Lease restrictions; generally
HRS §171-36
in effect171-36. Lease restrictions; generally
(a) Except as otherwise provided, the following restrictions shall apply to all leases:
(1) Options for renewal of terms are prohibited;
(2) No lease shall be for a longer term than
sixty-five years, except in the case of a residential leasehold, which may
provide for an initial term of fifty-five years with the privilege of extension
to meet the requirements of the Federal Housing Administration, Federal
National Mortgage Association, Federal Land Bank of Berkeley, Federal
Intermediate Credit Bank of Berkeley, Berkeley Bank for Cooperatives, or
Department of Veterans Affairs requirements; provided that the aggregate of the
initial term and extension shall in no event exceed seventy-five years;
(3) No lease shall be made for any land under a lease
that has more than two years to run;
(4) No lease shall be made to any person who is in
arrears in the payment of taxes, rents, or other obligations owed to the State
or any county;
(5) No lease shall be transferable or assignable,
except by devise, bequest, or intestate succession; provided that with the
approval of the board, the assignment and transfer of a lease or unit thereof
may be made in accordance with current industry standards, as determined by the
board; provided further that prior to the approval of any assignment of lease,
the board shall have the right to review and approve the consideration to be
paid by the assignee and may condition its consent to the assignment of the lease
on payment by the lessee of a premium based on the amount by which the
consideration for the assignment, whether by cash, credit, or otherwise,
exceeds the depreciated cost of improvements and trade fixtures being
transferred to the assignee; provided further that with respect to state
agricultural leases, in the event of foreclosure or sale, the premium, if any,
shall be assessed only after the encumbrances of record and any other advances
made by the holder of a security interest are paid;
(6) The lessee shall not sublet the whole or any part
of the demised premises, except with the approval of the board; provided that
prior to the approval, the board shall have the right to review and approve the
rent to be charged to the sublessee; provided further that in the case where
the lessee is required to pay rent based on a percentage of its gross receipts,
the receipts of the sublessee shall be included as part of the lessee's gross
receipts; provided further that the board shall have the right to review and,
if necessary, revise the rent of the demised premises based upon the rental
rate charged to the sublessee, including the percentage rent, if applicable,
and provided that the rent may not be revised downward;
(7) The lease shall be for a specific use or uses and
shall not include waste lands, unless it is impractical to provide otherwise;
(8) Mineral and metallic rights and surface and
ground water shall be reserved to the State; and
(9) No lease of public lands, including submerged
lands, or any extension of any lease of public lands shall be issued by the
State to any person to construct, use, or maintain a sunbathing or swimming
pier or to use the lands for those purposes, unless the lease, or any extension
thereof, contains provisions permitting the general public to use the pier
facilities on the public lands and requiring that a sign or signs be placed on
the pier, clearly visible to the public, that indicates the public's right to the
use of the pier. The board, at the earliest practicable date, and where
legally possible, shall cause all existing leases to be amended to conform to
this paragraph. The term "lease", for the purposes of this
paragraph, includes month-to-month rental agreements and similar tenancies.
(b) The board, from time to time, upon the
issuance or during the term of any intensive agricultural, aquaculture,
commercial, mariculture, special livestock, pasture, or industrial lease, may:
(1) Modify or eliminate any of the restrictions
specified in subsection (a);
(2) Extend or modify the fixed rental period of the
lease; provided that the aggregate of the initial term and any extension
granted shall not exceed sixty-five years; or
(3) Extend the term of the lease,
to the extent necessary to qualify the lease for
mortgage lending or guaranty purposes with any federal mortgage lending agency,
to qualify the lessee for any state or private lending institution loan,
private loan guaranteed by the State, or any loan in which the State and any
private lender participates, or to amortize the cost of substantial
improvements to the demised premises that are paid for by the lessee without
institutional financing.
