thaiwanderer

If in case the Lessor of land (registered long term lease) dies during the time period of the lease is valid, goes bankrupt, looses his land through a court order or Revenue Department order or SELLS such land, you lost your extension rights as the option is only binding to the parties.

All other things being equal this was my understanding also.

However Isaanlawyers appears to disagree here: http://www.thaivisa.com/forum/Usufruct-Thailand-t275057.html

In that thread you will see my (rambling) musings arsing from that.

Perhaps you can give a (more focused) view on that?

Presumably he was given the number by you / your ex when you were together and you didn't advise no longer to use? If so obviously his fault.

The Lessor can eventually have you removed from it but why bother assisting her?

Maybe to help somebody else? But that concept sames strange to some people here.

It was a suggestion based on the OP's vague reference 'so to avoid being dead' but obviously we can't all be perfect like 'some people'.

Am aware of refusals to register lease for farang husband where thai wife is the landowner.

Where such a refusal occurs and appeal it would be interested as to what need to show.

If the farang has signed the declaration for the purchase of the freehold that has no claim is that not weakened by a lease then being attempted?

If not so weakened or if the Thai wife can show evidence that actually bought with her own separate money anyway is there not then the additional problem of evidencing actual payment from farang husband to the wife for the lease (not merely declaring an amount and paying the tax? and from abroad?)?

(Obviously all depends on refusal to register lease in first place which i understand is not widespread (?) in such circumstaces - but can raise the heart rate a bit for the farang when monies transferred aready for the purchase of the freehold which is registered then find out not getting a lease).

If the money was already transfered and husband finds out he can not get a lease other options are open for the husband as to register a land usage right, superficies or usufruct and/or other option, best to consult a lawyer or law firm.

Unfortunately that relies on the co-operation of the wife who is now the owner of unencumbered land and more importantly the co-operation of the land office that has already refused to register the lease.

At the very least, some grease for the wheels would be needed.

My question is; can I force him to sell and except market value through a Thai court?

IMHO yes you can. In practical terms your partnership is at an end already.

A Thai court will take time, cost money and you are then selling under a court order.

You need money now.

Offer him the lowest amount you can/want to take for your share now discounted rather than the hassle of court. Only you can decide what that figure is.

Turn his argument on him - if he is so sure what it will be worth in the near future then he will only be increasing his profits by buying you out - you are doing him a favour.

If not, Thai court is only real option unless you want to play really dirty.

(Not sure what an Austrailian court could do about it?)

good luck

PS: I'm not saying that it's valid or invalid. I just put a big question mark on that. But if you want a lease for 60 years, you register one for 30 years and make a letter of intention to renew it for another 30 years the next years, binding the heirs. This has retroactive value under the civil code and according to my knowledge, IT IS ENFORCABLE in Court.

How exactly do you suggest that such a letter of intention can bind the lessor's heirs?

response here:

http://www.thaivisa.com/forum/Usufruct-Thailand-t275057.html

For the lease, the letter of intention refers to section 168 of the Thai Civil Code.

Basically, it's legal to make a lease of 30 years, and legal to make a renewal. Right?

It's also legal for the parties to write down their intentions to renew the lease under the same conditions.

Under 168, the effect of this document is retroactive, so it will be enforcible if the heirs (for example) do not want to register the renewal. You can write down your intentions to renew it BEFORE the renewal.

Of course, you must put some clauses for inheritance in the lease. Clause to bind the heirs, etc.

Thank you for that. Of course the gap between law and reality can often be wide, similarly the gap between having a legal right to something and it being sensible to enforce it (house on land of ex-wife up country etc.).

When you have a moment I would welcome if at all possible your clarification on section 1412 as to whether it allows for a choice as to the term: specified time (maximum 30 years), life of the land owner or life of the superficiary.

Your comments on declaration of intention (section 168) are very interesting to my amateur mind. I have of course seen wordy clauses stating the Lessor shall ensure their will and any sale contracts for the land bind the heirs and transferees particularly in relation to renewals. However I note you refer to heirs but not other transferees of the freehold. Do you draw a distinction here as to who is bound and if so why? (maybe other transferees are at arms length and buy in good faith and heirs inherit what is the deceased's to give??)

