Buying an established business does it come with Chanote?

[Guest]

Greetings,

 

We are in the Pattaya area and the wife found out the little tiny bitty restaurant she liked to dine, is actually for sale.

 

The current owner is asking for 99.000 baht to "pass it" to her, however there is still an associated monthly rent of 5.000 baht, along with a 3 months deposit (15.000 baht) and 60.000 baht what they call "key money".

 

I'm a complete neophyte and the owner talking Thai only doesn't make it easy on us, but my questions are more or less "generic":

 

- Do businesses for sale/buy actually come with a Chanote like a residential property?

- How does one actually acquire the associated Chanote to any businesses in Thailand (the intent is to not have to pay the monthly rent anymore nor what they call "key money")?

 

And I know this one will be fairly complex to answer, but for a typical 30 meters square store in an established "open air" market type area, is the 30 meters square land subdividable and subsequently "buyable"?

 

Thanks for your answers.

 

Edited May 11, 2019 by Guest

[BestB]

You are not buying the building, you are only buying the business, Leasehold not Freehold

 

The only thing you get is a rental agreement into your name.

 

Often, not always keymoney would make rent cheaper, but owner gets a lump sum upfront,but charges cheaper rent per month

 

Also keymoney is tax free.

 

Sometimes key money is charged for giving you the opportunity to run business on owners land/premises, this is common in highly sought out location.

[TommyTucker]

Greetings,
 
We are in the Pattaya area and the wife found out the little tiny bitty restaurant she liked to dine, is actually for sale.
 
The current owner is asking for 99.000 baht to "pass it" to her, however there is still an associated monthly rent of 5.000 baht, along with a 3 months deposit (15.000 baht) and 60.000 baht what they call "key money".
 
I'm a complete neophyte and the owner talking Thai only doesn't make it easy on us, but my questions are more or less "generic":
 
- Do businesses for sale/buy actually come with a Chanote like a residential property?
- How does one actually acquire the associated Chanote to any businesses in Thailand (the intent is to not have to pay the monthly rent anymore nor what they call "key money")?
 
And I know this one will be fairly complex to answer, but for a typical 30 meters square store in an established "open air" market type area, is the 30 meters square land subdividable and subsequently "buyable"?
 
Thanks for your answers.
 

So, just looking at what you have written seems to equate to the following:
Sale of restaurant is at 99,000.00 baht
Rental deposit of 3 x months at 15,000 baht
Key Money at 60,000 baht

So, a total of 174,000 baht ($ 5,800) for something you do not own and have no control over.

Have you inspected the proper audited financial accounts for the last 12 x months?

Have you spoken to the staff? and suppliers?

Have you been to see how busy the restaurant is in the morning, in the afternoon and in the evening??

Do you have staff who can run the restaurant?





Enjoy life, whilst you can!

[Guest]

39 minutes ago, BestB said:

You are not buying the building, you are only buying the business, Leasehold not Freehold

 

The only thing you get is a rental agreement into your name.

Thank you for your reply, I got that part that we weren't buying the building or land plot per se.

 

The question though is as there are different types of land deeds in Thailand, (Sor Kor Nung, Nor Sor Song, Nor Sor Saam, Nor Sor Saam (Gor), Nor Sor Saam (Kor) and then the true "Chanote" Nor Sor Si Jor), do you get any types of these land deeds upon signing a contract for a business at all?

 

I'll get into more details, my concern is the following scenario:

 

Mr. scammer Bob posts an ad on the internet or advertises he has a business for sale, he sells you the business with a mere contract, you pay the 60.000 key money upfront, plus 3 months of rent upfront 5000x3 and the month that starts as you move in, 60.000+15.000+5000=that's 80.000, you sign the contract, he gets paid in cash and he vanishes, 3 days later the REAL owner of the business (aka the one who actually owns the land plot) shows up and asks you "Who the <deleted> are you and what are you doing on my property/in my shop?", then you're expelled out without any delay. In the meantime the scammer Mr. Bob disappeared with the cash, what is your legal recourse of action?

 

I know this exemple scenario might seem a little bit extreme here but I've seen it all happen where I come from, so the question stands, does signing a contract for a business that is for sale actually entitles you to any temporary "Chanote" alike document legalized at the land office at all?

 

And alternatively, do small businesses in Thailand have their own real Chanote declared at their respective land offices? How does it work? Is it different than housing?

 

Thanks.