(c) Any extension authorized pursuant to
subsection (b) shall be based on the economic life of the improvements as
determined by the board or an independent appraiser; provided that the approval
of any extension shall be subject to the following:
(1) The demised premises have been used substantially
for the purpose for which they were originally leased;
(2) The aggregate of the initial term and any
extension granted shall not be for more than sixty-five years;
(3) In the event of a reopening, the rental for any
ensuing period shall be the fair market rental at the time of reopening;
(4) Any federal or private lending institution shall
be qualified to do business in the State;
(5) Proceeds of any mortgage or loan shall be used
solely for the operations or improvements on the demised premises;
(6) Where improvements are financed by the lessee,
the lessee shall submit receipts of expenditures within a time period specified
by the board or else the lease extension shall be canceled; and
(7) The rules of the board setting forth any
additional terms and conditions, which shall ensure and promote the purposes of
the demised lands.
(d) The board, at any time during the term of
any intensive agricultural, aquaculture, or mariculture lease and when
justified by sound economic practices or other circumstances, may permit an
alternative agricultural, aquaculture, or mariculture use or uses for any
portion or portions of the land demised. As a condition to permitting
alternative uses, the board may require any other modifications, including
rental adjustments or changes in the lease, as may be necessary to effect or
accommodate the alternative use or uses. An alternative use or uses may be
allowed by the board upon:
(1) The application of the lessee;
(2) Consent of each holder of record having a
security interest in the leasehold; and
(3) A finding by the board that the alternative use
or uses are in the public interest.
(e) The board, from time to time during the
term of any agriculture, intensive agriculture, aquaculture, commercial,
mariculture, special livestock, pasture, or industrial lease, may modify or
eliminate any of the restrictions specified in subsection (a), extend or modify
the fixed rental period of the lease, or extend the term of the lease upon a
showing of significant economic hardship directly caused by:
(1) State disaster, pursuant to chapter 209,
including seismic or tidal wave, tsunami, hurricane, volcanic eruption,
typhoon, earthquake, flood, or severe drought; or
(2) A taking of a portion of the area of the lease by
government action by eminent domain, withdrawal, or conservation easement;
provided that the portion taken shall not be less than ten per cent of the
entire leased area unless otherwise approved by the board; and provided that
the board determines that the lessee will not be adequately compensated
pursuant to the lease provisions.
(f) The approval of any extension granted
pursuant to subsection (e) shall be subject to the following:
(1) The demised premises have been used substantially
for the purposes for which they were originally leased;
(2) The aggregate of the initial term and any
extension granted shall not be for more than fifty-five years;
(3) The rental shall not be less than the rental for
the preceding term;
(4) The rules of the board setting forth any
additional terms and conditions, which shall ensure and promote the purposes of
the demised lands; and
(5) The length of the extension shall not exceed a
reasonable length of time for the purpose of providing relief and shall in no
case exceed five years.
[L 1962, c 32, pt of §2; am L 1965, c 239, §18; Supp,
§103A-36; am L 1967, c 234, §14; HRS §171-36; am L 1969, c 217, §1; am L 1971,
c 19, §1 and c 38, §1; am L 1976, c 196, §1; am L 1978, c 191, §1; am L 1982, c
37, §1 and c 55, §1; am L 1988, c 159, §2; am L 1989, c 104, §1; am L 1990, c
242, §1; am L 1992, c 283, §1; am L 1994, c 114, §1; am L 1997, c 67, §1, c
206, §1, c 258, §6, and c 286, §1; am L 1999, c 160, §21; am L 2000, c 261,
§§2, 5; am L 2002, c 68, §2, c 103, §1, and c 180, §1; am L 2005, c 129, §2; am
L 2011, c 207, §1; am L 2017, c 12, §1; am L 2019, c 111, §1]
Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: http://www.capitol.hawaii.gov/hrscurrent/Vol03_Ch0121-0200D/HRS0171/HRS_0171-0036.htmFetched: 11/10/2026