30 Year Leases

[Thaifan2]

Come on are you kidding!! There isn't a re sale market for ANY property a farlang buys in Thailand unless he can find another farlang sucker...and even then its not that easy. We BUY property we never can actually SELL!!!!

Farangs are buying and selling land and houses all the time in Pattaya .

[hgma]

Whats the requirement for taking on the lease 30 in the first plac?

Do you need to be on Houseregsitration?

Do you need a Non0 retirement/bussines/dependent Non0 multiple?

Do you need to have a thai spouse?

do you need to........what?

for the most of you its an excisting fact for many of us NOT

can anybody fill me in?

Thanks a lot

[dsfbrit]

Just because you were conned 5 years ago, now you like me to stop saying something that is at variance with your belief. Unfortunately, I cannot oblige since I am born as a free person and still believe that 30+30 year lease is possible. I am not in an estate business but a person with independent means with no ulterior motives in joining this TV forum which is the best I have ever experienced. I may be wrong and I may be right that is up to the readers to judge on our rationales. There is no monetary reward or reward of any nature in sharing my knowledge and experience with others.

I have promised myself on the TV forum not ever to insult people with different point of view from mine or cast on their intelligence just because of my knowledge and experience being different from theirs. I have seen a few ugliness in this forum when the exchange was reduced to childishness. In sticking to this principle, I have learnt quite a lot from others and it has also changed my thinking and attitude when I was proven wrong.

To state that "Anything beyond this (the first 30-year lease) is at the discretion of the land owner, whoever that may be in 30 years time." is a generalised statement without recognising the free intention of the lessor and lessee. It also reflects on the lack of impartial reading of my message. My message was that even if the landlord dies before 30 years is up, the successor to the property is still obliged to the legal commitment as previously made by the deceased because the land is subject to that incumbrance already registered with the officials. It is not 100% protection but rarely has the landlord won the case when there is this dispute in court which is not often. Similarly, if the landlord is a company, the company's liquidator is obliged to follow the legal commitment previously made by the company. All I require to hear is for someone to tell me that I am mistaken and why. If I am wrong, then I would apologise and learn of the new ground and become a better man. If I am right, then others could benefit from this TV forum in knowing the right standing of the renewal clause of 30 years.

I have said all that I can say on this and to show that I am someone who is only too happy to listen to other peoples points of view I have just given you the last word.

So if it stops raining I am off down the beach.

Have a nice day

[Irene]

oldhand,

Thank you for sharing with us on your experiences and observations. My comments are in bold type:-

A 30 year lease is just that. I took out a 30 year lease registered with the land office way back when I first thought about moving to Thailand. In my contract, I was allowed to renew the lease for a further 30 years which was more than enough for my needs at the time.

At about year 23 the landowner told me that he was selling the land and told me that I would have no further extension of the lease. When I took my contract to the land office they pointed out that the registered lease was for 30 years only. I still own the house on the land but do not have the right of abode there.

30 years is 30 years and that is it! Anything else is not worth the paper it is written on as it cannot be registered at the land office.

That depends on your previously agreed renewal clause whether it was at the discretion of the landowner or that of the lessee with prior agreed rental. Section 540 of the Civil and Commercial Code on Letting of Property provides as follow:-

"The duration of a rental of immovable property cannot exceed thirty years. If it is made for a longer period, such period is to be reduced to thirty years.

The aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal."

The law already gives sanction to the possibility of the renewal. The condition of the renewal is up to meeting of the mind of the two parties.

Section 569 also provides the following:-

"A rental contract of immovable property is not extinguished by the transfer of the ownership of the related property.

The transferee is entitled to the rights and is subject to the duties of the transferor towards the lessee."

Also very important is the fact that the 30 year lease is not transferable. The only way to sub let is to have the original landowner sign a new lease with the new lessor. You cannot sell it.

Section 544 clarifies this point that:

"Unless otherwise provided by the rental contract, a lessee cannot sublet or transfer his rights in the whole or part of the property to a third person.

If a lessee acts contrary to this provision, the lessor may terminate the contract."

With the above said and done I understand that TAT and the original Thai elite card are coming up with some program to provide lifetime transferable leases and that the company that they are setting up is to be listed on the stock exchange - I cannot confirm or advise on the legality of this scheme as I don't have enough info and am not qualified to do so.

I strongly suggest that anyone purchasing property (land) at this time goes the leasing method as it is still the only legal way that a foreigner can secure the land in his name albeit for a limited period.

