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

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

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

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

(4)  Alienation.  Each residential lease shall containconditions prohibiting the lessee from subletting or parting with thepossession of the whole or any part of the premises and from selling,assigning, transferring, or otherwise disposing of or encumbering, except byway of mortgage as hereinafter permitted, any interest in the lease or any improvementserected on the premises, except with the written consent of the board.

(5)  Right of purchase.  Each residential lease shallalso state that no right or privilege of purchasing the fee title to the landdemised 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 residentiallease shall provide that the lessee may mortgage the lease and improvementsonly for the purpose of financing the construction of a residence upon thepremises or, after the requirement of construction of a residence upon thepremises has been fulfilled, for the purpose of financing the purchase of thelease and improvements.  The mortgages shall be made only to recognized lendinginstitutions and may provide for foreclosure and for sale at the foreclosure toany purchaser, without regard to whether the purchaser at the sale is qualifiedor disqualified to take a residential lease under this part.  The mortgagee'sinterest in any such mortgage shall be freely assignable.

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