Edited May 11, 2019 by Guest

[BestB]

1 minute ago, TommyTucker said:

So, just looking at what you have written seems to equate to the following:
Sale of restaurant is at 99,000.00 baht
Rental deposit of 3 x months at 15,000 baht
Key Money at 60,000 baht

So, a total of 174,000 baht ($ 5,800) for something you do not own and have no control over.

Have you inspected the proper audited financial accounts for the last 12 x months?

Have you spoken to the staff? and suppliers?

Have you been to see how busy the restaurant is in the morning, in the afternoon and in the evening??

Do you have staff who can run the restaurant?





Enjoy life, whilst you can!

555555555555, its a good thing you not asking for much from a 99000 baht business

 

How exactly owning a restaurant and renting the premises in Thailand any different to any other country in the world? Most small business operators do not own premises but only have a lease and own business.

 

Going by your expert knowledge all of these people in fact own nothing and have no control?

[BestB]

1 minute ago, tcp7 said:

Thank you for your reply, I got that part that we weren't buying the building or land plot per se.

 

The question though is as there are different types of land deeds in Thailand, (Sor Kor Nung, Nor Sor Song, Nor Sor Saam, Nor Sor Saam (Gor), Nor Sor Saam (Kor) and then the true "Chanote" Nor Sor Si Jor), do you get any types of these land deeds upon signing a contract for a business at all?

 

I'll get into more details, my concern is the following scenario:

 

Mr. scammer Bob posts an ad on the internet or advertises he has a business for sale, he sells you the business with a mere contract, you pay the 60.000 key money upfront, plus 3 months of rent upfront 5000x3 and the month that starts as you move in, 60.000+15.000+5000=that's 80.000, you sign the contract, he gets paid in cash and he vanishes, 3 days later the REAL owner of the business (aka the one who actually owns the land plot) shows up and asks you "Who the <deleted> are you and what are you doing on my property/in my shop?", then Mr. Bob disappears with the cash, what is your legal recourse of action?

 

I know this exemple scenario might seem a little bit extreme here but I've seen it all happen where I come from, so the question stands, does signing a contract for a business that is for sale actually entitles you to any temporary "Chanote" alike document legalized at the land office at all?

 

And alternatively, do small businesses in Thailand have their own real Chanote declared at their respective land offices? How does it work? Is it different than housing?

 

Thanks.

The lease agreement would have to be signed in your name directly with the owner. or existing one transferred into your name directly with the owner, owner should have already provided copies of ownership of land/building with the current lease agreement,

 

You may also request to have lease registered with the land office, most owners do not want to do that as it means they have to pay tax, but you can opt to pay tax on owners behalf. While extra cost to you, it is also extra security and peace of mind.

 

On 3000-5000 baht rental per month, you would paying about 200-250 baht extra in tax.

[Guest]

2 minutes ago, BestB said:

How exactly owning a restaurant and renting the premises in Thailand any different to any other country in the world? Most small business operators do not own premises but only have a lease and own business.

This is Thailand, our Western logics do not apply.

 

As per: https://www.samuiforsale.com/knowledge/thailand-land-title-deeds.html

 

Nor Sor Song (2)

The N.S.2 is a consent letter issued by the land department to the holder. This document entitles the holder to occupy and use the land for a temporary period of time. The holder has to commence occupation and using the N.S. 2 land within 6 months and has to complete the utilization of the land within 3 years from the receipt of N.S.2. This land may not be sold or transferred except by inheritance. Depending on the land’s location, this document may be upgraded to Nor.Sor. 3, Nor.Sor. 3 Gor or Nor. Sor. 4 Jor (Chanote), however, after the upgrade the prohibition for sale or transfer is still effective and in full force.

 

Question still stands: When acquiring a business are we allowed/supposed/able/given/granted the chance to have a legalized document at the land office at all? ie: A Nor Sor Song? Or it actually never happens at all?

[Guest]

1 minute ago, BestB said:

You may also request to have lease registered with the land office, most owners do not want to do that as it means they have to pay tax, but you can opt to pay tax on owners behalf. While extra cost to you, it is also extra security and peace of mind.

 

On 3000-5000 baht rental per month, you would paying about 200-250 baht extra in tax.

This is EXACTLY the answer I was looking for, sorry if I sounded pedantic or annoying.

 

So while this is not a "real" chanote, I can go to the land office with the REAL plot owner and have it registered that we are occupying this plot of land for business purposes for the X amount of specified time and we get this document legalized in case of any future mishaps.

 

Thank you so much for your answer.

