Key money?

[sevinnow]

"Key Money" is a term I am unfamilier with in the UK but are aware that is is the norm in Asia/Usa ect.

I am looking to purchase a Guesthouse/bar in pattaya very soon and are aware of the lease agreemants and work visa's ect but can some one explain what the "key money" is?

Sev

:cool:

[keestha]

Key money is originally a Chinese business tradition. The lessee pays a relatively low rent, but in order to get the lease he has to pay an often large amount of money to the landlord which is called the key money. Many westerners purchasing bars and guesthouses were unhappily surprised when they discovered they not only had to buy the business from the existing owner, but that they also had to give key money to the landlord in order to get a rent contract for the business premises.

[sevinnow]

Thanks for that info.

Is there anyway that you could be misled about the "key money" when it is due on a lease?  ie the owner tells you it is due in another 2 years and you find out from the landlord it is due in another 2 months!

I assume a laywer would check this out?

Sev

:cool:

[keestha]

Normally if a guesthouse changes owner, the lease of the old owner will be terminated and the new owner will sign a new lease with his own name on it with the landlord , who will want the key money up front. No way you can buy a guesthouse, restaurant or bar without having spoken with the landlord.

[Sunbelt]

Some landlords ask for key money so they can get money without the Land Bureau knowing about it. This way they evade paying tax on that amt.

Many businesses we transfer don't have key money. Others however do require it especially in prime locations. Just depends on a case by case.

As for you not knowing about key money? How our firm does the business transfer, it would be impossible. The lease is in your name in 100% of the cases with asset purchase. The old lease is torn up.

Only in 25 million baht transactions or over have we ever done share transfers and nothing happens with the lease. It stays with the corporation that you are now becoming the owner of. Still you would know the key money that’s been paid.