Good point. A lawyer should be consulted on the best way to protect your interest on the renewal clause. This is especially so when you have a friendly lessor now.

OH

[quiksilva]

Of course leaseholds can be assigned, so long as there is a provision for assignment within the contract. Although they are more difficult interests to dispose of.

Yes, you are right, leaseholds can be registered (or sub-leased) as long as the master lease contract allows it (normally with notice, but not consent of, the land owner). However, any assignment of the lease (if the remaining lease term exceeds 3 yrs) requires registeration.....

Options can not be registered by themselves, they are merely clauses within a contract, the land office is not really interested in that but there seems to be no restrictions on the number of leases one can register on a title deed and nothing to stop someone from officially registering a lease prior to it's commencement date, just so long as all parties are in agreement.

absolutely correct, lease extension options are merely private contractual promises (not registered rights).....but with respect to your second point, I actually tried to register a lease (commencing in the future)....was successful for a 30 yr registered lease commencing in a few months later (i.e., the scheduled date when some construction was to finish) BUT was firmly advised (by the Land Office) that one could not register an initial lease for 30 years and at the same time register another successive lease commencing 30 years later because the maximum registered lease period is 30 years (***there are some very exceptional 50 year leases)... I interpreted this to mean that you could only have a maximum of 30 years lease registered at any one time.....

quiksilva, is your experience different? if so, I guess one could (one "day-one") register three, four or five successive 30 year leases (paying 1.1% registration fee based on the entire 90 or 120 years rent) and we could just go about like the HK system and stop the debate.... however, I honestly do not think this is the case....

I know of two landlords who have successfully registered two successive 30 year leases on substantial properties in Bangkok. However they could not get more than that.

I can't disclose which buildings in a public forum as I trust you might be able to appreciate, but will say at least two of these buildings are in the CBD and over 20,000 sqm in size.

I'm not saying it is easy to do, it is far from it, it requires good contacts at the land department office, good lawyers, and considerable patience .... but it has happened.

[BL4u]

I know of two landlords who have successfully registered two successive 30 year leases on substantial properties in Bangkok. However they could not get more than that.

I can't disclose which buildings in a public forum as I trust you might be able to appreciate, but will say at least two of these buildings are in the CBD and over 20,000 sqm in size.

I'm not saying it is easy to do, it is far from it, it requires good contacts at the land department office, good lawyers, and considerable patience .... but it has happened.

Just the fact that is registered has no value, and the land offices register anything even if it is void and they are allowed to do so: Section 73 Land Act: If the legal act to be recorded (meaning the second lease here) appears voidable the competent authority shall record it when the party who may be damaged thereby insists. If it is registered does this mean that you have a sixty year lease? NO.

As for the renwals in the lease, yes a lease may be renewed upon expiration, yes the 30-year lease is not terminated on the transfer of ownership, however the Supreme Court clearly ruled many times that only lease right that are by nature lease right will transfer to the new owner. Contractual rights based on the freedom of contract do not transfer with the freehold title of the land but are merely on a person to person agreement. You can not enforce the renewal if the land is transferred. You can inculde about anything you like in a lease, even register 2! But of little value if you have to go to Court to enforce it and getting it enforced after 30 years is a totally different story.

[quiksilva]

I know of two landlords who have successfully registered two successive 30 year leases on substantial properties in Bangkok. However they could not get more than that.

I can't disclose which buildings in a public forum as I trust you might be able to appreciate, but will say at least two of these buildings are in the CBD and over 20,000 sqm in size.

I'm not saying it is easy to do, it is far from it, it requires good contacts at the land department office, good lawyers, and considerable patience .... but it has happened.

Just the fact that is registered has no value, and the land offices register anything even if it is void and they are allowed to do so: Section 73 Land Act: If the legal act to be recorded (meaning the second lease here) appears voidable the competent authority shall record it when the party who may be damaged thereby insists. If it is registered does this mean that you have a sixty year lease? NO.

Interesting, I can see where you are coming from. You have given me some food for thought. Thanks for sharing.

[siddv]

Farangs are buying and selling land and houses all the time in Pattaya .

Edited July 25, 2007 by siddv

[quiksilva]

Come on are you kidding!! There isn't a re sale market for ANY property a farlang buys in Thailand unless he can find another farlang sucker...and even then its not that easy. We BUY property we never can actually SELL!!!!

I suppose that would depend on what you are trying to sell, to whom and for how much.

