After The Lease Is Over...

[Mark Wolfe]

Bored, I was skimming a copy of the Samui-Phangan Real Estate guide. This caught my eye:

A recent report by CB Richard Ellis says that it is now becoming quite common for foreign buyers to purchase villas in Thai resort areas on leases of 30 years, along with two to three options for renewal, ... However, [with] such a lease structure, both the freehold owner and the lessee need to physically contact each other to renew the lease, even though the full price is paid in advance.

The article goes on to advocate leases of 99 years here, which apparently to the author is preferable.

My question is this: I have been aware of this 30-year lease arrangement, but what happens after that time (including extensions) is up?

Let's say I am 30 years old and lease a property and build a house on it. After 30 years, the original Thai owner does not want to renew the lease ... or after 30 + 30 years the lease and option are finished. So everything reverts to the original Thai owner and/or his heirs?

What is going to happen to all these multi-million baht homes, build with the money of the foreign lessee?

Granted, it's a long time from now, but at some point aren't all these properties going to go back to the Thais?

How does this work?

In 60 years or so are there going to be all these nice houses coming back to the Thai (or his family) who leased it out?

I don't see how a Thai who leased his land on a hill in the coconut groves could afford to pay out for the improvements on the land 30 or 60 years from now.

So I can use the land as if it were mine, but at the end of the lease everything I put into it goes right back to the lessor?

[The Vulcan]

One imagines that as the years pass the property is sold on numerous times at a progressively reducing rate hence re-couping a portion of the lessees outlay. The difference being attributable to "cost of living". This handles the lease logic I believe.

After the expiration of the lease period - The heirs apparent strike gold!

Maybe they'll re-lease, develop or sell on.

It works for everybody frankly.

BUT, if I'm correct, I seem to have read/heard something along the lines that the lease expires upon the death of the lessee (cannot pass to heirs) and "potentially" expires upon the death of the lessor if the contract is not written to contra this.

This could be more of a concern

[highdiver]

to renew the 30 year lease the owner or his heirs must come to the land office and sign again.

if the original contract was laid out properly stating that the contract is for 30+30+30 and that the lessor and lessees assign their heirs to it and that the payment paid was for 3 periods of 30 years then the contract under law is valid.

if the owner of the land refuses to sign the next 30 years in the land office then the lessee has the right to sue him in court for a breach of contract. and the court has the right to enforce the contract.

to the best of my knowledge no such case has come up yet.

for those signing a contact for only 30 years then when the contract is finished the Thai wins the house back, however after 30 years of tare and ware even with the best maintenance most houses in the tropics would be so worn out that you will need to knock them down.

[Prakanong]

"after 30 years of tare and ware even with the best maintenance most houses in the tropics would be so worn out that you will need to knock them down."

They must build then differently in Singapore then as there are lots of old houses here well over 30 years

British brickies must have been better back then

[Nirvana]

"after 30 years of tare and ware even with the best maintenance most houses in the tropics would be so worn out that you will need to knock them down."

They must build then differently in Singapore then as there are lots of old houses here well over 30 years

British brickies must have been better back then

Did you think that the British built the houses themselves only ??

If you build something right the first time, no reason it will not last past 30 years even in the tropics in my humble opinion

[PoorSucker]

You can always do it the Thai way.

Take down doors, windows, roof etc, until there's only a concrete skeleton.

[Prakanong]

"after 30 years of tare and ware even with the best maintenance most houses in the tropics would be so worn out that you will need to knock them down."

They must build then differently in Singapore then as there are lots of old houses here well over 30 years

British brickies must have been better back then

Did you think that the British built the houses themselves only ??

If you build something right the first time, no reason it will not last past 30 years even in the tropics in my humble opinion

Sorry I had my tongue firmly in my cheek - I doubt a British guy lifted a hand in building houses in Singapore - just as today you will not see a Singaporean do so -sub-continent and Chinese mainland both era's I would guess

[Nirvana]

Sorry I had my tongue firmly in my cheek - I doubt a British guy lifted a hand in building houses in Singapore - just as today you will not see a Singaporean do so -sub-continent and Chinese mainland both era's I would guess

Indeed, i guess not much has changed in so far as labour used. Nice to see traditions passed down though.

