Worrying Clause In A Rental Agreement

[luisparis]

Hi

After rather lenghty negociations I thought we finalized a deal on a new residence from my little family. Yet reading the draft contract I see the addendum, which IMO opens a huge security breach with the possibility for the owner to claim I offer one of his staff a position and then kick us out from the apartment and pocket whatever advance rental we have paid plus the 400 000TBH security deposit (2month rentals). I paste below the appendum, any one is familiar with such a clause, what kind of proof would the owner need to take us at fault?

Thanks

Luis

<H1 style="MARGIN: 0cm -2.6pt 0pt 0cm; TEXT-ALIGN: justify">Re: Requesting an additional Clause</H1>

As per LEASE AGREEMENT made on 10^th day of July, 2008. On behalf of the management at , we would like to request an additional Clause which states that “the LESSEE to avoid giving work offers to the LESSORS’ employees. Failing to do so will considered to be a breach of the LEASE AGREEMENT, and shall automatically be terminated and the deposits will not be refunded” to the existing lease agreement.

We appreciate your gestures for taking great prides in our employees and because they are priceless, we would not like any of our employees to be moving from us to any of our tenant firms. Once again let me convey my appreciation for your continual patronage to .

Kindly sign and acknowledge the attached copy and return to our office for our records.

LESSOR ………………………….. Date …………………………….

[luisparis]

I can't say that the above clause, couple with below's, inspires me much:

If the LESSEE does not pay any amounts due within 5 days after the LESSOR notify the LESSEE in

writing to pay such amounts, the LESSOR may terminate the Lease Agreement by giving 15 days

notice. This agreement shall automatically terminate and the deposits will not be refunded. The

LESSOR has the right to lock a unit and can move the LESSEE belongings to store room by giving the police report and the LESSOR have a full legal right to rent this unit immediately.

[BEENTHEREDONETHAT]

Personally I would look elsewhere and forget about this property and dealing with the lessor. It sounds like he would have you by the short hair and you would be sweating it all the time you lived there. Good luck in finding the perfect spot for you and your family.

[joskydive]

Don't sign.

They are letting you know well in advance that they really don't want to give your deposit back and from what has been written, they can easily find any excuse to revoke your tenancy. I don't know about you but I don't like people messing with my stuff either, but, here you are giving them the right to handle, damage and move your gear/property to some place else.

Also, first they are saying they will give you 15 days notice of Lease termination and again, repeating, no deposits returned and then stating in the last para. that they can rent the unit immediately. So, which is it? 15 days notice or instant?

400,000baht deposit is a nice little money earner if they don't like you after a month and then you are out on your ear with some trumped up excuse/reason, with your belongings locked up somewhere and down 400,000baht aswell.

Do they really think you are that dumb or desperate?

[luisparis]

Thanks for the opinions, feeling the same on this side of the computer...Just got back to the office and read the following of the draft... for the least I'm surprised and wouldn't sign the addendum... which is possibly an option as they pushed it as an addendum only. But even for the rest I'm more than the suspicious . Is the following standard in a thai rental contract?:

"If the Lessee does not pay within the next 3 days from the date the Lessor sends the invoice, the Lessor is entitled to receive 5% penalty per month of delay from the Lessee"

and/

"To pay 1 month rent in advance not later than the 10^th _of each month. If the LESSEE does not pay in due time, the LESSOR is entitled to receive 5% penalty per month of delay. Failure to respond to this demand will result in the amount stated herein being deducted directly from your holding bond"

I'm afraid we will stay a bit longer in no deposit involved 1 month serviced apartment rentals... but on the on the other side it is a very nice penthouse with well over 400k worth of furnitures and without beeing desperate the place is very convenient to us and the owner rents a bunch of high end properties in BKK. Now wish I had more feedback on how her properties are run because the lease is for the least slightly odd.

Edited July 10, 2008 by luisparis

[joskydive]

For me, this would be suspect too.

