Buying a building / shop - govt land. 30 yr lease on offer

[davidst01]

The wife and I looked at a row of shops thats under construction and we called the developer to ask questions. He didnt mention anything about the fact that its actually all government owned land and that 30 yr lease is being offered. New owners are required to pay a nominal thb1000 to thb2000  monthly fee to the govt as part of this deal. We approached the bank that this guy recommended and she is the one that told us about the fact that its govt land. 

 

Has anyone heard about this sort of arrangement? If I divide the purchase price by 30 yrs and then divide by 12 months in a yr then the monthly amount is 44k baht. In effect we are paying 44k over a 30 yr period for something we will never really own. The clinic that we will open will make huge money and thus the 16million outlay is 'doable' I suppose. 

 

We need to speak to an attorney about this but if you have any opinions can you please discuss here. At the end of the 30yr lease is it in the original contract the terms of renewal?

 

Also, if we are dealing with the bank he recommends is this unwise? How does it work legally if we do proceed and get bank approval? Does our attorney do all the due diligence in conjunction with the bank? Theres a long row of shops .... are there separate chanotes / papers for each shop?

 

Under this arrangement are we going to be subjected to the original owner telling us what to do? 

 

I personally would prefer to be owning the building outright but the city where we are looking at is quite old and we haven't found anything comparable. 

 

What are your thoughts on any of this?

many thanks

Edited December 27, 2017 by davidst01

[KhunMhee]

" We need to speak to an attorney about this but if you have any opinions can you please discuss here. At the end of the 30yr lease is it in the original contract the terms of renewal? "

 

That's your best bet. As I have seen you need to check back grounds on everyone involved. That's SOP for all places Thailand and other. If I am looking to invest that much I would also find another Attorney and check with out mentioning that you already are doing this. I believe in double checking most things used in an investment situation. Take the time to find written laws on it and read up for your own knowledge. From my previous businesses I have never had to pay such fee but that does not mean that it is not newly introduced.

 

Either way I wish you luck in the business endeavour. 

[Halfaboy]

You are quoting 'New owners are required to pay a nominal $1000 to $2000  monthly fee to the govt as part of this deal'.

 

Is the $-sign correct ?

[davidst01]

6 minutes ago, Halfaboy said:

You are quoting 'New owners are required to pay a nominal $1000 to $2000  monthly fee to the govt as part of this deal'.

 

Is the $-sign correct ?

thanks. I changed it to thb. 

[khunPer]

6 hours ago, davidst01 said:

...are there separate chanotes / papers for each shop?

If build on leased land, i.e. you said 30-years, then there is no title deed, but a lease agreement. You own the building for as long time as the lease period is running. Your best option is to have an experienced lawyer to check everything for you, and explain your legal options.

[ukrules]

21 minutes ago, khunPer said:

If build on leased land, i.e. you said 30-years, then there is no title deed, but a lease agreement. You own the building for as long time as the lease period is running. Your best option is to have an experienced lawyer to check everything for you, and explain your legal options.

Don't you need the lease (presuming usufruct filed with government here) to be issued by the actual land owner, in this case the government ?

 

 

[Coconut Kidd]

7 hours ago, ukrules said:

Don't you need the lease (presuming usufruct filed with government here) to be issued by the actual land owner, in this case the government ?

 

 

My thoughts as well.

 

The developer should have told you up front who owned the land. That's a big red flag in my opinion. PROCEED WITH CAUTION.

[khunPer]

25 minutes ago, ukrules said:

Don't you need the lease (presuming usufruct filed with government here) to be issued by the actual land owner, in this case the government ?

No, Usufruct is different from Lease, and Usufruct can run for life, i.e. longer than 30-years. However, the building constructor, or owner of the project, need stated in the lease agreement that the leased land can be used for constructing a building, which is also needed for building permission at Tessa Ban. There might be more terms in a Lease agreement, and that's why a lawyer's assistance is advisable.

 

A Superficies agreement, however, gives permission for construction and ownership of that, and that can be combined with a Lease contract...