In practical terms I never considered such clauses to carry much weight.

Maybe I was wrong (I am every day!)

Firstly (although I am not at all sure about this bit) even if the same lessor remains alive it is a declaration of intention for the future and circumstances can of course change. My understanding was that unless the rent for the renewal period has been paid already (and even then?) there is effectively no (substantial) loss giving rise to the court finding that the lease shall be renewed. In addition to rent in advance the lessee may also build a house or whatever on reliance of a longer lease so perhaps additional loss to factor in there. This may be too vague but I hope you get my meaning. Essentially if the same person is alive and remains the lessor, is the mere declaration of intention (of course clearly indicated by contract) to do something in the future sufficient to bind them (without anything else such as advance rent or whatever)?

On perhaps a more on topic point - heirs - is not a will a (last) declaration of intention and therefore regardless of previous declarations to a lessee unless the will specifies they are left the land on condition they renew are they bound (in my example above where there is no advance rent and it is merely a declaration of intention included in the contract with the lessee)?

Of course if you do draw a distiction between heirs (bound by the declaration) and other transferees (not bound by the declaration) the renewal would easily be defeated by lessor or their heirs transferring to another before the renewal was due (which was my perhaps confused understanding before today in relation to anyone other than the lessor being the land owner at renewal time).

(Would a declaration for perpetual renewals to a farang where the freehold remains in the family forever be void for offending 'good morals' and/or effectively giving the farang land?)

On a seperate point the clauses I have seen often refer to an option (for the lessee) to renew and are worded in such a way that the lessor shall (maybe 'declares an intention' (?) now to...)offer to renew shortly before the end of the current term and if the lessee accepts then they shall renew.

I wonder if a renewal 'promise' is in fact a declaration of intention (albeit current intention to do something in the future, as of course the act can't be done for another 30 years) which is binding now? Or is it a declaration of intention to make an offer (contract) for renewal in 30 years which the lessee can choose to accept then?

Section 169/2 states that the death of the person who made the declaration does not affect the validity of the declaration BUT section 360 (in the 'contracts' section) states that 169/2 does not apply if the offeror declares a contrary intention or if before the offeree accepts the offeror dies.

I hope my vague and amateur (and coffee driven) thoughts on the issue make sense but as I am sure you can tell I am a little confused as to the exact status of the 'promise' to renew - declaration thats immediately binding (if so why only binding on heirs?), current declaration to do something in the future which is not binding even on the lessor (unless rent paid in advance or whatever), or a current offer or declaration of intention to offer renewal in 30 years time that is not capable of acceptance until then?

Any comments to point me in the right direction on this would be gratefully received.

We could of course accept that anything after 30 years for farang is a coin toss but where would the fun be in that?????

Hi all, I saw a good topic on this a few years back, just cant find it now.

assuming I had over 40m bt to invest in thailand to take up the land ownership, without using a thai wife.

what areas of thailand would I have to invest my money?

donations, roads, schools or just have the money in a account.

I am a Thai citizen. I am from Korat, NorthEastern of Thailand (ESAN). I do the resort and real estate. Frankly, no foreigner can own property such as land deed, except only thai citizen can. But you can have a way out by long leasing of 30 years or even more. Anymore questions please feel free to call me 081-9996509 Mr.Pom

Bit of a superficial and incorrect assessment of land ownership laws given the subject of the thread and quite ironic you then tout leases of longer than 30 years.

Yes, await their post here and also on the 60 year lease thread where they appear to suggest a letter of intention binds heirs?

Be very careful on any power of attorney even where it is apparently 'restricted' - aware of one that was explained as being just for the registration of a lease - but what was not explained was that it allowed the holder to agree amendments to the lease at the land office to make it acceptable to them. He ended up with a lease he did not want as the amount he was willing to pay was for the lease as agreed between the parties. By then of course too late - money gone and lease regsitered. Legal advisor could not see the problem.

If there is an outstanding divorce would not necessarily suggest cancelling the lease before that?

why take the usufruct and not the 'Superficies' Agreement for life time and having the right to pass on to your hires and sell the rights ?

