Buying in Kona: Two Questions to Answer Before You Offer

Fee Simple vs. Leasehold: Confirm Which One You're Actually Buying

Not every property offered for sale in Hawaii conveys the land itself. In a leasehold purchase, the buyer owns the structure -- the house, the condo unit, the improvements -- but not the land underneath it; the land remains owned by a separate landowner under a long-term ground lease with its own remaining term, its own rent-renegotiation schedule, and its own expiration date. When that lease runs out, ownership of the improvements can revert to the landowner unless the lease is extended, renewed, or the underlying fee interest is purchased separately. Fee simple, by contrast, means the buyer owns the land and everything on it outright, indefinitely, with no underlying lease. This distinction runs deep in Hawaii's land-ownership history: roughly 55% of all Hawaiian land is estimated to be held by a relatively small number of major landowners -- often cited around 17 major entities -- the largest of which is the Kamehameha Schools/Bishop Estate, which holds thousands of acres on the Big Island specifically. Fee simple is the most common ownership form for property sold today across Hawaii, including in Kona, but leasehold interests genuinely still exist, particularly in some older condominium buildings and certain subdivisions with legacy land arrangements.

This page did not confirm a specific percentage of Kona's or Hawaii County's housing stock currently held under leasehold versus fee simple, and does not invent one -- that figure wasn't available from a source reliable enough to state as settled fact this research pass. What can be said with confidence: leasehold is a real, structurally different ownership form, not a rare historical footnote, and a buyer should never assume a specific Kona listing is fee simple by default just because most current sales are. Confirm the ownership type of any specific property in writing, in the listing documentation and again through the title search, before getting financially or emotionally attached to it.

If a Property Is Leasehold: What to Get in Writing Before You Offer

A leasehold listing isn't automatically a bad deal -- leasehold purchase prices typically run lower than a comparable fee-simple property precisely because the buyer is acquiring a depreciating, time-limited interest rather than permanent land ownership, and some buyers accept that tradeoff deliberately, particularly for a vacation property they don't intend to hold across generations. But it demands more careful due diligence than a standard fee-simple purchase. Before making an offer on any leasehold property in Kona, get clear, written answers to: how many years remain on the ground lease; whether and how lease rent resets or renegotiates during the remaining term; whether the landowner has any stated willingness to sell the fee interest, extend, or renew the lease, and on what terms; what happens to the improvements at lease expiration absent a renewal or fee purchase; and how mortgage lenders have actually treated financing in that specific building or on that specific lease term -- some lenders won't originate a conventional mortgage on a leasehold interest with too few years remaining, which can also constrain resale down the line.

None of that substitutes for having a Hawaii-licensed real estate attorney read the actual ground lease before signing a purchase contract. Hawaii's leasehold conveyancing and lease-rent-renegotiation mechanics are genuinely more complex than most mainland buyers' prior closing experience prepares them for, and this is exactly the kind of situation where a general-practice mainland attorney unfamiliar with Hawaii law can miss something a Hawaii specialist would catch immediately.

Hawaii County's Short-Term Rental Rules Are Actively Changing Right Now

If any part of a Kona purchase plan involves short-term or vacation-rental income, there's a second question that needs a direct, current answer, and it's genuinely in flux as of this research pass: is the specific property correctly zoned and registered for short-term vacation rental (STVR) use under Hawaii County's rules? The current regulatory foundation is Bill 108, adopted in 2018 as Ordinance 2018-114, which defined where STVRs are allowed, established operating standards, and created a Nonconforming Use Certificate (NUC) pathway allowing existing rentals located outside permitted zoning districts to continue operating. More recently, the county passed Ordinance 25-50 (Bill 47), creating a formal registration requirement for transient vacation rentals, with the compliance deadline extended to September 1, 2026. Earlier, in 2024, the County Council reviewed a further package (Bills 121, 122, and 123) aimed at registering all transient accommodations, defining standards of conduct, setting fees, and addressing neighborhood impacts -- that package drew strong community feedback and was sent onward for further review rather than being finalized as originally proposed. Also in 2024, the state legislature further empowered counties, including Hawaii County, to regulate the time, place, manner, and duration of transient accommodation use, and to amortize or phase out such uses in residential or agricultural zones over time -- a real, structural expansion of county authority over STVRs that could affect a specific property's long-term rental eligibility even if it's currently compliant.