[Gatorade]

to renew the 30 year lease the owner or his heirs must come to the land office and sign again.

if the original contract was laid out properly stating that the contract is for 30+30+30 and that the lessor and lessees assign their heirs to it and that the payment paid was for 3 periods of 30 years then the contract under law is valid.

if the owner of the land refuses to sign the next 30 years in the land office then the lessee has the right to sue him in court for a breach of contract. and the court has the right to enforce the contract.

to the best of my knowledge no such case has come up yet.

for those signing a contact for only 30 years then when the contract is finished the Thai wins the house back, however after 30 years of tare and ware even with the best maintenance most houses in the tropics would be so worn out that you will need to knock them down.

What happens if...

The land owner has sold the land on? Surely the contract is only between the houseowner and original landowner who signed the contract. Thus after 30 years a new contract has to be issued.

The access roads and land carrying essential services (assuming a private complex) have been re-mortgaged? Presume same applies after 30 years.

Wouldn't it be better to purchase a house as a company despite all the rules? Providing you can legally do this it seems to me that you will at least know that the land under your feet is more or less yours. True/false?

[Pattaya46]

if the original contract was laid out properly stating that the contract is for 30+30+30 and that the lessor and lessees assign their heirs to it and that the payment paid was for 3 periods of 30 years then the contract under law is valid.

if the owner of the land refuses to sign the next 30 years in the land office then the lessee has the right to sue him in court for a breach of contract. and the court has the right to enforce the contract.

Wrong

I do not understand(*) how an "Advanced member" like you, highdiver, can give such false information about important contracts like that...

The Thai law say "30 max" and there is nothing legal or guarantied such as a "30+30+30".

Please read : http://www.thaivisa.com/forum/303030-Year-...sc-t166345.html

* Maybe I understand: you must be a real estate promoter, no ?

[joecoolonsamui]

if the original contract was laid out properly stating that the contract is for 30+30+30 and that the lessor and lessees assign their heirs to it and that the payment paid was for 3 periods of 30 years then the contract under law is valid.

if the owner of the land refuses to sign the next 30 years in the land office then the lessee has the right to sue him in court for a breach of contract. and the court has the right to enforce the contract.

This is incorrect (although such lessee may have recourse for unremitted value they paid for i.e. undue enrichement), the Civil and Commercial Code, Section 540, only provides for one renewal. The third 30 year period is not enforceable. Also, the second 30 period is not enforceable against a new good-faith owner/lessor, such as an heir. The renewal option is treated by the Thai courts as a "promise" made by the orginal owner the lessee but NOT as part of the lease/contract itself, so it is not enforceable against a party who did not make said promise. Finally, the lease is not transmissible by will or inheritence statute under the CCC, however, the supreme court (wrongly in my opinion) has provided that if the lease says it is transmissible, it is.

"for those signing a contact for only 30 years then when the contract is finished the Thai wins the house back, however after 30 years of tare and ware even with the best maintenance most houses in the tropics would be so worn out that you will need to knock them down."

This is correct if the lease does not provide for the lessee to own the house. However, if the house was built pursuant to the lease then the Thai supreme court opines that the builder/lessee owns it and the lessor must then pay for the value of the house when transferred to lessor at the conclusion of the lease. This is pursuant to the supreme court's (incorrect in my opinion) interpretation of CCC 146. Much better to simply register a superficies over the land (section 1410 ff) and be certain of owning the value of the house.

[highdiver]

if the original contract was laid out properly stating that the contract is for 30+30+30 and that the lessor and lessees assign their heirs to it and that the payment paid was for 3 periods of 30 years then the contract under law is valid.

if the owner of the land refuses to sign the next 30 years in the land office then the lessee has the right to sue him in court for a breach of contract. and the court has the right to enforce the contract.

Wrong

I do not understand(*) how an "Advanced member" like you, highdiver, can give such false information about important contracts like that...

The Thai law say "30 max" and there is nothing legal or guarantied such as a "30+30+30".

Please read : http://www.thaivisa.com/forum/303030-Year-...sc-t166345.html

* Maybe I understand: you must be a real estate promoter, no ?

you did not understand my point or i did not explain well

under the law you can register only 30 years. however... the contract between parties can agree on the extension. and if payment has been made then the Lessor is obliged to renew the contract and sign it for additional terms. as if he fails to do so then he is liable for breeching the contract.

there is 2 items here that are addressed :

1 the contract between parties

2. signing the lease at the land office.