"If the Lessee does not pay within the next 3 days from the date the Lessor sends the invoice, the Lessor is entitled to receive 5% penalty per month of delay from the Lessee"

and/

What's to stop them back dating 3 days? Is there going to be and invoice that is sent to you registered so that you have to sign for it or what? If it comes registered ok, but what then, if it doesn't come on time and you then have to pay an extra 5% through no fault of your own.

Also, I don't really understand why they would put this in as the next in line is that you must pay not later than the 10th of each month anyway with a 5% charge if you are late.

[dotcom]

Are you trying to say 400,000 baht i.e. four hundred thousand baht? see san baht?

What kind of place needs a 400,000 baht deposit?

[CCCP]

Are you trying to say 400,000 baht i.e. four hundred thousand baht? see san baht?

What kind of place needs a 400,000 baht deposit?

Indeed. And even if they didn't scam you, i'm sure they will make interest on your crazy deposit.

[luisparis]

Are you trying to say 400,000 baht i.e. four hundred thousand baht? see san baht?

What kind of place needs a 400,000 baht deposit?

Indeed. And even if they didn't scam you, i'm sure they will make interest on your crazy deposit.

400 000 is two month rental (200k a month) so quite standard as a deposit. Yet the owner is also asking for two months advance payment when moving in, which would make for an even bigger loss if they manage to terminate the contract straightaway. The clauses in the contract are disturbing, as noted by Joskydive, although when I pasted I interverted 2 lines, the original beeing :

To pay 1 month rent in advance not later than the 10^th _of each month. If the LESSEE does not pay in due time, the LESSOR is entitled to receive 5% penalty per month of delay. Failure to respond to this demand will result in the amount stated herein being deducted directly from your holding bond. To pay utility charges and VAT within the Premises: i.e., water, telephone and electricity as per individual meter, during the tenure of the lease. These rates can be increased if any rules and regulations are imposed by the government in this respect. The Lessee will pay the utility charges i.e., overseas telephone, local telephone charges, etc. for which the Lessor will send the invoice. If the Lessee does not pay within the next 3 days from the date the Lessor sends the invoice, the Lessor is entitled to receive 5% penalty per month of delay from the Lessee. The LESSEE has to pay direct to the LESSOR in cash to avoid the future problems of all these bills

I don't have much experience with thai rental contracts except for much cheaper places I used to rent in BKK years ago but those contracts were definetely less threatening. Any one knows how a basic residency rental contract for a property in that price range should read?

Cheers

Luis

[glyph]

I'm confused. The addendum you've included in your post indicates a penalty if you offered any of their employees a job. Yet, your discussion seems to involve you failing to pay your rent on time. In any case, you have the right to alter the proposed rental agreement as you see fit - this is a negotiation, remember - and, if they don't agree, go elsewhere. Not a big deal at all.

[bkkjames]

At 200k a month, if anyone is adding an addendum it should be u. Run away fast from this lessor.

[PattayaParent]

Well regards the Addendum they're just protecting themselves from tenants poaching their staff. Nowt wrong with that, unless that's what you intend to do?

With regards to the late payment of rent, why should they lose money for your late payment? If you had to borrow the money from the bank they'd charge you interest wouldn't they?

The 3 days to pay the utility bills seems a bit short though. What happens if you're on holiday? But then again, they're providing you with a service to go to the various local utilities providers and pay the bills for you and ALL the other tenants. They don't want to have to go each and every day a tenant decides he wants to pay the bill do they? So if they have to they're making a charge for the inconvenience.

It all depends on whether YOU will obey the rules as to whether you will have a problem or not.

[luisparis]

I understand pretty well what negociations are about, yet one main issue here are the very agressive and IMO unreasonnable demands made. I am now very much worried about the mindframe of the lessor, and even if we get better conditions they look like the kind of people looking for troubles.

Besides while I didn't intend to take any of their employees, I'm out of BKK almost half of the time so some short delays in payment are to be expected and usually not a problem as it's the case with the office in BKK and elsewhere plus an apartment in Paris.

Thanks again for the replies, I will think that over a little longer see if it is even worth negocating the contract.