 

Onto the next question then: I assume tiny plots of lands that are used to "host" businesses (not housing, not condominiums) can have their own separate chanotes and can be sold/bought as well? If so, is there a minimal land size to get a chanote? Like can a 3 meters square be sold to a third party accompanied by it's title deed?

[BestB]

3 minutes ago, tcp7 said:

This is Thailand, our Western logics do not apply.

 

As per: https://www.samuiforsale.com/knowledge/thailand-land-title-deeds.html

 

Nor Sor Song (2)

The N.S.2 is a consent letter issued by the land department to the holder. This document entitles the holder to occupy and use the land for a temporary period of time. The holder has to commence occupation and using the N.S. 2 land within 6 months and has to complete the utilization of the land within 3 years from the receipt of N.S.2. This land may not be sold or transferred except by inheritance. Depending on the land’s location, this document may be upgraded to Nor.Sor. 3, Nor.Sor. 3 Gor or Nor. Sor. 4 Jor (Chanote), however, after the upgrade the prohibition for sale or transfer is still effective and in full force.

 

Question still stands: When acquiring a business are we allowed/supposed/able/given/granted the chance to have a legalized document at the land office at all? ie: A Nor Sor Song? Or it actually never happens at all?

Most businesses do a rolling lease 3x3x3 and its pre signed.

 

What you read on websites and how things really work are 2 very different matters and things.

 

Again, owners rarely want to have lease agreements registered with the land office because of having to pay tax.

 

Any lease agreement which is done properly by the lawyer would have owners tabian baan, id card and ownership papers attached.

 

Proper lease agreement will also have clause to terminate, evictions, in case of land/building sale and whatever else.

 

If owner agrees to have lease registered, then yes everything gets recorded at the land office.

[BestB]

3 minutes ago, tcp7 said:

This is EXACTLY the answer I was looking for, sorry if I sounded pedantic or annoying.

 

So while this is not a "real" chanote, I can go to the land office with the REAL plot owner and have it registered that we are occupying this plot of land for business purposes for the X amount of specified time and we get this document legalized in case of any future mishaps.

 

Thank you so much for your answer.

 

Onto the next question then: I assume tiny plots of lands that are used to "host" businesses (not housing, not condominiums) can have their own separate chanotes and can be sold/bought as well? If so, is there a minimal land size to get a chanote? Like can a 3 meters square be sold to a third party accompanied by it's title deed?

The top bit i already answered the bottom bit , to my knowledge, no, The only thing you have is your rental agreement. May work differently if you rent land to build a house on it, but with buying a business, all you have is rental agreement and nothing else.

 

Rental agreement is enough to get food and alcohol license or to apply for WP.

[Guest]

3 minutes ago, BestB said:

If owner agrees to have lease registered, then yes everything gets recorded at the land office.

Upon registration at the land office, as the lesser do I get any official documents from the land office at all?

 

[BestB]

11 minutes ago, tcp7 said:

Upon registration at the land office, as the lesser do I get any official documents from the land office at all?

 

It’s been a decade since I did my

last one and from memory nothing but 1000 baht worth of stamped stamps on your lease agreement ????

[Guest]

11 minutes ago, BestB said:

It’s been a decade since I did my

last one and from memory nothing but 1000 baht worth of stamped stamps on your lease agreement ????

Ah well, a couple of stamps from the Land Office is better than a kick in the nuts I guess! ????

 

Regardless, I think we'll keep looking for a business for sale that isn't "taking the plunge" and see if optionally we can also acquire the land+building it is sitting on.

 

I wonder if these days, there's anything to be had in Pattaya for about 1M or less. ????

[blackcab]

1. It is highly unlikely the land owner will register a lease on the title deed unless it is for 20-30 year period.

 

2. When you agree the lease you should have a copy of the title deed; a copy of the house book for the leased property; a copy of the land owners ID card and a copy of the land owners house book. All copies should be signed by the land owner.

 

The land owner would have a signed copy of the lessee's ID card and house book.

[KittenKong]

9 minutes ago, tcp7 said:

I wonder if these days, there's anything to be had in Pattaya for about 1M or less.

There are some freehold condos at that price.

 

Over the decades here I have seen hundreds if not thousands of businesses start up in rented premises, trade for a while and then go bust. But I have rarely seen the owners of those properties go bust. There may be a moral in that somewhere.

[scorecard]

1 hour ago, BestB said:

555555555555, its a good thing you not asking for much from a 99000 baht business

 

How exactly owning a restaurant and renting the premises in Thailand any different to any other country in the world? Most small business operators do not own premises but only have a lease and own business.

