Cant decide if we should renew tenants lease. What do you think?

[advancebooking]

We bought an old 3 level building  5 yrs ago and renovated it. Rented it out on a 3 + 3 yr contract for a restaurant. . We rented it to a thai couple who both seem to be high sot. He owns a small hotel and runs another restaurant. She runs 2 restaurants. After 1 yr they asked to re do the contract just in her name. We decided to allow this and they paid the attorney fee. 

 

Theres a clause in the contract thats a bit vague but states they have to pay all damage if any. I put in a clause that if any staff or customer dies at the building then they are liable not us. 

 

I was suspicious that he took his name off the contract and later thought maybe its because he has a lot of assets and maybe she doesnt. 

 

We noticed neither of the tenants are ever at the building. I drive past all the time as its close to where we live. Also at night I look in when driving past and never see them. All the staff live in the rooms at the building. 

 

Last year we were worried about the risks of a fire so installed a hard wired fire alarm system (smoke and heat sensors throughout). 

 

The first 3 yrs is coming up for renewal. I would rest easy at night knowing a normal thai family running any business that doesnt involve gas cooking would be better. I suppose Im worried about all the staff  and no supervision by the boss. 

 

Its a bit of a pain finding new tenants. Existing tenants pay the high rent on time. Building seems to be ok since I last checked 8 months ago. The workers seem ok when we go to the restaurant. They seem to be mature to be honest. 

 

Do you think I should just renew them? I was thinking of telling them I will renew on the basis of doing a new contract and he has to add his name back. And a clause stating any fire damage to neighbouring buildings will be liable for them as well not us. Its not in the contract at the moment and I think our building insurance policy will not cover this. 

 

 

thanks

Edited December 8, 2023 by advancebooking

[Morch]

I think other tenets would just make you worry about different things.

Maybe it's always like that when renting. Maybe some people always worry about something.

 

If there are no actual problems, the people pay on time, and those staying there are reasonable enough - no reason to change anything.

 

[sirineou]

First i dont understand what difference would it make if the guys name was on the list?

If from the beginning the wife had come on her own , would you have rented to her?

Second, what is a normal Thai family?

Third , what makes you think the business is not supervised  by the boss?

Who is the boss of the people that  work in that restaurant? the owner of the bossiness, or the manager that manages the restaurant? 

[richard_smith237]

37 minutes ago, advancebooking said:

I was thinking

 

Thats the start of it..      thinking too much.

 

You have good tenants, who've proven themselves to be good and reliable tenants.

You also seem to be a very considerate landlord.

 

Why mix things up at all ?

 

 

 

 

[advancebooking]

1 hour ago, sirineou said:

First i dont understand what difference would it make if the guys name was on the list?

If from the beginning the wife had come on her own , would you have rented to her?

Second, what is a normal Thai family?

Third , what makes you think the business is not supervised  by the boss?

Who is the boss of the people that  work in that restaurant? the owner of the bossiness, or the manager that manages the restaurant? 

They are not married. We know they spend most of their time in bangkok. 

 

If say for example, a big gas explosion happens and it spreads to neighbouring building/s then its better to have 2 people who can potentially pay the liability rather than one. Thats why I want him on the contract again. I know he has money. I dont know about her. She might be just renting her bkk restaurants just like she is renting my building. ie no real assets. 

[Etaoin Shrdlu]

You're on the right track attempting to make your tenant contractually liable for damages that may arise out of their activities and you are correct that your tenant may or may not have the means to make you whole for any liabilities that may attach to you due to their negligence.

 

A good solution might be for you to require your tenant to take out third party liability insurance that is suitable for the exposures generated by their activities at your premises with you named as an additional insured. In addition, you may want to look at getting your own third party liability insurance to address any exposures that can't be shifted to your tenant or which they can't (or won't) indemnify you. Third party liability insurance for these types of exposures is not expensive in Thailand.

 

Also make sure that the property insurance covering your building is valid for commercial use of the premises and that the insurer is aware that it is being rented out and used as a restaurant. 

 

Discuss these issues with your insurance broker and ask for advice on how to best address them.

 

 

 

 

 

[sirineou]

55 minutes ago, advancebooking said:

They are not married. We know they spend most of their time in bangkok.

 

I hear what you are saying

 The question in your mind should be, would you have rented to her on her own ? If the answer is no , then you should not renew the lease.

