Hawaii Commercial Lease Interest Rate And Usury

Most Hawaii commercial leases have a provision in which the landlord will charge the tenant interest “at the maximum rate permitted by law” if a monetary default occurs such as when the tenant is required to pay the landlord interest on all sums past due. This provision must be revised by a prospective tenant prior to signing a commercial lease because in Hawaii there is no interest rate cap in a commercial setting.

In Hawaii, for any consumer transaction (except a credit card agreement) and home business loan, Hawaii’s “Interest and Usury” statute has set certain interest rate restrictions. These transactions are generally restricted in written contracts to one percent (1%) per month or twelve percent (12%) a year.

A financial institution (other than a trust company or a credit union), may charge up to two percent (2%) per month or twenty-four percent (24%) per year for such transactions.

However, Hawaii commercial transactions are exempt from Hawaii’s Interest and Usury law. Hawaii Revised Statutes Section 478-4 provides:

“With respect to any transaction other than a consumer credit transaction, a home business loan, or a credit card agreement, it shall be lawful to stipulate by written contract for any rate of interest not otherwise prohibited by law.”

Thus, if you are planning to sign a Hawaii commercial lease you need to be aware of all provisions that require you to pay interest to the landlord which do not have a fixed percent, as well as other issues that are unreasonable when entering into a Hawaii commercial lease.

Contact us today for a consultation so we can help you through this complex process.