 

Going by your expert knowledge all of these people in fact own nothing and have no control?

 

Seems to me the OP is misunderstanding what a chanut is.

 

- A chanut is the official document to show who owns the land and it can also mean ownership of the land and the buildings on that land.

 

- A chanut is absolutely not a document of ownership of a business and a chanut is not a document to show who is the registered owner of the business. 

 

- There should be another totally separate document to show registration of the business and showing the name of the person who is the registered owner of the business. That's absolutely not meaning ownership of the land and or the buildings. 

 

-Seems that the current owner has quoted a rental amount, that seems to mean the owner is not selling the land, therefore the chanut stays as it is, indicating the name of the current owner who it seems is prepared to rent the land to someone else to run the business currently established on that land. So the documents the OP would receive is proof of buying the business entity and a rental agreement to rent the land. Chanut is not in the picture.

 

 

 

 

Edited May 11, 2019 by scorecard

[BestB]

5 minutes ago, KittenKong said:

There are some freehold condos at that price.

 

Over the decades here I have seen hundreds if not thousands of businesses start up in rented premises, trade for a while and then go bust. But I have rarely seen the owners of those properties go bust. There may be a moral in that somewhere.

You do not see owners of the properties go bust because they would not advertise it. If owner of the property unable to make payments, bank repossess the property and puts it up for sale, you could not possibly see or know if that happens. Naturally this would be the case with owners who mortgaged it, but i find most commercial properties are owned by rather wealthy people who either bought it for peanuts decades ago or paid top prices, and commercial properties in good location cost little more than condo ????

[KittenKong]

Just now, BestB said:

.... i find most commercial properties are owned by rather wealthy people who either bought it for peanuts decades ago ....

Hence my comment.

 

The real money here is in renting out business properties that have been family owned for a long time, not in running businesses in rented properties.

[BestB]

4 minutes ago, KittenKong said:

Hence my comment.

 

The real money here is in renting out business properties that have been family owned for a long time, not in running businesses in rented properties.

Naturally, but not too many people, especially foreigners have 20 million in cash to buy building and business plus another 20 million in reserves until business kicks off.

 

Renting premises to run business is pretty standard practice worldwide, i know a few foreigners who started off with renting, business did well and 10 years later bought the building.

 

Everyone starts somewhere, unless born into wealth ????

[ThomasThBKK]

13 minutes ago, BestB said:

Naturally, but not too many people, especially foreigners have 20 million in cash to buy building and business plus another 20 million in reserves until business kicks off.

 

Renting premises to run business is pretty standard practice worldwide, i know a few foreigners who started off with renting, business did well and 10 years later bought the building.

 

Everyone starts somewhere, unless born into wealth ????

 

But there's also often the other side of that story.

 

1) Foreigner and/or Thais start a business.

2) Business runs good, if it doesnt it goes bankrupt and start at 1)

3) Landlord tries to terminate the rental agreement with all means

4) Landlord take over the business himself.

5) Profit for Landlord

 

Happens verrrryy often here. No matter if thai business or farrang.

 

Wouldn't start an expensive location based business on a short term rental agreement.

Edited May 11, 2019 by ThomasThBKK

[BestB]

3 minutes ago, ThomasThBKK said:

 

But there's also often the other side of that story.

 

1) Foreigner and/or Thais start a business.

2) Business runs good, if it doesnt it goes bankrupt and start at 1)

3) Landlord tries to terminate the rental agreement with all means

4) Landlord take over the business himself.

5) Profit for Landlord

 

Happens verrrryy often here. No matter if thai business or farrang.

 

Wouldn't start an expensive location based business on a short term rental agreement.

You are right, have heard of this myth a few times, have not met anyone or heard of anyone having it done but have heard the myth. 

 

To protect yourself as we already mentioned a few times, this is why lease gets registered with the land office so the worst case scenario is you would not be able to renew your lease once its expires, in which case you have to relocate your biz.

 

One of my leases, has a claw, if landlord sells the premises and i have to relocate, i must be paid my initial investment plus 1 year profit, all figures are clearly stated and noted with the land office.

 

Landlord does have property on the market but has added the costs to the asking price.

 

If it was to sell, i would be happy to relocate once i am paid out ????

[KittenKong]

4 minutes ago, BestB said:

You are right, have heard of this myth a few times, have not met anyone or heard of anyone having it done but have heard the myth. 

