§171-73  Term, rent, and other conditions of
residential leases.  Residential leases made by the board of land and
natural resources may be for an initial term of fifty-five years with the
privilege of extension to meet Federal Housing Administration requirements,
provided the aggregate of the initial terms and extension shall in no event
exceed seventy-five years.  It may contain such terms and conditions as the
board may in its discretion determine, except that the following shall in any
event be complied with in each residential lease:



(1)  Rent and taxes.  The annual rent shall be not
less than an amount representing a fair return on the value of the premises at
the inception of the rental period under the lease, which value shall be
determined by appraisers.  The lessee shall pay all real property taxes,
assessments for the lessee's pro rata share of the costs of the improvements of
the tract in which the land is located, and such other charges made against or
levied upon the lessee's premises.  "Value of premises" as used in
this section means the fair market value of the raw land, including in such
value the pro rata share of the cost of improvements only if the lessee has not
already been assessed or has not already paid the lessee's pro rata share thereof
or if the State has not assumed the costs.



(2)  Construction of residence.  Each residential
lease shall contain requirements that the lessee construct a residence upon the
premises, pursuant to plans and specifications approved by the board and using
a licensed contractor, within such time and having such minimum value or ground
floor area as may be determined by the board in its discretion.



(3)  Use.  Upon the completion of improvements upon
the premises, the lessee shall use and occupy the premises as the lessee's
residence and shall not rent or use for any business purposes the whole or any
part of the premises, except with the written consent of the board.



(4)  Alienation.  Each residential lease shall contain
conditions prohibiting the lessee from subletting or parting with the
possession of the whole or any part of the premises and from selling,
assigning, transferring, or otherwise disposing of or encumbering, except by
way of mortgage as hereinafter permitted, any interest in the lease or any improvements
erected on the premises, except with the written consent of the board.



(5)  Right of purchase.  Each residential lease shall
also state that no right or privilege of purchasing the fee title to the land
demised shall be created by the lease, except as provided in section 171-79,
notwithstanding any other provision of the law to the contrary.



(6)  Construction and mortgages.  Each residential
lease shall provide that the lessee may mortgage the lease and improvements
only for the purpose of financing the construction of a residence upon the
premises or, after the requirement of construction of a residence upon the
premises has been fulfilled, for the purpose of financing the purchase of the
lease and improvements.  The mortgages shall be made only to recognized lending
institutions and may provide for foreclosure and for sale at the foreclosure to
any purchaser, without regard to whether the purchaser at the sale is qualified
or disqualified to take a residential lease under this part.  The mortgagee's
interest in any such mortgage shall be freely assignable.



(7)  Mortgage qualification.  The foregoing provisions
to the contrary notwithstanding, the board is authorized from time to time,
upon the issuance of any such lease to adopt or modify or eliminate any
provision contained in sections 171-70 to 171-83, to the extent necessary to
qualify the lease for mortgage lending or guaranty purposes with the Federal
Housing Administration, Federal National Mortgage Association, and Veterans
Administration, and their respective successors and assigns. [L 1962, c 32, pt
of §2; Supp, §103A-69; HRS §171-73; gen ch 1985]