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Leasehold Conversion in Hawai'i

This pediatrician who lives in Manoa states what I have stated: Read the contract before signing. As many people know, there are affluent people in Hawai'i who live in homes and/or condos which they own but they do not own the land that it sits on. This is common in Hawai'i and its referred to as "leasehold." Unfortunately they are forcing private landowners who own these lands to sell using the Honolulu City Council to force the landowners to sell to them. This is illegal of course and this pediatrician is stating the obvious. That is, they should have read the contract before signing. Read his commentary below:

We didn’t buy land to become landless by Jerry Lam


"My mother and her family are among the many small landowners in Hawaii who are affected by Act 38, a city ordinance that forces lease-to-fee conversion in condominiums. We have a small 15,000 square-foot parcel of land in Waikiki, which my grandmother wisely bought more than 60 years ago. When she leased her precious land to developers 45 years ago, she never intended to sell the land. She was promised that the land and the building would be returned to her after 55 years, and this contractual agreement was written into the lease document.

Persons who lease offices, apartments or condominiums should read their leases. Many may have been misled by real estate agents who implied that their buildings would eventually be converted to fee simple in the future. This misrepresentation may have been done to secure a sale. If any lessee had read the lease documents prior to their purchase, they would know that legally they are simply leasing their units for a certain number of years and that there are no assurances that they would ever own the land in fee. Our family did not lease the land to be forced to sell it later.

In 1991, former City Councilman John Henry Felix, with help from fellow Councilman Duke Bainum, supported the unconscionable law -- Act 38 -- which was passed by the thinnest of margins. The law changed the lease rules in the middle of the lease. It was unfair, immoral and made Felix very popular with the lessees who outnumber and can outfinance the small landowners. The Supreme Court later upheld the legality of the act. We all know that being legal is not the same as being right. No other city in the country has passed such an un-American piece of legislation.

The law also unfairly authorized the city to use its vast resources to assist the lessees in condemning their land, while the small landowners had to borrow funds to fight each condemnation. Our family's legal fees are exorbitant. The city should never take sides in a private dispute. The city is helping to take private land from one private party to give to another private party for private financial gain. This is unfair. There is no public purpose for 13 lessees to take away private property from 25 members of my family. Many of my children live on the mainland and are also hoping to own a property of their own someday in Honolulu.

The lessees repetitively state that the landowners, including Kamehameha Schools, the Queen Liliuokalani Trust and the small landowners, can reinvest the money they receive from the condemnation to make better investments elsewhere. What could be better than the land in Waikiki that we already own? Average land values have appreciated 50 percent in Honolulu during the past five years and 18.9 percent this past year. Why can't the lessees sell their units and buy a residence elsewhere?

Land ownership in our United States is sacred. And unless there is an overriding and compelling public purpose, no one should be forced to sell her or his cherished land. It is not the city's business to intervene in private affairs. Many of us want to keep our land no matter what price is offered. We just want our rightful property back at the end of the lease, which in our family's case, is 10 more years.

A bill that is making its way through the City Council that would stop the injustice that has gone on for 14 years. None of the lessees were complaining at the beginning of the lease when the lease rents were so low and the terms of the lease were so long. Our family received $1,500 a month for the entire property for the first 10 years of the lease! Times have changed. Today we have City Council members who are wiser, willing to revisit this contentious issue and to make amends. I applaud them for their courage."




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Jeremy Lam is pediatrician and resident of Manoa.

Seen at http://starbulletin.com/2004/10/05/editorial/commentary.html

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