Has Anyone Heard Of This Clause On A Lease Contract?

[tric]

Curious if anyone else has ever heard of this clause in a contract. I am interested in leasing a resort however the lease cannot be registered at the land office for reasons that myself and my partners have agreed to. However if not registered at the land office 3 years is only legal after which the landlord could break the contract. However, we have been advised by a reputable law firm that as long as the leasehold improvements to the resort are greater than the rent/lease payments the landlord cannot break the contract. Please let me know if anyone has heard of this before. Or if there are any other method to protect ourselves. Thanks

[joskydive]

No, never heard of this before and if you haven't registered the lease with the land office how will you have any protection?

Also, I believe, that if you have improved the property sufficiently to make it a profitable concern the Landlord can either tell you to get lost and manage it himself or put your rental up so much that it becomes non-profitable to you and your partners.

This, however, is only my opinion.

[lazeeboy]

never enter into a contract that is not registered with the government ,it will only end in tears

[dotcom]

First off you haven't said what the clause is. Second. Have you ever considered consulting a lawyer?

[simon43]

I have to say that you would be inviting huge problems if you do not register the lease at the Land Office. Why do you and your partners not wish to register this lease?

Simon

[GuestHouse]

I have to say that you would be inviting huge problems if you do not register the lease at the Land Office. Why do you and your partners not wish to register this lease?

Simon

Probably because they don't want to pay tax.

--

There are various ways of setting yourself up to be ripped off in Thailand - very many start with trying to buck the system.

Register the agreement, pay the tax and have real legal protections.

[tric]

First off you haven't said what the clause is. Second. Have you ever considered consulting a lawyer?

We have consulted a lawyer and the clause is that if the leasehold improvements are greater than the rent paid, then the lease cannot be broken even after 3 years.

[tric]

Has anyone heard of this also. Lease not registered at land office. The lease has to be renewed every 3 years however instead the 3 years are renewed every year. So after every year the landlord renews a new 3 year contract and if they don't at least you have 2 years advance notice that they are going to screw you.

[joskydive]

Has anyone heard of this also. Lease not registered at land office. The lease has to be renewed every 3 years however instead the 3 years are renewed every year. So after every year the landlord renews a new 3 year contract and if they don't at least you have 2 years advance notice that they are going to screw you.

Lease not registered at land office. = For me, that would mean it's not worth the paper it's written on.

The lease has to be renewed every 3 years however instead the 3 years are renewed every year. = This sounds more like a Rental Agreement and with it having to be renewed every year, that would mean, to me, that the Landlord wishes to up the rent every year. God forbid, you make money! Also, in a rental agreement, at least there they are supposed to upkeep the property, not you.

So after every year the landlord renews a new 3 year contract and if they don't at least you have 2 years advance notice that they are going to screw you. = Sorry, I think they are trying to screw you anyway and get you to pay for the improvements. After that is done, I don't think they will want you to stay. It all depends on how much of your hard earned cash, you and your partners are prepared to lose.

[joskydive]

Tric, I don't know where you are located but I strongly advise you to go and find another, independant, Lawyer and have your own lease drawn up which suits your purpose and offer this to the Landlord to either accept or not.

If he accepts it, it should be on the proviso that it is registered with the Land Office. If he doesn't wish to accept it, then you know he is not being genuine and you will have saved your money to look around for something more feasable.

[quiksilva]

Tric, I have never heard of either of those cases. But in my experience I'd have to say don't bank on it.

The first does not seem viable at all. Considering the court will likely value your Leasehold Improvements (LHI) after an allowance has been made for depreciation (which is usually a 20% straight line amortization). So after 3 years your LHI is only worth 40% of what you put into it, despite its useful life being considerably longer.

In Thailand a 3 year lease comes under contractual law, not property law. It can not be registered. This in itself is no big deal, this is how all commercial rental agreements are drafted, in fact your lawyer's own agreement to rent their office space is most likely just for 3 years. The point is your rights to use that property are defined by the contract, and inferred rights by the language used in the appropriate clauses.

Yes you could theoretically renew a 3 year contract every year in to perpetuity but your rights to stay there are only for 3 years. Personally I would not find this to be of sufficient comfort to invest more in LHI than the rental I am paying out.

In fact when I rent property I prefer not to invest anything at all, because I will have to either reinstate the property to the same condition as it was delivered to me (subject to wear and tear) or accept the fact that the fixtures will belong to the landlord at the end of the term.