The stakes here are concrete and Kona-specific: Kailua-Kona alone is estimated to account for roughly 40-43% of the island's total STVR inventory in different real-estate-industry estimates, making it the epicenter of this regulatory conversation, not a peripheral concern. And compliance is genuinely mixed -- county estimates cited in recent reporting suggest only around 3,500 of the island's roughly 8,008 STVR units were registered as of the most recent figures found, with the county estimating it is missing approximately $12 million in Transient Accommodations Tax and $1.6 million in General Excise Tax annually as a result of that gap. Do not treat a seller's or listing agent's assurance that a property 'can be rented short-term' as sufficient confirmation. Before offering on anything intended for short-term rental income, confirm the parcel's actual zoning status and registration eligibility directly against Hawaii County's Planning Department guidance and the current ordinance text, and ask for the property's specific permit or NUC history in writing if it relies on a grandfathered nonconforming use rather than by-right zoning.

Standard Purchase Mechanics: Title, Escrow, and the Usual Contingencies

Beyond the two Hawaii- and Kona-specific questions above, a Kona purchase otherwise follows the general mechanics common to Hawaii real estate transactions: an accepted purchase offer, a title search to confirm clear ownership and identify any recorded liens, easements, or encumbrances, use of an escrow arrangement to hold funds and documents while sale conditions are satisfied, and a closing where title transfers and the transaction records. As with any purchase, expect and negotiate for standard contingencies -- financing, inspection, and clear title among them -- appropriate to the specific property and circumstances. This page does not state specific Hawaii County closing timelines, typical escrow-period lengths, or closing-cost percentages, because none were confirmed strongly enough this research pass to print as settled fact; ask your own title company, escrow agent, and real estate attorney for current timelines and costs specific to your transaction.

Who You Want on Your Side

Given how much of the above turns on Hawaii- and Kona-specific detail rather than generic mainland real estate knowledge, retain a Hawaii-licensed real estate attorney for this transaction specifically -- one who can read an actual ground lease and confirm a parcel's STVR zoning and registration status against current Hawaii County ordinance text, not a general-practice attorney working outside their usual jurisdiction. Just as important, work with a Kona-based real estate agent genuinely familiar with the fee-simple-versus-leasehold distinction and with Hawaii County's actively evolving STVR rules, rather than an agent whose primary experience is on another island or on the mainland. Given how actively this regulatory area is changing -- new ordinances, extended registration deadlines, and further county authority to phase out STVR use in some zones -- a Kona specialist's current, on-the-ground knowledge is worth more here than it would be in a more regulatorily stable market.

Confirm Directly Before Finalizing a Purchase

Nothing on this page is legal, tax, or financial advice. Before finalizing any Kona purchase: confirm in writing whether the specific property is fee simple or leasehold, and if leasehold, have a Hawaii-licensed real estate attorney read the actual ground lease -- remaining term, rent-reset terms, and renewal or fee-purchase options -- before signing a contract; confirm the specific parcel's current STVR zoning and registration status directly against Hawaii County's Planning Department guidance and current ordinance text, including whether it relies on a grandfathered Nonconforming Use Certificate, before counting on short-term-rental income; and have your title company, escrow agent, and real estate attorney confirm current title, escrow, and closing procedures and costs specific to your transaction. This page discloses what it could not confirm -- exact closing timelines, closing-cost percentages, and any current leasehold-versus-fee-simple housing-stock percentage among them -- rather than filling those gaps with invented figures.