I would approach them both and say 

when I signed the lease , I did it because you would both be responsible, but now you remove yourself from the lease and I am nervous, for x. w. and z reasons . How can we rectify this concern so that we will both be happy?

Se if you can find a win win solution. 

   I am not sure what the market is in your area, but in my area I can see a lot of empty properties, Covid was not very kind to many business owners, so you also have to ask yourself, if you do not renew their lease , how easy it would be to rent the place, and how long it would take to get a new tenant ?

would you be jumping from the frying pan and into the fire. 

You know? the devil you know, 

If the loss in revenue would be 100k but you can reduce your liability for 50K in insurance.....

 

If that was me, Those are all things I would consider towards making a decision in the matter. 

 

[Elkski]

They are not married?  Maybe one of bis other women was the cause of him wanting his name off the lease.  Maybe if was because he knows there is risk.   He thought it was important enough to ask to change the lease and have his own lawyer set it up.  Did your lawyer read the lease?  He sounds like a pretty astute business man.   Bring your best poker game. 

[Tropicalevo]

If it aint't broke, don't fix it.

They pay on time and they appear to not have been a problem.

It sounds as if it is working.

The real tenants have probable just gone and opened another (successful?) restaurant.

Normal practice. Train staff. Watched them for a while and moved on to the next one.

New tenants could be a can of worms.

[Dan O]

Sounds like they removed his name for asset protection for him as step 1. They are probably sub-letting to the staff or others which you may allow or not depending on your lease structure. You should be requiring insurance in place covering the structure and all areas of your concerns and have a lawyer review it. If they pay good rent and on time that's half the battle the rest is just in case protection. 

[cracker1]

If the rent's being paid and the property is kept tidy without complaints from the neighbours, then I would renew it. I think you may have difficulty terminating the lease if all the above is OK, and the tenant wants to renew.

I would also look closely at the insurance policy and ensure it covers building replacement in case of destruction. I am assuming the tenant pays for this cover ?

With your next lease also require that the husband and wife both sign as Guarantor's of the lease, separately.

[rwill]

Just put in the new contract that they have to buy insurance.

 

I don't know how much it would cost for a business.  My house insurance costs about 5K/year.  So not that expensive.

[Ralf001]

19 hours ago, advancebooking said:

They are not married. We know they spend most of their time in bangkok. 

 

If say for example, a big gas explosion happens and it spreads to neighbouring building/s then its better to have 2 people who can potentially pay the liability rather than one. Thats why I want him on the contract again. I know he has money. I dont know about her. She might be just renting her bkk restaurants just like she is renting my building. ie no real assets. 

 

you do not have insurance ?

[SAFETY FIRST]

21 hours ago, advancebooking said:

We noticed neither of the tenants are ever at the building. I drive past all the time as its close to where we live. Also at night I look in when driving past and never see them. All the staff live in the rooms at the building. 

Are your tenants sub letting?

 

 

[timendres]

As I have been told many times by my attorneys, "get the proper insurance".

Insurance is the only solution for "what if...?"

Price some insurance that will cover your worst nightmares.

Then build the cost of that insurance into the rent.

[ChrisKC]

20 hours ago, advancebooking said:

They are not married. We know they spend most of their time in bangkok. 

 

If say for example, a big gas explosion happens and it spreads to neighbouring building/s then its better to have 2 people who can potentially pay the liability rather than one. Thats why I want him on the contract again. I know he has money. I dont know about her. She might be just renting her bkk restaurants just like she is renting my building. ie no real assets. 

Do you not have insurance for the building whoever might set the place on fire?

[Liverpool Lou]

19 hours ago, sirineou said:

approach them both and say 

when I signed the lease , I did it because you would both be responsible, but now you remove yourself from the lease and I am nervous

He didn't just "remove himself", all parties, including the OP, agreed to the change in the contract.

[ChrisKC]

We here on the forum do not have all the facts over that time period at hand.

 

If you have concerns or suspicions, then some tactful investigation would be in order to satisfy yourself that you are not "thinking too much" Don't try to fix something that isn't broken!

 

Someone who has carried out their part of the contract for three years, paying good rent on time and not smashing the place up; on the face of it seems a good tenant!

 

You DO need to be confident one way or the other that your decision is the best outcome for both Tenant and Landlord!

