The question this site poses for every leasehold owner in Hawaii

Hawaii has a meaningful stock of leasehold condominiums — projects built on land held under a master lease from the State, a trust or a private lessor. Banyan Drive is what the end of one looks like when nobody planned for it.

The questions a leasehold owner faces, and most cannot answer:

When does the master lease expire, and what happens to the units then? The declaration and the master lease answer this together, and the answer is frequently that the improvements revert.

Who is responsible for demolition or surrender condition? Master leases commonly require the lessee to surrender the premises in a specified state. If the lessee is the association or a lessee entity that has ceased to function, the obligation does not disappear — it becomes an unfunded liability that eventually lands on somebody, and at Banyan Drive it landed on the taxpayer after years of a fenced-off building.

Does the reserve study contemplate the lease term? Section 514B-148(h) defines a cash flow plan as “a minimum thirty-year projection” of income and expense to fully fund replacement reserves. For a building with fewer than thirty years of lease left, a thirty-year reserve projection is projecting past the end of the project. The new administrative rules, HAR ch. 16-119.6, carry the same thirty-year floor.

That mismatch is not addressed anywhere in Hawaii law that we can find, and it is worth a board raising with its reserve preparer directly.

How a Hawaii condominium actually ends

Not through a purpose-built termination statute — Hawaii does not have one of the kind many states carry. The provision is HRS § 514B-47, “Removal from provisions of this chapter,” and it offers two doors:

• Consent. Owners of eighty per cent of the units and all lienholders may remove the property from condominium status by recorded instrument. Every mortgagee holds a veto.
• Substantial damage. Where “substantial damage or destruction has not been rebuilt, repaired, or restored within a reasonable time,” a unit owner or lienor may petition for partition and court-ordered sale.

Section 514B-47(c) and (d) add leasehold-specific provisions for eminent domain takings and dedications, permitting a lessor and developer to amend the declaration without unit owner consent where land acquired does not exceed five per cent of the total land of the regime. And § 514B-47(e): removal “shall in no way bar the subsequent resubmission of the property to the requirements of this chapter.”

Neither door is designed for a building that simply becomes worthless while its lease runs out.

The redevelopment layer

Banyan Drive sits in a community development district established to oversee redevelopment under the Hawaii Community Development Authority. That is the state’s current answer to a failed leasehold site: create a district and plan around it.

It is worth reading alongside Act 121 (2026), which restructured HCDA’s 99-year leasehold condominium programme — owner-occupancy requirements, a sixty-day eligible-buyer window, a sixty per cent income restriction and a rental prohibition to be set by agency rule. Hawaii is simultaneously winding down one leasehold generation and designing the next.

What a board on leased land should do

• Get the master lease and read the surrender clause. Not the summary in the public report — the lease.
• Ask the reserve preparer to model the lease term, not a default thirty years.
• Know your § 514B-47 numbers — eighty per cent of units plus every lienholder — before a decision is urgent.
• Disclose the lease position on resale. A buyer who learns the term late is a dispute waiting.

What to watch

Whether the June 2027 inspection produces a rehabilitation proposal or a demolition, and whether the Legislature is asked for a purpose-built condominium termination and renewal statute — a gap several Hawaii commentators have now named directly.