[bkkjames]

Well regards the Addendum they're just protecting themselves from tenants poaching their staff. Nowt wrong with that, unless that's what you intend to do?

With regards to the late payment of rent, why should they lose money for your late payment? If you had to borrow the money from the bank they'd charge you interest wouldn't they?

The 3 days to pay the utility bills seems a bit short though. What happens if you're on holiday? But then again, they're providing you with a service to go to the various local utilities providers and pay the bills for you and ALL the other tenants. They don't want to have to go each and every day a tenant decides he wants to pay the bill do they? So if they have to they're making a charge for the inconvenience.

It all depends on whether YOU will obey the rules as to whether you will have a problem or not.

Yes but the first one is a bit paranoid and IMO sends the wrong message to a prospective tenant because someone in the past stole one of their staff. Especially at this rent level, it's not the kind of message I would be sending. Regarding late payment of rent, if you see that you are going to be away when its due, then you need to make arrangements to pay it in advance.

[A_Traveller]

On the basis of what is here, I'd walk away. Has this property been rented before do you know? Also personally I'd want direct control of any and all bills, not a landlord.

Regards

[dotcom]

Actually standard practice is 3 months rent in advance. First month last month & a damage deposit.

The way that contract is written, well let's just say it appears to have been written by a drunk. I would pass on it seeing as how they don't seem to want to work with their tenants.

As I was explaing to a friend: In case your tenant does pay you by the 10th of the month, go by & tell him or place a note on the door, Your lease has expired. You have 20 days to move out.

I pay my rent on time. No landlord should be made to wait unless you have made prior arrangements.

Walk away from this one. Too many contradictory terms & conditions. (As all these posters have said).

[thaihome]

Have you offered a rewording of the clause? Contract language is also part of the negotiations, not just rent amount. If you are going to disagree, you need to propose alternative language, not just “I can’t live with that”

I would propose to change the language that you have to actually employee one their employees not just make an offer. Non-Poaching clauses are very common in contracts.

As far as the defaulting on the payments, offer it to be 30 days instead of 5. You could also offer to have some notifications of delinquency be done before going into default.

Aggressive contract language, especially by property owners that have burnt in the past, in not unusual.

Does the lease have a clause that if the owner does not fix something, that with proper notification, you are entitled to fix it yourself and deduct from the rent?

Does it spell out when the deposit is to be returned, with a clause that exempts normal wear and tear form damages to be deducted?

I wouldn’t waste a lot of time on this, but if you like the place, it might be worth it to discuss the terms and condition language a bit.

TH

[quiksilva]

Good advice Thaihome, I concur.

In fact if you are not happy with the 'legalese', the first thing i would do is speak with the landlord about the clauses of concern to determine their rationale for including them and find out if they would be willing to amend them so that they reflect both parties concerns equally.

[luisparis]

Thanks again for your input. The place is rented at the moments from tenants who seemed quite satisfied and are moving out because I understood they bought another penthouse nearby. Unfortunately I do not have their contact number but anyway the tenant told me they are private friends with the owner, so the impression and experience might well be favourably biaised.

It's so far the best place we have found within short distance from our office so I might spend some extra time on it and try to discuss it with the owner when back in BKK - thanks TH for the precise advice there. Or seriously just stick to 1 month rents in serviced appartments, a little more expensive and a tad less stylish but very easy to manage.

[JohnC]

Find somewhere else and get a good lawyer to negotiate and check any lease.

