either an adventure... or you're not doing it right!!!

  22. #22
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    Default Re: Land Lease Renegotiation

    Wow! That's a bummer, MM. Since it seems that there are no definite plans yet, I hope that things eventually work out for you (and everyone else).

  23. #23
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    Default Re: Land Lease Renegotiation

    It is a sad situation, and everyone else here is more qualified than I to give advice.

    Back in the day when FEE was out of reach (or unavailable), people did what they could, hoping for future change, just to have a PLACE!

    It's lawful, but it's unjust.
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  24. #24

    Default Re: Land Lease Renegotiation

    Quote Originally Posted by Menehune Man View Post
    Oh well... Iolani School has purchased the entire Laau St. area.
    Guess we will be booted out Dec. 2012.
    Maybe they'll let more time since it's stated that there are no set plans yet and believe nothing will be started for years... we'll see.
    Don't be suprised if they start now sending out notification of the need to vacate in 2012. They will probably do that even if they have no intention of actually building yet. Since there are months and months of advance notice needed, they might start in on that process, and then in the end give out month-to-month extensions. That way, they keep the homes in place, but the minute they decide to build something new, they are set up to get everyone out immediately.
    Now run along and play, but donít get into trouble.

  25. #25
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    Default Re: Land Lease Renegotiation

    We had a similar problem in Waialae Nui Valley back in the 80's. The subdivision was built in 1960 under a 55-year lease agreement to homeowners. Many of us bought our land (ours was 10,000 sq ft) for around $50,000 against the suggestion of our community attorney. Then the Japanese bubble hit and suddenly $50K jumped in leaps and bounds to a point where the valuation jumped to 10-times that amount to half a million dollars for that very same property.

    That lease runs out in 2015 and those who didn't take advantage of the initial KSBE offering of $50,000 then and can't afford the current market value now, will find themselves in the same predicament you are in.
    Life is what you make of it...so please read the instructions carefully.

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