USA – HAWAII Law and Practice Contributed by: Jon Pang, Lisa Broulik and Matthew Cohen, Case Lombardi, A Law Corporation
5.6 Annual Entity Maintenance and Accounting Compliance
pays as percentage rent a portion of gross revenues earned from their use of the leased property. Ground leases tend to be structured for tenants to occupy the land for a longer duration of time, often ranging from 20 to 99 years. Typically, at the expiration of the ground lease term, the buildings and improve - ments on the land revert to the landlord. Agricultural leases are also common in Hawaiʻi due to tax incentives and lower real property tax rates for qualifying leases. Such leases are entered into with governmental and private landowners. 6.3 Regulation of Rents or Lease Terms Rents and lease terms in commercial leases are largely left to the landlord and tenant to freely negotiate. The terms of commercial leases may be subject to case law and statutes addressing specific issues, such as unconscionability, the implied covenant of good faith and fair dealing in the performance and enforcement of a contract, and the duty to mitigate damages. 6.4 Typical Terms of a Lease Term The length of a lease term varies depending on the type of lease and the agreement between the land - lord and tenant. Typical commercial leases may range from three to five years or longer. A ground lease often ranges from 20 to 99 years. Maintenance Responsibilities Most commonly, tenants are responsible for main - taining and repairing the leased premises (eg, interior walls, flooring, lighting), while landlords are often, but not always, responsible for maintaining and repairing structural components of the building (eg, roof, exte - rior surfaces of walls) and common areas as defined in the lease. Frequency of Rent Payments Most commercial leases typically require tenants to make monthly rent payments, but some long-term ground leases may provide for annual rent payments.
Corporations, limited liability companies and partner - ships registered to do business in Hawaiʻi are required to file annual reports to remain in good standing. The fee associated with each entity is currently between USD5 and USD15 for for-profit businesses. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The most common ways to occupy and use real estate for a limited time without buying it outright are through leases, licence agreements and easements. Leases A lease is a binding contract between a landowner and tenant to possess and use the real property for a period of time in exchange for the payment of rent. Typically, the buildings and improvements on the land revert to the landlord at the expiration of the lease term. Ground leases in Hawaiʻi typically range between 20 and 99 years. Licence Agreements A licence agreement is a personal contract between the licensor and licensee, often for a shorter dura - tion, to grant the licensee permission to occupy or use the real property (for events, improvement work, etc), without granting ownership or leasehold interest. Easements An easement gives an individual a right to use prop - erty or a portion of the property for a specific purpose without having an ownership interest in the property Various types of commercial leases are used in Hawaiʻi, including building and space leases, ground leases and agricultural leases. For a traditional space lease, the tenant pays a fixed base rent that may increase annually, plus additional rent for their share of common area expenses. In some cases, like retail stores and restaurants, the tenant (eg, ingress and egress purposes). 6.2 Types of Commercial Leases
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