DHHL administrative rules may affect transfers of vacant land
The Department of Hawaiian Homelands (DHHL) administrative rules §10-3-36 do not allow lessees to sell their lease interests for consideration if improvements are not in place.
- "For consideration" means a lessee cannot sell for money or other consideration, for example a vehicle. A lessee can transfer the lease interest to another qualified DHHL applicant for no consideration (free).
- "Vertical improvement" for residential leases means a house. In the case of agricultural lands, crops, barns or other structures in use qualify as improvements.
Considerations for lessees
- If currently leasing a DHHL property and the home is in poor condition, don't tear it down if you're planning to sell. To avoid future issues with transferring for consideration (selling) a lease interest, it can be worthwhile to spend time and money to keep the house in livable condition. A transferee is supposed to immediately occupy the residence after the transfer.
- Agricultural leases (farm land) must be "substantially improved" to be sold for consideration. What is an improvement? Active cultivation of the land qualifies per DHHL rules.
DHHL §10-3-36 Transfer of homestead leases
A lessee, with the written approval of the commission, may transfer the leasehold to any individual who is a native Hawaiian and is at least eighteen years old. The transferee shall immediately occupy the residence lot or use or cultivate the agricultural, pastoral, or kuleana lot. Failure to occupy or use the lot within sixty days from date of transfer shall constitute grounds for cancellation of the lease. A transferee may own an interest in non-Hawaiian home lands real property, regardless of degree of ownership. [Eff 7/30/81; am 2/3/83; am 9/24/83; am and comp 10/26/98] (Auth: HHC Act §222) (Imp: HHC Act §208).
The DHHL's lease transfer process for vacant and undeveloped lots
- The DHHL lease transfer form (blue form) must be filled out by the lessee and the transferee. The forms must be obtained from the DHHL offices, they aren't available for download. Photocopies will not be accepted. The original blue form must be used and completed in black ink.
- Transferees (aka buyers) must be "on the list". To be a transferee you must have your genealogy proven and approved by the DHHL. If that hasn't been done yet, hold up on the transfer and get it done. DHHL will not approve a transfer until you're on their list.
- The lessee and transferee must complete the "Statement regarding transfer of vacant or undeveloped lots" acknowledging they understand they cannot transfer the property for money (kala) or other consideration (car, boat, etc). Furthermore, the lessee and transferee understand that misrepresentation may result in cancellation of the lease AND civil and criminal penalties. A link at the bottom of this page includes the download for the "statement regarding transfer of vacant or undeveloped lots" form.
- DHHL violations (unpaid water bills, property taxes, lease rent etc.) must be paid off in order to transfer the property. Generally it's best for the lessee to clear the violations prior to submitting the blue transfer form. If a lessee is unable to payoff the violations, the DHHL might (not guaranteed) allow the violations to be paid off at closing, if the lessee and transferee are conducting the transaction through an escrow company.
Do your homework before initiating a property transfer. This applies not only to DHHL but all transfers of real property.
Mike Bates (Realtor Associate)
CENTURY 21 iProperties Hawaii
1585 Kapiolani Blvd #1533
Honolulu, HI 96814