[trajan]

I know of two landlords who have successfully registered two successive 30 year leases on substantial properties in Bangkok. However they could not get more than that.

I can't disclose which buildings in a public forum as I trust you might be able to appreciate, but will say at least two of these buildings are in the CBD and over 20,000 sqm in size.

I'm not saying it is easy to do, it is far from it, it requires good contacts at the land department office, good lawyers, and considerable patience .... but it has happened.

Just the fact that is registered has no value, and the land offices register anything even if it is void and they are allowed to do so: Section 73 Land Act: If the legal act to be recorded (meaning the second lease here) appears voidable the competent authority shall record it when the party who may be damaged thereby insists. If it is registered does this mean that you have a sixty year lease? NO.

As for the renwals in the lease, yes a lease may be renewed upon expiration, yes the 30-year lease is not terminated on the transfer of ownership, however the Supreme Court clearly ruled many times that only lease right that are by nature lease right will transfer to the new owner. Contractual rights based on the freedom of contract do not transfer with the freehold title of the land but are merely on a person to person agreement. You can not enforce the renewal if the land is transferred. You can inculde about anything you like in a lease, even register 2! But of little value if you have to go to Court to enforce it and getting it enforced after 30 years is a totally different story.

I absolutely agree with the above statements by BL4u....just because 2 successive 30 leases were registered in a particular instance does not make it valid....I also personally know of a title deed being issued on public forest lands (I guess with enough "tea money" you could levitate the title deed with a magic wand) and they were flogging it for sale..... the bogus title deed was subsequently rescinded.....

[Adagio]

Wow I seem to have asked a sensitive question, however this topic was supposed to be about a market for the resale of leases NOT the leasing of land for more than 30 years.

I was going to start a new topic and ask people not to discuss lease extensions but I think I have found out all I need too. The market is small. Most farangs are buying (illegally or through a spouse) and the resale market is in it's infancy.

Thank you to those who stayed on topic. To those with opinions on lease extension, START YOUR OWN THREAD

[trajan]

I realise all sales have taken a bit of a downturn lately but in general, is there a resale market for leases? If I build a house on the piece of land I have rented can I sell it in ten years? or if I had 20 years remaining on a lease now, would there be a buyer?

I have also heard a few 'anti' comments about leasehold having loopholes. Just how safe am I from a dishonest landlord/freeholder?

calm down.......remaining periods on the leasehold (including extension periods) are DIRECTLY relevant to resale of the leaseholds... you also alluded to the viability of the leaseholds and "loopholes'....

[solo siam]

"The duration of a rental of immovable property cannot exceed thirty years. If it is made for a longer period, such period is to be reduced to thirty years.

The aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal."

The law already gives sanction to the possibility of the renewal. The condition of the renewal is up to meeting of the mind of the two parties.

That simply means that after the 30 years up the parties can renew if they want to, it says nothing about guaranteed renewal, there is no such thing.

I'm sure you can get someone to sign a bit of paper stating they will give you two more renewals of 30 years, but surely this means nothing if a)untested and one or both parties are dead. Besides if the leaseholder has hold of the Chanote, he can simply sell it onto someone - it's only encumbrance is the 30 year lease stated on it, nothing else, certainly nothing about extensions.

[dsfbrit]

Wow I seem to have asked a sensitive question, however this topic was supposed to be about a market for the resale of leases NOT the leasing of land for more than 30 years.

I was going to start a new topic and ask people not to discuss lease extensions but I think I have found out all I need too. The market is small. Most farangs are buying (illegally or through a spouse) and the resale market is in it's infancy.

Thank you to those who stayed on topic. To those with opinions on lease extension, START YOUR OWN THREAD

To be fair - I think if you re-read your question you will see that many have responded to this:-

'I have also heard a few 'anti' comments about leasehold having loopholes. Just how safe am I from a dishonest landlord/freeholder? '

I would also say that this thread has been very informative - one of the best I have read - in dealing with lease issues.

So much so I have actually added it to my 'Favourites' list for future reference.

Also I dont see how you can answer the first part of your question without understanding the leasing issues - you may for example be told you can sell your place with its 20 year lease by getting the landowner to agree a 30+30 year extension.

I personally, as I am too honest I guess, would not want to lumber a potential buyer with the possible problems they will have renewing the lease in 20 years time. I would therefore reject this 30+ 30 year suggestion or explain the true situation to the potential buyer.

Mind you I am so dumb, I would tell someone the problems with the FBA if someone wanted to buy my house and the company - so there is no hope for me anyway.