Quote

Right of Superficies in Thailand

A right of superficies is a real property right (attached to the land or part of the land area covered by title deed) and legally separates ownership over anything above the ground (building) from ownership of the land. A superficies must be registered and can only be created over titled land administrated by the Land Department.

 

Laws governing superficies can be found in the Civil and Commercial Code sections 1410 to 1416 (see further down this page).

 

Superficies and land lease

The right of superficies can be registered as a separate right or in combination with a land lease. Normally superficies is used by someone (e.g. a foreigner) who acquires a lease interest in titled land and uses the land for the construction of a building. A registered right of superficies is a strong supporting right to a lease agreement, e.g. you could loose your lease (termination upon death) but your superficies remains in full force and can be transferred to your heirs

Source: SamuiForSale 

Edited December 27, 2017 by khunPer

[xtrnuno41]

SO you are going to own the building (you can) by purchasing. The building will be yours, but never the land anyway, as Thai government will not sell (maybe later ? would be nice to put that in contract if they want to sell, you are the first to be contacted for buying! ).

And even then you ( as alien ) cant own land (or your wife is Thai and you start usfruct then), otherwise then starting Thai company with all the demands for that, then your company can own land. I dont know if that is possible instantly. As you are going to do business, you already should know about Thai company way. 

As you (alien) will start the business you probably need to do that in Thai company way, i assume. Or your wife is Thai and you will put all in her name?  

After 30 years you can extend for another 30 years and after that another 30 years (totally 90 years), but if that will be on same agreements ? It can be put in contract (the INTENTION for another 30 year lease), however has (extension for another 30 years) NO legal right ! It is not recognized in front of Thai court and law, so if government doesnt want too, you are doomed to sell after 30 years.

A 1000-2000 bath/month is peanuts ofcourse, considering your business income. Maybe also deductible from company tax, aswell as your building ? 

The contract should be handled with a lawyer, or even maybe you can have an legalized English contract to confirm with lawyer otherwise then Thai, but has to be expert in Thai ways.

Ofcourse you can buy an old building with land and all (in Thai company or wifes name), break it down and built new or renovate the building in your way. This is another story ofcourse. 

It is weird the developer didnt mention the land was to be leased.  He "forgot"? Shouldnt if he is professionnel.

Dont see everything in pink glasses, but be wide awake. 

[timendres]

Renting would be smarter.

[zaZa9]

13 hours ago, xtrnuno41 said:

......

After 30 years you can extend for another 30 years and after that another 30 years (totally 90 years), but if that will be on same agreements ? It can be put in contract (the INTENTION for another 30 year lease), however has (extension for another 30 years) NO legal right ! It is not recognized in front of Thai court and law, so if government doesnt want too, you are doomed to sell after 30 years,building in your way. ...

Correct ... in fact i read the government statement on written 30+30+30 contracts here on TV earlier this year..

And the person signing the presented  ( 90 year ) agreement , the leaser , is the one punished ! How unjust is that ??

But the op seems  aware of all that , he doesnt mention any other option than the 30 year term.

My Q would be , how old is the Op? Will he be in his 70's or so when the 30 years run out - and have to move/start again ? And what is this buildings resale/release prospects going to be like should he wish to sell in the interim?

[davidst01]

4 hours ago, zaZa9 said:

Correct ... in fact i read the government statement on written 30+30+30 contracts here on TV earlier this year..

And the person signing the presented  ( 90 year ) agreement , the leaser , is the one punished ! How unjust is that ??

But the op seems  aware of all that , he doesnt mention any other option than the 30 year term.

My Q would be , how old is the Op? Will he be in his 70's or so when the 30 years run out - and have to move/start again ? And what is this buildings resale/release prospects going to be like should he wish to sell in the interim?

why was the lessor being punished? do you know what happened. do you have the link for that thread?

[zaZa9]

Well , the search engine on TV couldnt find anything ..and I mean Anything , so maybe some BM will recall where.

So I googled ...