Hi SamILO, it seems that a "Superficies Agreement" will end if the owners of the land dies, so definetely not my choice, also it seems that with the right worded usufruct you can rent/sell too or at least that's what i understood till now, let me know if i am wrong, thank you

Wait on SamILO but iirc a superficies remains in force if the landowner dies or transfers the land to another.

However the landowner's co-operation is required to transfer the right of superficies.

Anyway, typically would you want a superficies without also having a lease or usufruct?

Fantsay legal:

How about Thai company route for owning the land, lease to offshore company, superficies to offshore company/individual farang and usufruct for offshore company/ individual farang (maybe chuck in a mortgage for good measure)? Or just comply with the (spirit of the )law

My sincere apologies what i should have said if i was not so fallible was:

'Wait on SamILO but iirc a superficies may remain in force if the landowner dies or transfers the land to another.' perhaps adding-........depending on the term that is specified (i.e. for 30 years or for the life of the superficiary).

Is that better?

Your suggestion / regurgitation that "superficies agreements die in Thailand with the life of the owner (section 1412)" is IMHO incorrect.

AFAIK section 1412 allows for superficies to be granted for a specified time (maximum 30 years), for the life of the land owner or the life of the superficiary.

Of course I may be talking out of my hat.

why take the usufruct and not the 'Superficies' Agreement for life time and having the right to pass on to your hires and sell the rights ?

Hi SamILO, it seems that a "Superficies Agreement" will end if the owners of the land dies, so definetely not my choice, also it seems that with the right worded usufruct you can rent/sell too or at least that's what i understood till now, let me know if i am wrong, thank you

Wait on SamILO but iirc a superficies remains in force if the landowner dies or transfers the land to another.

However the landowner's co-operation is required to transfer the right of superficies.

Anyway, typically would you want a superficies without also having a lease or usufruct?

Fantsay legal:

How about Thai company route for owning the land, lease to offshore company, superficies to offshore company/individual farang and usufruct for offshore company/ individual farang (maybe chuck in a mortgage for good measure)? Or just comply with the (spirit of the )law

Am aware of refusals to register lease for farang husband where thai wife is the landowner.

Where such a refusal occurs and appeal it would be interested as to what need to show.

If the farang has signed the declaration for the purchase of the freehold that has no claim is that not weakened by a lease then being attempted?

If not so weakened or if the Thai wife can show evidence that actually bought with her own separate money anyway is there not then the additional problem of evidencing actual payment from farang husband to the wife for the lease (not merely declaring an amount and paying the tax? and from abroad?)?

(Obviously all depends on refusal to register lease in first place which i understand is not widespread (?) in such circumstaces - but can raise the heart rate a bit for the farang when monies transferred aready for the purchase of the freehold which is registered then find out not getting a lease).

PS: I'm not saying that it's valid or invalid. I just put a big question mark on that. But if you want a lease for 60 years, you register one for 30 years and make a letter of intention to renew it for another 30 years the next years, binding the heirs. This has retroactive value under the civil code and according to my knowledge, IT IS ENFORCABLE in Court.

How exactly do you suggest that such a letter of intention can bind the lessor's heirs?

I bump this as I consider it important that a lawyer and sponsor of the forum who offers such an opinion should explain.

Thanks.

why would a second lease be automatically void if registered with the land department and recorded on the back of hte title deed, as such the agreement is binding to the hires of the Lessor!

Changes to law always can happen, but the advantage is that a lease registered would most likely b e grandfathered.

Grandfather what exactly? if its registered and rock solid as you think there's no need to grandfather anything?

Remember there is no liability for the (negligent or deliberate) error of a land office official and any subsequent revocation of such.

That this magical solution of registering a second lease in advance now appears to rely on using a different name shows its not the fully open solution some have suggested.

Whilst registration is the step missing from some other solutions to 'secure' beyond 30 years the fact of such a perverse interpretation of the law imho makes it far more unlikely to succeed in the long term than say the company route (if at all).

Depending on security / site staff (if any) being briefed, management may well refuse your painter access.