Edited June 30, 2008 by highdiver

[highdiver]

if the original contract was laid out properly stating that the contract is for 30+30+30 and that the lessor and lessees assign their heirs to it and that the payment paid was for 3 periods of 30 years then the contract under law is valid.

if the owner of the land refuses to sign the next 30 years in the land office then the lessee has the right to sue him in court for a breach of contract. and the court has the right to enforce the contract.

This is incorrect (although such lessee may have recourse for unremitted value they paid for i.e. undue enrichement), the Civil and Commercial Code, Section 540, only provides for one renewal. The third 30 year period is not enforceable. Also, the second 30 period is not enforceable against a new good-faith owner/lessor, such as an heir. The renewal option is treated by the Thai courts as a "promise" made by the orginal owner the lessee but NOT as part of the lease/contract itself, so it is not enforceable against a party who did not make said promise. Finally, the lease is not transmissible by will or inheritence statute under the CCC, however, the supreme court (wrongly in my opinion) has provided that if the lease says it is transmissible, it is.

your opinion as valued as it may be is irrelevant as the supreme court has already addressed this issue.

a promise is when you leave the extended period to be paid(compensated) at a latter date. if payment has been received by the lessor then as such he or his heir have duty to fulfill the terms of the contract.

"for those signing a contact for only 30 years then when the contract is finished the Thai wins the house back, however after 30 years of tare and ware even with the best maintenance most houses in the tropics would be so worn out that you will need to knock them down."

This is correct if the lease does not provide for the lessee to own the house. However, if the house was built pursuant to the lease then the Thai supreme court opines that the builder/lessee owns it and the lessor must then pay for the value of the house when transferred to lessor at the conclusion of the lease. This is pursuant to the supreme court's (incorrect in my opinion) interpretation of CCC 146. Much better to simply register a superficies over the land (section 1410 ff) and be certain of owning the value of the house.

[Khun Jean]

if the original contract was laid out properly stating that the contract is for 30+30+30 and that the lessor and lessees assign their heirs to it and that the payment paid was for 3 periods of 30 years then the contract under law is valid.

if the owner of the land refuses to sign the next 30 years in the land office then the lessee has the right to sue him in court for a breach of contract. and the court has the right to enforce the contract.

Wrong

I do not understand(*) how an "Advanced member" like you, highdiver, can give such false information about important contracts like that...

The Thai law say "30 max" and there is nothing legal or guarantied such as a "30+30+30".

Please read : http://www.thaivisa.com/forum/303030-Year-...sc-t166345.html

* Maybe I understand: you must be a real estate promoter, no ?

you did not understand my point or i did not explain well

under the law you can register only 30 years. however... the contract between parties can agree on the extension. and if payment has been made then the Lessor is obliged to renew the contract and sign it for additional terms. as if he fails to do so then he is liable for breeching the contract.

there is 2 items here that are addressed :

1 the contract between parties

2. signing the lease at the land office.

This is not correct.

All the landowner has to do is sell the land or transfer it to one of his children/family members. And you can bet your life he will do that when the time comes. Way to much profit to be made.

You can not pay for 90 years as the max is 30 years.

Only the 30 years are REGISTERED. The rest is a private deal between you and the landowner and one that is as the above examples show easy to avoid.

I 'forgot' one. If the landwoners dies, the contract dies with him. All 'renewals' mentioned are only with the original contract signer.

Edited June 30, 2008 by Khun Jean

[The Vulcan]

I 'forgot' one. If the landwoners dies, the contract dies with him. All 'renewals' mentioned are only with the original contract signer.

That endorses my earlier suspicions - very scary.

But is the remaining lease period honoured in the event of the landowner passing away, or are we saying that the next of kin can squash the lease?

[joecoolonsamui]

your opinion as valued as it may be is irrelevant as the supreme court has already addressed this issue.

a promise is when you leave the extended period to be paid(compensated) at a latter date. if payment has been received by the lessor then as such he or his heir have duty to fulfill the terms of the contract.

really? where does the Thai law or any (preferably the s ct ) say that Highdiver? And yes, I understand the difference and you are wrong, the court, the s ct, considers that the prepaid rent is only for the lease, not for the renewal. Now, if you worded your lease properly, you may have an actoin for undue enrichment, but NOT one to force the renewal.

also, I take it you conced my point regarding the second renewal?

(BTW, for the rest of you, the supreme court's decisions are only suggestive, they are not authoritative, i.e. the lower courts do not have to follow them).