Edited July 26, 2007 by dsfbrit

[steve73]

I would like to add my recent experience on this topic having recently "bought" some land (6 rai) with a small but new house built on it.

After reading various views on this and other forums, I decided not to go the company route (despite my lawyer recommending it), mainly due to the property size. My first choice was to take a 30 yr lease from the existing seller (Thai wife of a farang). She was reluctant due to the personal income tax that would annually be due on the "rental" income (even though the payment made would be totally upfront). We explored usefructs, and other mechanisms (such as splitting the land and house - not possible for an existing structure) but finally decided to buy in my girlfriends name, and then take 30yr lease from her. Incidentally my g/f was initially reluctant to do this as she did not want to own anything??? (Is she mad or do I have a really good one there?) The seller agreed to pay all transfer costs, and even offerred me a 5% discount to go this route compared to leasing from her.

So, the sale was made with a registered value somewhat less than the actual price paid (to minimise various taxes on the sellers behalf), and one week later the lease was registered in my name. (I was treading on eggshells during that week I can tell you..!). The lease value was significantly less than even the registered purchase price, and was typical of land-rent in that area for two reasons. Firstly to minimise lease costs, and secondly so as not to cause my g/f to incur any (or minimum) ongoing personal taxation liabilities, although obviously no further cash actually changed hands between us.

Briefly the lease allows me to extend for a further 30 years but only with the g/f's agreement. In event of either death, the lease remains in force, and is passed on to either heir. I can transfer the lease or sublet to a third party without her consent. I have to pay for upkeep (obviously). If I make any modifications or additions to the property I must remove them at the end of the lease period, unless she agrees to keep them. (This was the bit I don't like as it prevents me from building a separate house and registering this solely in my name.) There is no provision if she wants to sell the freehold, although the lease contract does inlcude a clause that I will hold the chanote, which also has the lease with my name entered on it, so in effect she cannot sell without my consent (as I would only hand the chanote over on reciept of adequate proceeds - if it ever came to that).

She is entered on the house registration book (blue book), and I have also registered this as my address at the local Immigration Office (to allow me to get aThai driving Licence).

Question - can I aslo be entered on the blue book, or do I have to register at Immigration on every visit? (I visit regularly using a multi-entry non-imm "O" visa, and will continue for a couple more years until I can qualify for a retirement visa.)

I'm happy with the arrangement with her as freeholder, lessor, and landlady (in effect), and me as lessee having full right of habitation. At least while we are happy together...

If thing do go wrong between us (not that I'm expecting it to but you have to be prepared), I assume I can evict her and continue to live there myself (under the lease agreement), or could sell the lease on, but I suppose I cannot force her to sell the freehold. Any comments on this?

Incidentally this was a private sale with no estate agents involved by any party, and I used the same lawyer to draft the lease as the seller did for the sale.

A couple of other points, that were worthy of note:

It is myunderstanding that when you sell property, the full (or at least registered!!) proceeds of the sale are treated as income for personal taxation purposes, not just the capital gain (which is why registered sale values often differ from actual cash transferred) . At least this is what the lawyer informed. Can anyone confirm this?

Finally, I had to sign a declaration that the cash I transferred from the UK was to be used for "personal expenses", in order to avoid the 30% withholding, so obviously I did not get the relevant import certificate. Could present difficulties if I ever wanted to take the proceeds of a sale or transfer back out of the country.

Thanks, Steve

I realise that many of these points are not really relevant to this discussion thread, so maybe one of the moderators would prefer to move it to its own thread...

[nobody65]

I realise all sales have taken a bit of a downturn lately but in general, is there a resale market for leases? If I build a house on the piece of land I have rented can I sell it in ten years? or if I had 20 years remaining on a lease now, would there be a buyer?

I have also heard a few 'anti' comments about leasehold having loopholes. Just how safe am I from a dishonest landlord/freeholder?

You can only sell what you have and this is a leasing contract which will loose worth year by year

[jumnien]

We just sold a leasehold condo in BKK for more than we bought it for 3 years earlier. As the lease was running down the value of the units is going up. This may not be true with houses though.

[Irene]

Unless the property is situated in an ideal position, the run down of the value is normal and Thais abhored leased properties. Worse for a house built on a leased land.

Lease can be safe for the first 30 years once registered with the land department.

[jumnien]

All of the interest in our leasehold property in BKK was from Thais. A Thai couple bought it to rent out. They will do quite well I'm sure.