Become a Hawaii Real Estate Expert in Ten Minutes

Brief History
 
Hawaii is the only state in the Union that keeps one central location for all real estate deeds. All other states delegate this responsibility to the county level. Hawaii's unique form of recording can be traced back to the original land tenure system of the Hawaiian Kingdom. All land was owned by the King, but made available to everyone else. The concept of private property did not exist.

That changed with the Great Mahele. Westerners pressured the Hawaiian government to adopt a private system of land ownership. Bowing to that pressure, between 1845 and 1848 King Kamehameha III divided up land among the Kingdom, high-ranking chiefs, and the territorial government. This was called the Ka Mahele now known as the Great Mahele. Ka Mahele translated is "the division."

There are compelling arguments the native Hawaiians did not receive their fair share of the Great Mahele. Periodically, groups or individuals advocating native Hawaiian rights challenge the established land ownership system. These challenges create rumors and innuendo resulting in confusion and uncertainty.

Because of confusion determining land ownership and similar names the Land Court was established in 1903.Original registration in Land Court is done through a lengthy process of a judicial review. The availability of title insurance has dramatically reduced the need for judicial determination and registration in the Land Court.

Hawaii's Recording System
Hawaii has three methods to change title on real estate. The Regular System gives "notice" of change in title. Deeds recorded in the Land Court system are guaranteed by the State of Hawaii. Documents recorded in both systems are referred to as a Double System Recording.

Types of ownership
 Hawaiian Real Estate is owned is fee simple, as a leasehold interest or as a timeshare.

Timeshares
Timeshares are fractional vacation ownership interests in a resort. The fractional interest is usually the right to occupy a one or two bedroom unit for one week, every year. One unit could have 52 owners. Purchasers are granted ownership as either as a "Time-share Estate" or as a "Time-share Use." Time-share Estate ownerships are granted by deed and are actual real estate ownerships. Time-share Use ownerships are granted by contract and the owner has a license or membership interest in the time share resort. Time-share Use is not an ownership in real estate.

Leaseholds
Leasehold interest is the right to use the land for a specific number of years, typically 55 to 75. The person who owns the leasehold must turn the land back to the actual land owner at the end of the lease. The leaseholder owns the improvements on the land, but not the land itself.

Ownership in a cooperative or multi-family unit is often acquired by lease hold interest. Leasehold interests are conveyed by an apartment lease. The apartment lease has many names: Apartment Lease, Apartment Lease and Ground Lease, Condominium Conveyance Document, Apartment Deed and Ground Lease, or Dwelling Lease.

Fee Simple
Real property held in fee simple is the most common form of ownership and what a person typically thinks what it means to own real estate. The person owns all the land, and all of the building. In the past, transfers in ownership had words "fee simple". Fee simple meant the new owner's use of the land and buildings had no restrictions what so ever. Today transfers are granted subject to restrictions of an integrated society such as zoning restrictions and access by utilities, by local governments, and holders of mineral rights below the surface.

Typical ownerships in fee simple are single family homes and condominiums. Single family homes are what you expect, land and home owned together by one owner. Condominiums are multiple homes owned by multiple owners with a "common area" owned and shared by all. Common areas are; walk ways, parking lots, pools, BBQ areas, laundry facilities and recreational areas.

Today, grants in fee simple are conveyed with either a warranty deed or a quitclaim deed. A person transferring ownership with a warranty deed at a minimum guarantees he or she is the actual owner and he or she is conveying clean title. Warranty deeds are accompanied with title insurance. Warranty deeds are used in bona fide sales.

Quitclaim deeds are transfer of ownership with no guarantees. The grantor basically conveys whatever ownership he or she may have. Quit claims are essentially the owner walking away from the property. The new owner takes the property "as is." Transfers from one spouse to another are often quit claimed.
Time shares are often conveyed with a quitclaim deed. There is limited marketability for time shares so no real opportunity to sell. To avoid paying annual maintenance fees an owner gives away the property.

Ohana Dwelling
A final type of property is the Ohana Dwelling or Grandma's Cottage. This is separate building on the property of the main home. It is usually much smaller and self contained. It can be rented out or occupied by a relative, such as grandma.