Really? I know many businesses that have been forced to close by the landlord increasing the rent after the first three years, or copycat businesses opening up next door. And I'm sure it has happened to many more that I dont know of.

[ThomasThBKK]

4 minutes ago, BestB said:

You are right, have heard of this myth a few times, have not met anyone or heard of anyone having it done but have heard the myth. 

 

To protect yourself as we already mentioned a few times, this is why lease gets registered with the land office so the worst case scenario is you would not be able to renew your lease once its expires, in which case you have to relocate your biz.

 

One of my leases, has a claw, if landlord sells the premises and i have to relocate, i must be paid my initial investment plus 1 year profit, all figures are clearly stated and noted with the land office.

 

Landlord does have property on the market but has added the costs to the asking price.

 

If it was to sell, i would be happy to relocate once i am paid out ????

 

I know of 2 hotels where they tried that, one of them a very fancy design hotel.

 

Just saying - if someone here makes a bigger investment better lawyer up especially if you don't have any experience here already. And as you said, get the lease registered at landoffice, everything over 3 years has to anyway.

 

Wasn't to be addressed at you tho

[Guest]

1 hour ago, blackcab said:

2. When you agree the lease you should have a copy of the title deed; a copy of the house book for the leased property

How can there be a house book of a property when said property is not a residential house to begin with but rather a business front with no living space up top?

[Guest]

1 hour ago, scorecard said:

Seems to me the OP is misunderstanding what a chanut is.

 

- A chanut is the official document to show who owns the land and it can also mean ownership of the land and the buildings on that land.

 

- A chanut is absolutely not a document of ownership of a business and a chanut is not a document to show who is the registered owner of the business. 

 

- There should be another totally separate document to show registration of the business and showing the name of the person who is the registered owner of the business. That's absolutely not meaning ownership of the land and or the buildings. 

 

-Seems that the current owner has quoted a rental amount, that seems to mean the owner is not selling the land, therefore the chanut stays as it is, indicating the name of the current owner who it seems is prepared to rent the land to someone else to run the business currently established on that land. So the documents the OP would receive is proof of buying the business entity and a rental agreement to rent the land. Chanut is not in the picture.

 

 

 

 

Excepted there are at least 4 or 5 different types of "chanote" that can be issued at the land office.

[blackcab]

Buildings used for commercial purposes can have house books. It depends on how they were initially registered at the district office.

[Guest]

45 minutes ago, BestB said:

Naturally, but not too many people, especially foreigners have 20 million in cash to buy building and business plus another 20 million in reserves until business kicks off.

 

Renting premises to run business is pretty standard practice worldwide, i know a few foreigners who started off with renting, business did well and 10 years later bought the building.

 

Everyone starts somewhere, unless born into wealth ????

Love that post and the tone used. Thank you for that.

[Guest]

33 minutes ago, ThomasThBKK said:

 

But there's also often the other side of that story.

 

1) Foreigner and/or Thais start a business.

2) Business runs good, if it doesnt it goes bankrupt and start at 1)

3) Landlord tries to terminate the rental agreement with all means

4) Landlord take over the business himself.

5) Profit for Landlord

 

Happens verrrryy often here. No matter if thai business or farrang.

 

Wouldn't start an expensive location based business on a short term rental agreement.

Hence why it should be harder for the landlord to terminate or dismiss prior agreements if we have more legalized documents stamped and whatnot supporting our side of the story. This is the whole reason why I started this thread to begin with. Thanks!

[scorecard]

3 minutes ago, tcp7 said:

Excepted there are at least 4 or 5 different types of "chanote" that can be issued at the land office.

 Well that's not the point, a chanut is a document showing ownership. That's it. Everything I wrote earlier still remains the same. 

[Guest]

28 minutes ago, BestB said:

You are right, have heard of this myth a few times, have not met anyone or heard of anyone having it done but have heard the myth. 

 

To protect yourself as we already mentioned a few times, this is why lease gets registered with the land office so the worst case scenario is you would not be able to renew your lease once its expires, in which case you have to relocate your biz.

 

One of my leases, has a claw, if landlord sells the premises and i have to relocate, i must be paid my initial investment plus 1 year profit, all figures are clearly stated and noted with the land office.

 

Landlord does have property on the market but has added the costs to the asking price.

 

If it was to sell, i would be happy to relocate once i am paid out ????

Looks like you've covered yourself and done things the right way, hence why I would like to have legalized documentations at the land office to protect our upcoming business.