[alyx]

There are three or four things I would like to add

1- Deposit is not meant to cover for the unpaid rent. It is a security

2- My friend signed for a nice condo a couple of days ago: trust me he did change some clauses (although not drastically)

3- I have never seen any contract like this one; it should be entitled "Just leave the money on the premisces and leave

4- Regarding the penalties you should base yourself on the official rate which is a bit higher than 7% per annumthe clauses

Conclusion: there are plenty of high end owner willing (eager) to rent their places to nice tenants. take the time to look around or find another real estate agent (I know one if you like)

[alyx]

There are three or four things I would like to add

1- Deposit is not meant to cover for the unpaid rent. It is a security

2- My friend signed for a nice condo a couple of days ago: trust me he did change some clauses (although not drastically). The rent is about the same as the one you WERE going to sign for

3- I have never seen any contract like this one; it should be entitled "Just leave the money on the premisces and leave the premisces"

4- Regarding the penalties you should base yourself on the official rate which is a bit higher than 7% per annum

Conclusion: there are plenty of high end owners willing (eager) to rent their places to nice tenants. take the time to look around or find another real estate agent (I know one if you like). You ll be better off

[luisparis]

Alyx

the contact of a good agent will be most welcome, although I wonder wether they will have much exclusivity in the properies offered, as the 2 agents we've used so far pretty much had the same listing. But yes , please do PM the contact.

I mailed yesterday the agent about the expected changes and got that reply:

"This is the standard contract from the owner. She opens to negotiate for any comments, advices or resonable changes on the contract.

From my experience, almost contracts can be changed according to acceptable agreement by both parties. Now I am also working on this lease agreement.

I will keep continuously an eye if there is something you might be interested in."

I actually would like to get feedback from the owner atitude from his current or past tenants, but don't know how good it is to ask on this open forum . They do own a whole low rise in Narathiwat soi 7/Sathorn soi 3 and several other high end condos in the Sathorn area, including top floor penthouses in high rises and a posh building right on the river. Does it seem like one of you is renting from the same person?[/font]

Edited July 12, 2008 by luisparis

[cclub75]

The bottom line is really simple : with a rent of 200 000 THB per month... you are entitled to write yourself the lease agreeement !

Not the other party.

At such prices, again, you shall hold the pen.

They don't agree ? Just say goodbye.

Scrap all those ridiculous and florentine clauses.

Edited July 12, 2008 by cclub75

[thaihome]

What does the amount of the rent have to do with the terms and conditions? Isn’t that dictated by market conditions? You would be surprised to learn that the market for places at these prices is actually in the owners favor at this point in time. Good ones in prime locations are hard to find.

TH

[glyph]

"What does the amount of the rent have to do with the terms and conditions? Isn’t that dictated by market conditions?"

Absolutely correct. If you read these forums, though, you'll notice that many TVers are looking for the "cheapest" aything, whether it's an apartment, "happy hour", iPod battery replacement, or a "good ole Sunday carvery". For many TVers, 200,000THB represents a decade of apartment rental in BKK.

[dotcom]

The terms & conditions of the original contract are nonsense & in contradiction with each other (the various clauses).

The owner might be grateful if you can come up with a lucid contract that makes sense. Does it pass the sniff test?

I think Sunbelt have rental agreements one could use as a template.

Here is a potential clause:

xx) In case the rent is not paid by the 10th of the month leasee will be considered to have given notice & shall vacate the premises by the end of the month & shall forfeit his damage deposit.

Edited July 14, 2008 by dotcom

[thaihome]

I like these two better:

X.X) If any payment is made by the Lessee after an applicable time limit, a penalty at the rate of 2%

(Two Percent) of the monthly rental shall apply on a daily basis. Any checks returned unpaid will be subject to the 2% charge on a daily basis which shall be in addition to any late charges assessed. Partial payment of a month's rent does not avoid this late fee.

X.X) Rent is due on the 5th (fifth) of each month, and not withstanding any other provision. In this lease, the Lessor may terminate the Lease if Lessee is chronically late with rent payment. Chronic late payments is defined as paying rent after the due date on three or more occasions during the Lease.

TH

[luisparis]

Such a long story and dramatic changes in the contract. We finally agreed on the terms and are supposed to sign tomorrow for a moving date beginning of August. Yet the owner wants me to pay the 400 000TBH deposit upon signing the contract tomorrow, and the agent says it's a standard practice. Does it sound standard to you?

[luisparis]

hhhmmm... actually called the agent to say I wouldn't sign or at least pay deposit ahead, it seems I never got over the feeling of mistrust born from the original lease draft.