I know nothing about condominiums in Hawaii, though I know a bit about New York condominiums, and I believe the applicable principles of condominium law are probably similar. However, I understand that a great deal of the real property in Hawaii is held under long-term ground leases, a pattern unusual in the rest of the U.S. (though existing in England and some parts of Pennsylvania stemming from the original grant of land to William Penn).
In New York, the owner of land (known as the “base lot”) can file in the real estate records office a document known as a declaration of condominium, and certain related documents (collectively, the “declaration”). A condominium sponsor must also register the condominium with the Attorney General’s office and meet certain other requirements before offering units for sale to the public.
The declaration will divide the base lot and any buildings thereon (or to be constructed thereon) into a number of units, and provide a detailed description of what a unit consists of. For instance, one declaration I have handy states:
The declaration will also describe certain features of the property and buildings as “common elements” and assign each unit a percentage representing its ownership interest in the Common Elements. The declaration will also provide for what happens in certain circumstances, including if the unit owners wish to revoke the declaration, and if the bulilding is destroyed by casualty (fire, flood, etc.) or condemned.
Once the declaration is accepted, the base lot will be legally considered to be split into several parcels of real estate, in a similar manner to the way the owner of a large parcel of land can subdivide it into building lots. The fact that a parcel is a cube of space a dozen floors in the air, rather than a plot of land, is really of no legal significance. A condominium unit may be sold, mortgaged and otherwise conveyed in the same manner as regular real estate, subject to certain restrictions contained in the declaration.
Now I’m guessing that base lot of your parents condominium is owned by a foundation and leased under a long-term ground lease, something that I believe would be prohibited in New York. Again, I know nothing about Hawaii law, but I suspect that there are legal provisions that protect “owners” of property subject to such long-term ground leases. If the foundation holding the ground lease were to transfer its interest to another, the ground lease payment would go to the new ground lessor, but the new ground lessor would have no rights greater than those held by the existing ground lessor.
If your parents’ building is trying to get the ownership from leasehold to fee simple, what I think it is trying to do is to buy the ownership interest of the foundation that owns the base lot. If they succeed, I believe the foundation will no longer have any interest in any part of the property.
I hope this helps.