How To Register A 4 Year Office Rental Contract?

[kaphi]

How do you go about registering a rental contract for an office (4 years) ?

Does the landlord need to agree? What are the disadvantages for him?

The rental contract has to be registered to meet BOI requirements (to be regarded as investment).

Now we are a little worried that the landlord declines his agreement (for whatever reasons).

[quiksilva]

Yes the landlord needs to agree, the disadvantages for him is that typically office leases are split into 2-3 agreements (typically Lease, Service and maybe a Furniture Hire agreement).

They do this to minimise their exposure to Household and Land Tax 12.5% of the rental in the Lease Agreement whereas only 7%VAT is payable on the other agreements.

If it is a prime office building in the CBD they are quite unlikely to agree. But if they do the lease agreement will have to be drafted in Thai and registered at the land office, various information such as company registration, stamps, ID's of authorised signatories etc will be needed at that time which your lawyer can advise you of.

Its a fairly straightforward process, if you can get the landlord to agree.

I run a commercial agency practice here so if you need specific advice, with no obligations, feel free to PM me.

Edited April 23, 2007 by quiksilva

[kaphi]

Thanks for the helpful reply, quiksilva!

I've sent a PM with a few additional details.

[Moonfruit]

great topic.

How about if your landlord is actually sub-leasing the property to you.

How do things look then?

[quiksilva]

Firstly, your lease term can only last as long as their head lease and typically the head lessor will have to grant prior written approval to your sub-lessor to grant this right. (This is can be unlikely in Thailand if the head-lessor realises that the sub-lessor will be making a profit rent).

In case it does go through though, your sub-lease will have to be very carefully worded. Your security of tenure will be dependant upon not only your ability to honour the terms of the agreement but your sub-lessor's ability to honour the terms of their head lease.

Having a copy of the head lease attached to your agreement would be reasonable in that case, whether they are willing to show you this or not is another story, no matter how reasonable it is, they are unlikely to let you know what they have to pay in rent.

So people rarely can come to an agreement on this, so it happens very rarely, and anyway at the end of the day this option should be avoided if at all possible. It's far better to be the master of your own destiny by having a lease direct with the landlord or own outright.

Edit: its registerable (is that even a word?) though.

Edited April 25, 2007 by quiksilva