USA – HAWAII Law and Practice Contributed by: Jon Pang, Lisa Broulik and Matthew Cohen, Case Lombardi, A Law Corporation
1. General 1.1 Main Sources of Law
Bills at both the state and county levels have been introduced seeking to enhance affordability by, for example: • establishing teacher and workforce housing incen - tives; • bolstering low-income hours tax credit pro - grammes; and • modifying existing density restrictions and permit - ting barriers to reduce residential development obstacles. Another shift in Hawaiʻi’s regulatory scheme has been the tightening of short-term rental regulations, which has allowed individual counties – particularly Maui, Honolulu and Hawaiʻi County – to scale back tran - sient vacation rental use in residential areas in order to preserve inventory for residents. These restrictions have begun to fuel litigation as property owners seek to protect their investments. See the Hawaiʻi Trends & Developments chapter in this guide for a more extensive summary of proposed leg - islation and recent trends affecting real estate invest - ment, ownership and development. The most common forms of real property ownership in Hawaiʻi include fee simple, leasehold and life estates. A less common derivative of property ownership is fee simple ownership of air space (typically established by a condominium structure) subject to a ground lease. Title in these ownership forms may be held as ten - ants in severalty, tenants in common, tenants by the entirety, or joint tenants. Hawaiʻi also has non-possessory interests in real property such as easements, licences, liens and secu - rity interests. Mortgages are the traditional method of effecting security interests in Hawaiʻi real property (see 3.2 Typical Security Created by Commercial Inves- tors ). Anecdotally, long-term leasehold interests are par - ticularly common in Hawaiʻi due to significant por - 2. Sale and Purchase 2.1 Categories of Property Rights
Although Hawaiʻi’s real estate jurisprudence, like much of the United States, is grounded in English common law, it also uniquely incorporates some components of traditional Native Hawaiʻian customs and rights. Other sources include constitutional, statutory and admin - istrative law. Hawaiʻi is distinct from other regions in that its body of available statutory and/or common law remains relatively limited and underdeveloped com - pared to other jurisdictions. Consequently, courts and practitioners often look to decisions from outside of Hawaiʻi for guidance. 1.2 Main Market Trends and Deals The Hawaiʻi real estate market is experiencing a period of rebalancing with additional regulatory over - sight. Pressures inherent to the limited availability of real property in the islands leads to high demand and strong pricing. Of particular interest is the regulatory shift to: • create more high-density, mixed-use developments within urban Honolulu; • foster transit-oriented development centred around Oʻahu’s new “Skyline” rail system; • limit short-term vacation rentals to preserve inven - tory for local residents; and • stem the impacts of climate change. The hotel industry continues to be a major driver of development projects across the state, as construc - tion activity within resort zones remains high. For example, major 2026 capital projects include the USD180 million renovation of the Mauna Kea Beach Hotel, the restoration of the Moana Surfrider, and the construction of a new 515-room, 36-storey tower at
the Hilton Hawaiʻian Village. 1.3 Proposals for Reform
Hawaiʻi’s recent legislative cycle showcased a num - ber of measures targeted toward issues affecting real estate, including affordable housing and climate change in particular.
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