[joecoolonsamui]

if the original contract was laid out properly stating that the contract is for 30+30+30 and that the lessor and lessees assign their heirs to it and that the payment paid was for 3 periods of 30 years then the contract under law is valid.

if the owner of the land refuses to sign the next 30 years in the land office then the lessee has the right to sue him in court for a breach of contract. and the court has the right to enforce the contract.

Wrong

I do not understand(*) how an "Advanced member" like you, highdiver, can give such false information about important contracts like that...

The Thai law say "30 max" and there is nothing legal or guarantied such as a "30+30+30".

Please read : http://www.thaivisa.com/forum/303030-Year-...sc-t166345.html

* Maybe I understand: you must be a real estate promoter, no ?

you did not understand my point or i did not explain well

under the law you can register only 30 years. however... the contract between parties can agree on the extension. and if payment has been made then the Lessor is obliged to renew the contract and sign it for additional terms. as if he fails to do so then he is liable for breeching the contract.

there is 2 items here that are addressed :

1 the contract between parties

2. signing the lease at the land office.

This is not correct.

All the landowner has to do is sell the land or transfer it to one of his children/family members. And you can bet your life he will do that when the time comes. Way to much profit to be made.

You can not pay for 90 years as the max is 30 years.

Only the 30 years are REGISTERED. The rest is a private deal between you and the landowner and one that is as the above examples show easy to avoid.

I 'forgot' one. If the landwoners dies, the contract dies with him. All 'renewals' mentioned are only with the original contract signer.

sorry but you are incorrect too. if the land owner stays the same they must honor the first renewal (if they transfer "in order to avoid the law" i.e. to their wife or friend, etc, they lose...of course, proving that may be difficult, but legally you are incorrect).

[Khun Jean]

Which law do they avoid? I am curious to know that.

The owner can sell at any time to anyone, or is that not true.

The registered lease will stay on the chanot so the new owner has to accept that. It will probably reflect in the sale price.

But once that lease is finished it is taken of the register and then what to do when for instance his daughter is now the owner?

[frankman]

How can you own only the building, if the land is on a lease, and can be sold any minute by the kids of the owner, if he gives it to them? Just curios.

[joecoolonsamui]

How can you own only the building, if the land is on a lease, and can be sold any minute by the kids of the owner, if he gives it to them? Just curios.

what is your point? short answer to "how" is "law"....and, in the case of leases, the supreme court of Thailand. Owning the building, as opposed to the land, has very significant consequences (ownership, and esp TAXES!!...if you have any "sophistication" about such issues...or you can just keep listening to Highdiver).

[highdiver]

your opinion as valued as it may be is irrelevant as the supreme court has already addressed this issue.

a promise is when you leave the extended period to be paid(compensated) at a latter date. if payment has been received by the lessor then as such he or his heir have duty to fulfill the terms of the contract.

really? where does the Thai law or any (preferably the s ct ) say that Highdiver? And yes, I understand the difference and you are wrong, the court, the s ct, considers that the prepaid rent is only for the lease, not for the renewal. Now, if you worded your lease properly, you may have an actoin for undue enrichment, but NOT one to force the renewal.

please read the CCCsection 537 regarding disputes of payment of rent. ,The Consumer Protection Act (1979) and ohh i am getting bored with this..

also, I take it you conced my point regarding the second renewal?

(BTW, for the rest of you, the supreme court's decisions are only suggestive, they are not authoritative, i.e. the lower courts do not have to follow them).

[Nirvana]

Which law do they avoid? I am curious to know that.

The owner can sell at any time to anyone, or is that not true.

The registered lease will stay on the chanot so the new owner has to accept that. It will probably reflect in the sale price.

But once that lease is finished it is taken of the register and then what to do when for instance his daughter is now the owner?

Did anyone reply to above post from Khun Jean.I am interested to learn more.How Khun Jean puts it is how i understood it anyhow that land can be sold at any time along with a lease, but new owner has to honour the lease as long as it is in force. Thereafter if not renewed by original owner you have to start again. Doubtful in my view that original owner will be around anyhow after 30 yrs or will he want to renew, more likely resold it or passed on. Meaning back to square one for owner of house on land he does not own right ?

[frankman]

How can you own only the building, if the land is on a lease, and can be sold any minute by the kids of the owner, if he gives it to them? Just curios.

what is your point? short answer to "how" is "law"....and, in the case of leases, the supreme court of Thailand. Owning the building, as opposed to the land, has very significant consequences (ownership, and esp TAXES!!...if you have any "sophistication" about such issues...or you can just keep listening to Highdiver).

