H.B. 844 - Real Property Leases

• Applies to commercial and industrial leases where the lessor owns 50,000 or more square feet of such property in Hawaii and the lease has 20+ years remaining

• Requires lessors to not unreasonably withhold approval when lessees seek to assign, transfer, or encumber leasehold property

• Limits improvement requirements for leases with less than 30 years remaining to reasonable maintenance and repairs needed to comply with federal, state, and county health, safety, and code requirements

• Provides that when leases require reversion of improvements upon termination, improvements must be returned subject only to reasonable wear and tear from normal use

• Allows lessors who sell leasehold interest and all improvements to lessees to exclude the realized gain from state income taxes in the year of sale

• Requires rent increases to consider the financial feasibility of the increase relative to the current use of the property

• Takes effect July 1, 2011