Can the Department of Hawaiian Homelands cancel my lease?

I missed some mortgage payments for my DHHL homestead and got a letter saying my lease might be canceled. Can DHHL cancel my lease? Is there anything I can do to prevent losing my homestead?

By Henderson Huihui, NHLC Staff Attorney

If you miss mortgage payments, the Department of Hawaiian Homelands (“DHHL”) can seek to cancel your lease. To save the lease, you will need to make those payments or work out a plan with your bank and DHHL to get the account into good standing. If you have experienced hardship preventing you from making the payments, contact your bank to explain and ask whether they can agree to a payment plan that meets your financial means at this time or for a forbearance allowing you more time to make payments. Financial counseling, as well as mortgage assistance programs, may be helpful as well.

While you make your best efforts to address the mortgage payments, you should also promptly attend to any notices from DHHL regarding the cancellation process, participate in the process, and obtain legal representation to help.

If DHHL seeks to cancel a lease, DHHL must follow a process laid out by the Hawaiian Homes Commission Act (“HHCA”) and DHHL’s administrative rules. Lessees must be provided with notice of the process, and they can participate in that process too. By participating, lessees can put forward all legal arguments they have for saving the lease, and during that time, lessees may be able to successfully resolve the issue, settle with DHHL, and avoid lease cancellation.

Before any formal proceedings have begun, DHHL should inform lessees that they believe the lease has been violated, the nature of the violation, and how to respond. This initial notice may have a deadline to fix the violation and avoid lease cancellation. If the violation is not fixed by the deadline, DHHL will ask the Hawaiian Homes Commission (“Commission”) to hold a contested case hearing (“CCH”) process to cancel the lease. If the Commission approves the request, a hearing will be scheduled, usually presided over by a hearing officer. The location will be on the lessee’s island, and it could be held remotely.

Importantly, DHHL must provide the lessee with a Notice of Hearing at least 15 days before the hearing date. Notice of the hearing must be sent to the lessee by certified mail. The notice must list the purpose, date, time, and place of the hearing. If proper notice is not timely provided, this is an important legal issue that lessees should consult with an attorney about.

When the hearing occurs, DHHL, then the lessee, can submit evidence to the hearing officer regarding the issues DHHL puts forward as reasons for lease cancellation. This process can be hours or require multiple days depending on the complexity of issues and the amount of evidence provided. Lessees can represent themselves, but obtaining legal representation is a good idea to best navigate the process, make the strongest legal arguments, and when possible, negotiate a successful settlement.

After the hearing, if a hearing officer was appointed, a recommended decision will be given to the Commission to review, and the Commission will hold a final hearing on whether to adopt the hearing officer’s recommended decision. When the Commission makes its final decision, they must provide it to the lessee in writing. The decision is usually sent by mail.

Lessees have 30 days after the Commission mails the decision (not when the lessee receives the decision) to appeal the decision. If you have grounds for an appeal and appeal in a timely manner, this can offer another chance for a favorable decision and more time to seek a successful settlement with DHHL. If you miss the appeal deadline, however, there might not be a legal pathway to continue objecting to the cancellation.

Ultimately, when a lease is at risk due to nonpayment of a mortgage, keeping the lease will require a financial solution. But rightly, there is a legal process before a lease can be canceled, and that process helps ensure that the lessee’s rights are respected. While working on your financial plan, participate in the legal process and get legal help to fight for your lease.

This article was originally published in the January 2, 2024, edition of Ka Wai Ola. NHLC partners with the Office of Hawaiian Affairs to publish an article in Ka Wai Ola each month that responds to community questions. You can access this article on the Ka Wai Ola website here.

Ask NHLC provides general information about the law. Ask NHLC is not legal advice. You can contact NHLC about your legal needs by calling NHLC’s offices at 808-521-2302.

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