Good luck anyway.

The key problem for the OP is the acquisition of the land in the first place, you can only pass on what is yours. You can lease land for 30 years and own the building upon it. This you can leave to your children. Problems arise when you are hoping to circumvent and or stretch your legal rights of ownership in the first place.

Where there are Thai children you can have them as land owners etc. and then use any or a combinaton of lease, superficies and or usufruct. However whilst this may take care of the inheritance aspect it may equally weaken the farangs own security of tenure.

An appropriately constructed corporate structure with thai and offshore elements together with a lease can probably best take care of the farang and the children's inheritance if it is robust enough.

Or people could just get real and understand exactly what real estate they are being offered in the first place and make their decisions accordingly (a villa on land with a 30 year lease is not the same as with freehold ownership) and not dream that they can pass on what is not rightfully theirs in the first place (just because you want it to be yours doesn't mean it is).

PS: I'm not saying that it's valid or invalid. I just put a big question mark on that. But if you want a lease for 60 years, you register one for 30 years and make a letter of intention to renew it for another 30 years the next years, binding the heirs. This has retroactive value under the civil code and according to my knowledge, IT IS ENFORCABLE in Court.

How exactly do you suggest that such a letter of intention can bind the lessor's heirs?

If the OP has no intention of returning to Thailand (and other matters arising by my reading between the lines - may be wrong) - suggest OP needs to do nothing (and that includes even thinking about it). The Lessor can eventually have you removed from it but why bother assisting her?

On further reflection the advatage of a usufruct for life is its disadvatage also - the usufructuary's death becomes more valuable.

My previous comments apply and i am no defender of usufructs but usufructs are recognised by Thai law - sections 1417-1428 civil and commercial code - and are registerable with the land office in the same way as leases are (although as i said there are important differences).

Your uncritical reference to renewals and inheritance in relation to leases ignores the important distinction between lease and personal rights. If lease renewals were unproblematic the one advantage usufructs can have ('for life') would be negated.

It is entirely unremarkable to include provision for sub-letting in leases.

Nonetheless generally leases are typically more useful than usufructs to farangs, depending of course on their circumstances.

For the OP I would seriously consider pros / cons of usufruct and leases for your circumstances.

(EDIT - this was in response to maizefarmer)

As I said I have limited knowledge of usufructs but will give it a go:-

1) It seems that a usufruct can be registered for different lenght of times and i just want to be sure this is for "life"

- As i understand it can be registered for any length of time up to a maximum of 30 years or the life of the usufructuary (sic) ie. you (which may be longer than the 30 years). You would need to make your own arrangements as to 'certainty' as I said.

2) That make me a bit worry, i mean, if i will just get an "official copy" of the registered usufruct on the land deed and the land owner will retain the original documents, there is any chance that in the future the land owner can made changes or even cancel this agreement on his own and without my knowledge or comsent?

- Well thats always possible but the physical holding of the chanote isn't really the crucial part. The usufruct is registered at the land office not just on one bit of paper.

3) We can't just agree on a clause where the land owner aknowledge that any (possible)new person taking over all or part of the property will be liable for his own actions?

- You can of course agree any terms you want but whether they will protect and whether they would be acceptable to the land office? Appears to be going far beyond what a usufruct is and hence official xenophobic attitudes come (more) into play. Such an indemnity clause would appear to defeat the whole purpose of your continuing involvement and a prudent land owner (even in the family) would likely not agree - just as you want to 'be sure just in case' so well might they. TBH for a 'buyer' contracting with you for use of the remainder of the usufruct for your life is not the most attractive proposition by any stretch of the imagination. More likely want to have you break your usufruct and then buy/lease/ usufruct (sic) with the land owner direct.

4) Similar to the above, a clause on which we both agree on his "automatic" comsent will not be acceptable?

- Depends on the attitude of the land office official on that particular day (registering the usufruct) and on the subsequent day (registering the 'lease' on the usufruct right). The rights you have as a usufructuary are different from that as a freeholder and leaseholder. Again this may be seen as an unacceptable morphing of a usufruct beyond recognition.