I was aware that the proceeding +30 years  is not automatic. The Lessor needs to go with the Landlord and register it with the Land Office. IIRC , it was the Land Office or some similiar instrument that was pointing out that any Lessor who signed an  agreement that tried to circumvent this that would be punished.... this was in one post ...

 There is a misconception that a non-Thai can have a 99 year lease upon Thai Real Estate. Strictly speaking, this is untrue. Under the laws of Thailand, a lease is only valid for 3 years at a maximum if it is unrecorded at the local Thai land office and for only 30 if recorded. It is possible to put renewal clause in the lease, but it is not “automatic,” but instead the lease must be re-recorded at the local land office in Thailand. It goes without saying that this is much different than an automatic renewal. Should the Thai landowner and non-Thai leaseholder have some sort of falling out, then it could be very difficult to force the Thai landlord to record the new lease. For this reason (albeit a worst case scenario) it is wise to think of a lease as exactly that: a lease upon Thai Real Estate for 30 years and possibly renewable for another 30 years. " 

http://www.integrity-legal.com/real-estate-thailand/faq.html

 

And this -

The term of a registered lease agreement cannot exceed 30 years (section 540 ) and is automatically extinguished at the end of the registered term (section 564). A short term contract does not have to be registered but must be in writing to be enforceable by legal action.

https://www.samuiforsale.com/lease-law/

 

 

[zaZa9]

So it appears to me there cant be a watertight 30+30+30 deal.

 

Since the Thai government appears incapable of so many things , I can only assume that the threat of litigation upon lessors who signed some sort of 30+30+30 agreement  ( a document I assume would have had to be made by the land owners lawyers !) then I think it was exactly that - a threat.

This thread is at least this current year - but I did see an article on proposed 99 yr leases. Just a proposal so far.

 

[davidst01]

4 hours ago, zaZa9 said:

Well , the search engine on TV couldnt find anything ..and I mean Anything , so maybe some BM will recall where.

So I googled ...

I was aware that the proceeding +30 years  is not automatic. The Lessor needs to go with the Landlord and register it with the Land Office. IIRC , it was the Land Office or some similiar instrument that was pointing out that any Lessor who signed an  agreement that tried to circumvent this that would be punished.... this was in one post ...

 There is a misconception that a non-Thai can have a 99 year lease upon Thai Real Estate. Strictly speaking, this is untrue. Under the laws of Thailand, a lease is only valid for 3 years at a maximum if it is unrecorded at the local Thai land office and for only 30 if recorded. It is possible to put renewal clause in the lease, but it is not “automatic,” but instead the lease must be re-recorded at the local land office in Thailand. It goes without saying that this is much different than an automatic renewal. Should the Thai landowner and non-Thai leaseholder have some sort of falling out, then it could be very difficult to force the Thai landlord to record the new lease. For this reason (albeit a worst case scenario) it is wise to think of a lease as exactly that: a lease upon Thai Real Estate for 30 years and possibly renewable for another 30 years. " 

http://www.integrity-legal.com/real-estate-thailand/faq.html

 

And this -

The term of a registered lease agreement cannot exceed 30 years (section 540 ) and is automatically extinguished at the end of the registered term (section 564). A short term contract does not have to be registered but must be in writing to be enforceable by legal action.

https://www.samuiforsale.com/lease-law/

 

 

Thanks for your efforts in finding that info. It looks like its vital to have a competent and reliable attorney who will ensure that the 30yr lease gets registered. 

[zaZa9]

Yes. And a lawyer  who doesnt immediately call the developer once you've left his office and ask for some sort of backhander to 'steer' you to what the developer wants you to do.

I can say a lot on your plans , much of which may be irrelevant  .... and I'd like to qualify my comments that I am very happy here ( Phuket  9 years ) and wish to be positive.

But in the end , Farang arent supposed to own anything other than  a condo By Law here. ( Ok , at a 40 million investment yes , a rai and a mansion by special dispensation ).

So any other idea puts you out on a limb... thousands of us have tried to find away around it ...