Hawaii Commercial Lease Agreement

Implied Covenant of Good Faith and Fair Dealing

In contract law, the implied covenant of good faith and fair dealing assumes both parties will deal in good faith and follow the agreement as intended. It applies to any contract’s performance, even if not mentioned in the agreement.

Statutory Notice Periods

These are the most common statutory notice periods in Hawaii lease agreements, which you can use while drafting your commercial lease:

• Notice of termination – No specified timeframe, although it’s recommended to give notice of intent. Most states provide a standard timeframe of 30-90 days. 
• Failure to pay rent – 5 business days
• General repair schedule – 12 days 
• Failure to disclose authorized persons – 10 days

For notices of rent increase, please note rent can only be increased after the current lease term ends.

Security Deposits

• There are no restrictions on how much landlords can require as a security deposit for commercial leases in Hawaii.
• In Hawaii, no laws regulate the return of security deposits for commercial leases.
• Security deposits may be comingled with other funds if the landlord specifies his right to do so, with the tenant’s consent.
• Landlords don’t have to pay interest on their tenants’ security deposits or hold them in interest-bearing accounts.

Disclosures

No regulations stipulate the disclosures that should be in a commercial lease agreement. However, many contracts follow the Hawaii Residential Landlord-Tenant Code, Chapter 521, Section 43, which requires landlords to disclose the following details:

• Landlord’s name, address, and contact information. If the landlord is absent, the agreement must include the details of the agent authorized to act on their behalf.
• Lead-based paint disclosure for properties older than 1978.
• Information about the property, including but not limited to area, exclusive rights, parking needs, and hours of operation.
• Any additional taxes to be paid by any of the parties.
• Improvements to be made by the tenant, if applicable.
• Local zoning ordinances if these restrict signage, for instance.
• Landlord’s rights to relocate the tenant.
• Additional services provided by the landlord, if applicable.

Termination and Renewal

Every Hawaii Commercial Lease Agreement must contain information regarding termination and renewal, such as:

• Renewal terms which typically need a notice of 60 days before the end of the agreement date.
• Rent increases following the contract’s renewal are applicable and valid and usually require a notice between 30 to 90 days or as stated in the agreement.
• For fixed-term contracts in Hawaii, which is the case for commercial leases, the termination date of the contract must be stated in the agreement. In this case, there is no requirement for a notice of termination.