5) I just see this as a "preventive" measure, just in case once the land change the way it looks like due to cospicuous investments or my personal situation changes anyhow, the land owner doesn't change his mind, i am quite confident that everything will be ok between us, however i feel the need of some sort of better "insurance", that's all.

-Understandable. All else being equal essentially the only attractive element of correctly structured and registered usufruct over a lease is the right of use for your life. However a lease has advantges missing from a usufruct also. Is regsitration of more than 30 years crucial?

I'll start the ball rolling just to see how far it goes.

" A foreigner CANNOT own land in Thailand".

End of story

What relevance does that have to usufruct - which even in my limited knowledge is not and nor is it intended to be land ownership?

For the OP, making sure its for (your) life rather than 30 years? Speak with the land office, have your wife / her family ensure it, engage a lawyer - not sure exactly what you mean by that?

The land title deed will need to be updated - it will show who owns the land and will record your usufruct but afaik there won't be a separate deed just for your usufruct (you may want to be on the yellow book also). The current one will be out of date and I imagine the land owner will still be entitled to the original though you can obtain an official copy (they remain the land owner).

Renting / selling to another - the presumption is that you can (though its subject to the usufruct and the rights you have under that) but you will likely want to detail this right and other matters in the usufruct itself (will your estate have to pay for the removal of the building once you die and lots of other matters). However you will remain liable to the land owner for the actions on the land of whoever you rent or sell the building to.

Despite legislative indicators to the contrary IIRC in reality a farang cannot register such a lease without the land owners consent and the lease will essentially also die with your death. If this is central to your plans (or anyway) hopefully others will be along with fuller / more certain advice, do a search as usufructs have been discussed here before and typically i would counsel engaging a professional in any event.

Given the usufruct is being given for free I am a little perplexed as to why you would want the ability to lease to another without the involvement of the landowner. Registering for free involves iirc a very nominal fee but given this and your involvement the land office may have suspiscions as to whether its actually for free and smell some legitimate taxes (especially if you are also seeking to ensure the landowner's future co-operation is not necessary).

You really think the original lessee (or anyone else) can pay anything less than such a full and overbloated price for the landowner to register another lease at the land office? The freehold owner would view that as losing money.

Sorry if I've interpreted your point incorrectly, but my examples are about this occuring well before anywhere near approaching the end of the 30 years, ie: tearing up the old lease and issuing a new one maybe 10-15 years into it's period.

I'm suggesting, using the investor buyer example, that a landowner of 25 leasehold plots would accept cash from an investor and sell the land just 10 years into the initial 30 years, rather than wait another 20 years for the full valued amount. They may be too old to use it then, and consider many of them are Thai wives of Farang 'developers'. If they were offered 1M Baht x 25 plots then they walk away with 25M Baht that day and live happy for those next 20 years.

Other example, where a landowner does not want to give up the land cheap and rather 'keep it in the family', they would only be issuing (selling) a new 30 year period 10 years into the 30 years, they are getting cash in early but retaining the land by adding 10 years to it's maturity period.

Burgernev.

Obviously it all depends on the owners circumstances and greed / need for cash in the present.

They would have to be pretty desperate to sell for 1m THB.

All being equal I personally see no reason to sell to an existing lessee for anything less than 100% of the full freehold 'farang' price (they have paid for a 30 year lease, now they want the freehold thats 2 totally different transactions and my prices have no memory- no reason for a discount at all). I would perhaps discount it a little as getting the money now, but no where near the amount the lessee might think they are entitled to. They want the land. Its mine and though its (loosely ) tied up for say another 20 years unless i am desperate for the money now its not attractive at all.

As to the other example - sure issue a new lease but again not at a heavy discount and not even at a straight percentage of say 10 extra years so 1/3 of the 30 year price - as its the likely the latter years of the lessees life that are the more worrying for them at this end (hence the desire to extend it and sleep sound).

Whilst i am no fan of timeshare or fractional it exposes less capital to risk than branded villa / apartment with leaseback purchasers and their lofty talk of 'guaranteed' yields but maybe because of misplaced snobbery that is deemed by many to be more wholesome. IMHO its more stupid.