 

But, as you know, nothing is guaranteed.

 

 

[Liverpool Lou]

18 hours ago, Dan O said:

Sounds like they removed his name for asset protection for him as step 1.

How much of an asset is a building that he rents if creditors move on him?

[Liverpool Lou]

19 hours ago, sirineou said:

The question in your mind should be, would you have rented to her on her own ? If the answer is no , then you should not renew the lease.

He did rent to her solely as soon as he agreed to remove the "husband's" name from the lease and drew up the new contract in her name.

[khunPer]

22 hours ago, advancebooking said:

Last year we were worried about the risks of a fire so installed a hard wired fire alarm system (smoke and heat sensors throughout).

Make sure you have a proper fire-insurance on the building, it's actually relative cheap.

[sirineou]

46 minutes ago, Liverpool Lou said:

He did rent to her solely as soon as he agreed to remove the "husband's" name from the lease and drew up the new contract in her name.

Yea I get that , but he seems to have second thought about it. So the question is, what changed? perhaps at the time he did not think it through and later on when he had a chance to think more about it he thinks that perhaps he should not have done that because he does not think she can cover potential liability by herself.It is a reasonable concern  and  IMO he needs to sit down with then and talk it out.

 

This is are my concerns, this is what I think we can do, perhaps you have a better idea. I like to make this work for both of us. 

 

Perhaps a proposal  that i will renew the lease and maintain the current structure but you need to provide me with liability protection, perhaps in the form of additional insurance. The term of the insurance should be for the duration of the lease, failure to maintain such insurance will terminate the lease. Perhaps they can go half an half with such insurance do that the renters would not feel that they are unfairly treated. 

All things to think about. 

[brianthainess]

22 hours ago, advancebooking said:

They are not married. We know they spend most of their time in bangkok. 

Who's ever name is on the lease owns whatever they have put in the building themselves, my friend brought a washing machine for his live in GF, she kicked him out days later, he called the cops wanting his stuff back, the lease was in her name, she kept everything, even a hammock of his. So maybe his not wife is not so stupid. 

[Thorgal]

Rental contract split between he/she can be for tax reasons. Why don't ask after it ? Instead of suspecting malicious intend.

Edited December 9, 2023 by Thorgal

[SGD]

Amateur landlords

[Dan O]

2 hours ago, Liverpool Lou said:

How much of an asset is a building that he rents if creditors move on him?

According to the OP they have other assets. If he defaults on the rent on that lease or has damaged the property then there are other assets potentially available to go after. Without all the details no way of knowing but he disconnected himself from that lease for a reason. 

[natway09]

You know in Thailand that to go after somone if things go "pearshaped" is basically impossible.

I rented a bar for 24 years & many  insurance Co's would not sell me any policy as I did not own the joint.

As to damage repair on commercial leases the lessee has to repair, even if a major roof leak.

 

[BusyB]

10 hours ago, rwill said:

Just put in the new contract that they have to buy insurance.

 

I don't know how much it would cost for a business.  My house insurance costs about 5K/year.  So not that expensive.

 

High or low, insurance costs can be knit into the rent.

Edited December 9, 2023 by BusyB

[Scouse123]

On 12/8/2023 at 6:22 PM, advancebooking said:

They are not married. We know they spend most of their time in bangkok. 

 

If say for example, a big gas explosion happens and it spreads to neighbouring building/s then its better to have 2 people who can potentially pay the liability rather than one. Thats why I want him on the contract again. I know he has money. I dont know about her. She might be just renting her bkk restaurants just like she is renting my building. ie no real assets. 

 

 

I think you are being too nosy in matters that are not your business.

 

What she does with her businesses in Bangkok is not your concern. How they choose to run their businesses is also not your concern. You don't know the ins and outs of their finances or the structure of their businesses.

 

You seem to have a bee in your bonnet, with a tenant who is paying you expensive rent by your admission, and want to now go back to them with terms that may not suit them because you are overthinking about deaths and fires.

 

Just simplify things and request that the building be insured for matters such as fire. 

 

If you have to insure the property as the owners, tell them and come to an amicable arrangement with them.

 

Ridiculous, it sounds like you sit at home fretting and then jump in your car or on your scooter to go mooching around in the dark

[Datsun 1200]

What reason did they give for him taking his name off the lease??

 

IH