You have likely seen Mililani listings marked “leasehold” or “fee simple” and wondered what that really means for your budget and long-term plans. It is a smart question to ask before you fall in love with a home. The ownership type can affect your loan options, monthly costs, and future resale. This guide breaks down the differences, what to watch for on Oahu, and the exact steps to take so you can move forward with confidence. Let’s dive in.
Ownership types at a glance
Fee simple basics
You own the land and the improvements. Mortgages and title are straightforward, and resale is typically simpler. On Oahu, this is the most familiar ownership structure for single-family homes and many condos and townhomes.
Leasehold basics
You own a long-term leasehold interest in the land and usually the improvements, but a separate landowner holds the land. The lease is a contract that sets your rights, ground rent, renewals, and what happens at the end of the term. Lenders, appraisers, and buyers pay close attention to the lease language and the years left on the lease.
Why Mililani buyers should care
Across Oahu, leasehold properties appear most often in older condo projects in areas like Waikiki and parts of Honolulu. Much of Mililani’s planned single-family neighborhoods tend to be fee simple, which many buyers prefer for predictability. Still, do not assume. Some townhomes or condos anywhere on the island can sit on leased land. Always confirm the ownership type on the specific property before you write an offer.
Lease terms that matter most
When a listing is leasehold, the lease document drives your future costs and options. Focus on these items:
- Remaining lease term and renewals. Shorter remaining terms reduce lender appetite and may shrink your pool of future buyers. Ask if there are renewal or extension rights and how they work.
- Ground rent and how it increases. Learn whether increases are fixed steps, tied to CPI, market reappraisals, or another formula. Market resets can create large jumps at specific dates.
- Rent reset/renegotiation clauses. Some leases allow the lessor to require a new appraisal at intervals. That can be a major cost event.
- Assignment and subletting rights. Check whether you can sell or assign the lease and whether lessor consent is required. Look for any protections for your lender.
- Termination and default provisions. Understand what actions could end the lease and whether improvements revert to the landowner.
- Purchase or extension rights. Some leases include options or rights of first refusal to buy the fee or extend the term. Others do not.
- Who pays what. Ground rent is typically separate from HOA dues and from property taxes on improvements. Make sure the lease and condo documents spell out responsibilities.
Financing, appraisals, and resale
Financing a leasehold is different from financing fee simple. Lenders and loan programs each have their own rules, so confirm with your lender early.
- Remaining term vs loan term. Many lenders want the lease to extend well beyond the mortgage maturity date. Short remaining terms can limit loan choices, raise down payment needs, or push you to cash.
- Conventional, FHA, and VA. Conventional lenders and investor guidelines vary. Government-backed programs add requirements and documentation. For current program guidance, review resources from the Hawaii DCCA Real Estate Branch, HUD, Fannie Mae, and Freddie Mac.
- Appraisals. Appraisers often discount leasehold values to reflect the shorter horizon and any future rent resets. Comparable sales may be limited, which can affect valuation.
- Resale and buyer pool. Leaseholds often sell at a discount compared to similar fee simple homes. The buyer pool can be smaller because some lenders or buyers avoid leaseholds.
Monthly costs to expect
Your monthly carrying costs can look different on a leasehold property. Plan ahead by understanding all line items.
- Ground rent vs HOA dues. Ground rent goes to the landowner. HOA dues cover association costs, such as common-area maintenance. These are separate charges.
- Predictability of payments. Fixed rent step-ups are easier to plan for. CPI-based or market-reset terms can create larger, less predictable increases at set dates.
- Special assessments. Condo associations on leased land can still levy assessments for repairs or capital projects. A lease renegotiation can also lead to cost changes that affect owners.
- At lease expiration. Outcomes depend on the lease. Some leases include extension or purchase options. Others can end or allow reversion of improvements to the landowner. That uncertainty affects long-term value.
- Insurance and taxes. The lease and condo documents will define who pays for property taxes and insurance on the improvements and the land. Verify both before you buy.
Due diligence checklist for buyers
Before you commit, gather the right documents and ask focused questions.
Documents to request and review:
- Full recorded ground lease and all amendments
- Condo declaration, bylaws, house rules, recent minutes, budgets, reserve study, and financials
- Estoppel certificates from the lessor and the HOA if available
- Title report and any leasehold title insurance exceptions
- Any notices about rent resets, buyouts, litigation, or condemnation
- Recent ground rent payment history and any default notices
- Prior rent appraisals or reset letters
- Correspondence between the lessor and the HOA about future changes
Key questions to get answered:
- Exactly how many years remain on the lease and are there extension rights? On what terms?
- How is ground rent adjusted and when is the next reset?
- Does the lessor need to approve your mortgage, assignment, or sale?
- What mortgage protections are in the lease for your lender?
- Are there active disputes or upcoming renegotiations?
- Which lenders have recently financed units in this project?
Smart offer and negotiation moves
- Add a lease review contingency. Give yourself time for your lender and a Hawaii leasehold attorney to review the lease and condo documents.
- Keep your financing contingency. Do not remove it until your lender confirms the lease is acceptable for your loan program.
- Request estoppel letters. Where possible, ask the lessor and HOA to confirm current amounts due, any defaults, next reset dates, and pending negotiations in writing.
Who to involve and when
- Lender. Get pre-approved and verify they will finance the specific leasehold. Ask about minimum remaining lease terms and required lease language.
- Title company. Order a thorough title report and discuss leasehold title insurance options.
- Hawaii real estate attorney. Have an attorney experienced with Hawaii leaseholds review the lease and HOA documents.
- HOA management. Request budgets, reserve studies, and minutes. Ask about any lease negotiations or anticipated resets.
- Local appraiser. If valuation looks complex, consider an early consult with an appraiser familiar with leaseholds on Oahu.
Trusted resources
Use these sources to verify requirements and learn current program rules:
- Consumer and professional guidance from the Hawaii DCCA Real Estate Branch
- FHA and condo program information from HUD
- Conventional underwriting resources from Fannie Mae
- Conventional underwriting resources from Freddie Mac
Ready for local guidance?
If you are comparing a Mililani townhome or condo, the ownership type can change your path to closing. A careful lease review, early lender check, and clear offer strategy can protect your budget and timeline. If you want a calm, design-minded approach and a partner who will walk you through each step, connect with Kristen Matthews for a friendly, no-pressure consultation.
FAQs
What is the difference between leasehold and fee simple on Oahu?
- Fee simple means you own the land and the improvements; leasehold means you own a long-term lease interest and usually the improvements, while a separate landowner owns the land.
Can you finance a leasehold condo in Mililani?
- Many lenders add requirements for leaseholds, and some loan programs may not apply; confirm early with your lender and review resources from HUD, Fannie Mae, and Freddie Mac.
How do ground rent resets affect monthly costs?
- Resets tied to CPI or market appraisals can create larger, less predictable increases at set intervals, so you need to know the method and the timing before you buy.
What happens at the end of a ground lease?
- It depends on the contract; some leases allow extensions or purchases of the fee, while others can end or allow improvements to revert to the landowner.
How do you confirm ownership type in Mililani listings?
- Review the listing and title report, and verify in writing during due diligence; your agent can help request the full ground lease and condo documents if the property is leasehold.
What documents should you review before buying a leasehold?
- The full ground lease and amendments, HOA documents and financials, title report, estoppel letters if available, rent reset history, and any notices about renegotiations or disputes.