Good luck to believe in the law in thailand. If you have enough money and a good lawyer or company, may be.

[joecoolonsamui]

your opinion as valued as it may be is irrelevant as the supreme court has already addressed this issue.

a promise is when you leave the extended period to be paid(compensated) at a latter date. if payment has been received by the lessor then as such he or his heir have duty to fulfill the terms of the contract.

really? where does the Thai law or any (preferably the s ct ) say that Highdiver? And yes, I understand the difference and you are wrong, the court, the s ct, considers that the prepaid rent is only for the lease, not for the renewal. Now, if you worded your lease properly, you may have an actoin for undue enrichment, but NOT one to force the renewal.

please read the CCCsection 537 regarding disputes of payment of rent. ,The Consumer Protection Act (1979) and ohh i am getting bored with this..

also, I take it you conced my point regarding the second renewal?

(BTW, for the rest of you, the supreme court's decisions are only suggestive, they are not authoritative, i.e. the lower courts do not have to follow them).

So:

1) you do then concede my point regarding the second renewal (the CCC does NOT provide for it and it is not enforceable);

2) please cite the s ct case or withdraw your comment ...given your demonstrated legal comprehension your statement require verification in the absence of which they should be disregarded;

3) your point regarding CCC section 537??? quote:

"A hire of property is a contract whereby a person, called a letter, agrees to let another person, called the hirer, have teh use or benefit of a property for a limited period of time, and the hirer agrees to pay a rent for."

Please make a point or withdraw your comment.

4) Sorry you are getting so bored, but perhaps that has to with quoting law without stating its relevance i.e. what section of the Consumer Protection Act...SPECIFICALLY and WHY. Please provide (go ahead, have it right here in my office) or again, withdraw your comment.

I am bored with your horribly incorrect advice, but I am also concerned that others might actually believe it and that could affect them and their property...so I am willing to go the distance. What do you say, Highdiver?

[joecoolonsamui]

Which law do they avoid? I am curious to know that.

The owner can sell at any time to anyone, or is that not true.

The registered lease will stay on the chanot so the new owner has to accept that. It will probably reflect in the sale price.

But once that lease is finished it is taken of the register and then what to do when for instance his daughter is now the owner?

Did anyone reply to above post from Khun Jean.I am interested to learn more.How Khun Jean puts it is how i understood it anyhow that land can be sold at any time along with a lease, but new owner has to honour the lease as long as it is in force. Thereafter if not renewed by original owner you have to start again. Doubtful in my view that original owner will be around anyhow after 30 yrs or will he want to renew, more likely resold it or passed on. Meaning back to square one for owner of house on land he does not own right ?

Correct!

[joecoolonsamui]

How can you own only the building, if the land is on a lease, and can be sold any minute by the kids of the owner, if he gives it to them? Just curios.

check out section 1410-1416 of the CCC

[frankman]

Thanks.

[highdiver]

How can you own only the building, if the land is on a lease, and can be sold any minute by the kids of the owner, if he gives it to them? Just curios.

check out section 1410-1416 of the CCC

horribly wrong yet another superficies advocate

1.the question was for lease and as you know it has a limited time. the superficies itself if done according to the law is limited by time or by life.

2. the superficies when combined with a 30 year lease is limited to 30 years.

3. there many contradictions that one needs to take in a account such as CCC 1403-1409

4.as a rule the owner of the land is also the owner of things that are attached to or form body with the land (Section 139)

[frankman]

interesting

[joecoolonsamui]

How can you own only the building, if the land is on a lease, and can be sold any minute by the kids of the owner, if he gives it to them? Just curios.

check out section 1410-1416 of the CCC

horribly wrong yet another superficies advocate

1.the question was for lease and as you know it has a limited time. the superficies itself if done according to the law is limited by time or by life.

2. the superficies when combined with a 30 year lease is limited to 30 years.

3. there many contradictions that one needs to take in a account such as CCC 1403-1409

4.as a rule the owner of the land is also the owner of things that are attached to or form body with the land (Section 139)

Highdiver do you have any legal training or certification?...because, if not, the I can chalk your ignorance, off the wall assertions (and inability to document what you assert...or, as here, failure to make your point, once again about Code you site) up to that. Please let us know because that will help me formulate my response in a way that is, I hope, educational for you and actually informative to the rest of the folks reading the thread.