Below is an email from the President of Kuilima East stating Kuilima East closed the land purchase from the Turtle Bay Resort.  Kuilima East condos are no longer leasehold, they are fee simple.

Dear Owner,

I am happy to report that we were able to record the main purchase from Turtle Bay Resorts to KEE today along with 32 individual owners and the Bank of Hawaii loan for $7.6 million. We immediately paid down the loan by $1,482,000 with the 32 recordings.

On Monday, we will record 11 more owners totaling $522,000. Recordings of 8 to 11 owners will occur every day next week.

After today, we are only allowed to file 25 documents with the Bureau every day. Every cash owner filing has at least 2 documents as the first is the Limited Warranty Deed and the second (for those owners paying cash or have a loan) is a release from the Bank of Hawaii loan. If your purchase also involved an Assignment of Lease or a Petition to change name or record a death or marriage, then that adds one more document. So this process will take about 10 or more days as we have 138 owners buying at present.

Those owners who closed today probably will not get their deed for a month or 2. KEW recorded their purchase on May 11 and my computer still shows all of their units as leasehold.

If you have sent in your signed documents and the proper amount of money, your deed will be filed shortly. If you haven’t returned all of the signed documents or have not paid in sufficient funds by July 1, you will be charged the small amount of 4% per year, or about $5 a day depending on the size of your unit, until you send in the funds and documents.

However, all owners who have signed contracts by June 15 and want to close now have been removed from the leasehold payment list. Please let me know if the leasehold charge shows up on your bill for July. For the others we will pro-rate the lease rent at escrow when you close.

Again thank for your co-operation during this process.

All the best.

Bill

Currently the Kuilima Estate Owner Association and the Turtle Bay Resort are in negotiation for the Resort to sell the land where the Kuilima condos are located to the association.  In general, leasehold ownership, unlike fee simple ownership, does not include the land when purchasing real estate.  For a further explanation see:  Leasehold vs. fee simple.

Should the deal go through, the Kuilima Owner Association will become the owner of the land.  In that case, as a buyer of a Kuilima Estate Condo, you will have the option to purchase the condo a fee simple.  This will require the purchase of ‘the fee’.  The association, as the new owner, retains title to all the land until the individual owners pay the association for their portion of the cost of the land.

Generally this is a very good thing because unless the land is sold to the association, the real estate slowly becomes less valuable as the grounds lease matures.  Therefore, yes you should want to purchase the fee from the association.  In either case, you will be buying the property fee simple if you don’t purchase the fee at the same time you close on the property but the association with hold a lien on the property until you buy it from them.  If possible, you should purchase the fee when purchasing the property as the interest costs you could obtain from a bank are most likely lower than what the association would charge your.

The Kuilima Estates Owner Association has signed a letter of intent to purchase the lease to the grounds the Kuilimas Estates are located on.  Below is the letter to owners from the Kuilima East Owner Association President.

Dear Kuilima East Owner:

The Kuilima Estates East Board met on Dec. 11 and approved the Letter of Intent (LOI) to purchase the fee simple interest in our property. Both the KEE Board and Turtle Bay Resort have now signed the LOI.

The next step is a purchase and sale agreement that will be prepared by our attorney and Turtle Bay Resorts. I expect that document to be completed by mid January. I also hope to have a final commitment from the bank that will finance our purchase of the fee simple interest. The price of $7,841,000 is the price that I previously sent to you.

We are hoping to close the sale and the loan by the end of March 2011. In January, you will be sent a purchase agreement which you will need to sign and return confirming that you will purchase the fee.

For those of you who plan to finance the purchase of your fee, it is critical that you talk to your bank as soon as possible about obtaining a loan. If you are an owner occupant, many of the local Hawaii banks offer loan programs at around 4.5% interest. If you are a Hawaii resident, but not an owner occupant, you should still talk to your local bank about financing but the rate may be higher. Banks are taking at least 60 days to close loans so give yourself plenty of time. If you live on the mainland, you might consider a home equity loan secured by your own property as the best way to obtain low interest rates.

The Kuilima East Home Owners Association (HOA) will have some limited funds for Agreement of Sale purchases of the fee, on a first-come, first-served basis. Under such an arrangement, the HOA would be financing your purchase, and would retain title to the fee until you pay the purchase price in full. Currently we are looking at 6% interest with 20% down and 7% interest with 10% down. Closing costs would be additional and the loans would be for 2 years using a principal and interest amortization of 25 years. You will have to prepare a financial statement to give to the board to obtain this financing. The Board will provide more information later.

We plan to give everyone a reasonable amount of time to close their purchase. As the units close, the bank loan will be paid down. However, the HOA will still accrue interest on the loan. If you don’t close by May 1 or decide not to purchase the fee by that time, the price of the fee will go up 20% plus carrying costs. It may go up again August 1.

The Board negotiated this purchase because we feel it is in our best interests to own the fee.  For example, without owning the fee, we might have a difficult time refinancing our condo or selling it. If a condo is sold without the fee, the buyer might be able to purchase the fee interest but at a higher price. This higher price may affect the selling price of the condo.

As of today, 153 owners have responded to either the original survey or follow up calls. 60 have said they will pay cash, 68 feel that they will need some type of financing, 21 are unsure between cash and financing and 4 have said no to purchasing. 14 owners have not responded.

If you have questions, please contact me and I will do my best to answer them.

Sincerely,

Bill Schoen
President, Kuilima Estate East

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