Renting Property In Thailand

[Sumitr Man]

At lunch today a matter was brought to my attention that I thought I would pass on - in case you were not aware of it. The matter concerns what happens to a lease agreement in the event of the death of the lessor/lessee - and concerns Section 541 and Section 569 of the Civil and Commercial Code.

Section 541 of the CCC stipulates that: "a contact of hire may be made for the duration of the life of the letter or of the hirer."

Section 569 of the CCC stipulates that: "a contract of hire of immovable property is not extinguished by the transfer of the ownership of the property hired. The transferee is entitled to the rights and is subject to the duties of the transferor towards the hirer."

What I was not aware of, until lunch, was that reading these two sections together will result in the following:

In the event that the lessor (the owner) dies, the lease agreement continues against his estate - S. 569;

In the event that the lessee (renting person) dies, unless otherwise agreed to in the lease agreement, the lease agreement terminates and the property reverts back to the lessor. This position has been confirmed by Supreme Court decision 383/2540 (1997).

The upshot of this appears to be (if you are renting on an arms-length basis): (1) make sure you have a provision that allows your beneficiaries to enjoy the fruits of any expense you may have already made; or (2) co-sign the lease with your wife.

However, please note this was only a lunch conversation and if you think this may affect you, seek appropriate professional guidance. I must add that I have not been able to confirm 100% that the above position is right.