30 Year Lease Buy Back

[jackyseymour]

I met a couple who had taken out a 30 year lease on a one rai plot of land here on Phuket. The couple parted company shortly after, and so any plans for building their retirement home had to be shelved.

Since then the the owner of the land, a farang, had offered to buy the plot back, at a reduced price, just a couple of k less than the original purchase price, and after all, what could the Lessees do but accept anyway, all the Lessor had to do was refuse to show up at the Land Office with the Lessees and sign over an agreement to a new purchaser /'Lessee' of the land plot.

After some months the Lessor paid, on his own insistence, the Lessees a 10% deposit, saying he had cash flow problems (even though it's widely known this gentleman has many overseas business interests) and would pay the remainder of the re-purchase price, once said cash flow problems were resolved, but within a year.

At the time of paying the 10% deposit, the owner/Lessor, insisted there was no need for any kind or 'receipt' for the payment of the deposit, he said, of course he trusted them. So no proof on either side that any contract or payment of deposit was made.

Since then, the Lessor called a meeting of the Lessees to inform them he was in contact with a potential buyer for the entire plot of land, consisting of around 10 rai, with his own expensive house in a very desirable spot on Phuket quite close to the beach, and would the Lessees sign over their parcel of land to make negotiations with the potential buyer of the entirety, less 'complicated'.

The separated couple, (the Lessees) refused, quite rightly in my view, on the basis that if something were to happen to the Lessor (not suggesting they didn't trust him of course ) they would have no proof of 'tenancy'. Whereupon the Owner/Lessor became very irate and told them he would leave it until the last possible moment to pay them the remaining 90% purchase price.

Without paperwork of any kind showing any contract between the Lessor and Lessee, would the Lessees be able to enforce a verbal agreement to pay the remainder of the re-purchase price? After all, what could they do if the Lessor reneges on his agreement to buy the land back? There is always of course, the scuppering of any plans to resell the Lessor's entire 10 rai plus house, but this buyer may indeed not exist.

The couple albeit separated, are finding themselves very strapped for cash and are relying on the Owner/Lessor paying the balance due, and with the verbal time limit.

I'm feeling 'long con'. Any thoughts?

Edited October 13, 2008 by jackyseymour

[PattayaParent]

There's been an offer, an acceptance and consideration therefore it's a legally binding contract in the eyes of the Law.

And by paying the repurchase price at the last possible moment the owner is doing nothing wrong in complying with the terms of the contract.

So what's the problem?

[Sir Burr]

A verbal agreement isn't worth the paper it's written on.......

[lazeeboy]

i'd start worrying when the years up and the monies have'nt been paid ,at the moment nothing has changed the deal to pay within the yearis still on .

[jackyseymour]

A verbal agreement isn't worth the paper it's written on.......

My thoughts exactly. My thinking is the owner/lessor, believing the Lessees 'just off the boat' (and from what I know of these people I too would find it difficult to assume otherwise, by the by), would've attempted to gain the Lessees' confidence by virtue of initiating the offer of an unasked for deposit (after all, he had nothing to lose by simply promising to buy back, what is, in effect, his own land anyway), and having gained their confidence, assumed they would simply reassign the land back to himself, but came unstuck when the wife refused to do so.

If the Landowner/Lessor refuses to accompany the Tenants/Lessees to the Land Office to countersign any transfer of the Lease to a Third Party, what can one do? Nothing but wait out one's 30 year tenure.

Edited October 13, 2008 by jackyseymour

[thaiwanderer]

My thoughts:-

1. Presumably their lease did not include provision for assignment/transfer otherwise they would not be looking to hang their hat on the verbal agreement to buy back.

2. The ‘verbal agreement’ is not enforceable. Even if a receipt had been given it would need to have been quite an extensive document so as to have any possibility of being theoretically valid. Thereafter litigation costs would likely be prohibitive (especially to them as they now are relying on the return of the money). As an aside, how were they going to be able to afford to live and build their house if they are so strapped for cash now?

3. I doubt it was necessarily a long con (other than being a lease!!!) as they are only in need of the buy back because they have subsequently split up. However from the Lessor’s point of view an opportunity has now arisen as they have split up (regardless of whether there is a potential buyer for the collective plots).

4. Whilst it does not help them now, I do not understand why (especially since they are retirees) they did not register the lease in the name of an offshore company (passing the lease on would then not rely on any action by the lessor, can assist with inheritance and either way is 'tax efficient').

5. I assume they did not take decent legal advice and then form their own opinion on the risks involved and how best to mitigate them. They are in this position because they did not consider possible eventualities before parting with their money.

6. They should certainly not sign the lease back to make negotiations 'less complicated'.

[jackyseymour]

My thoughts:-

1. Presumably their lease did not include provision for assignment/transfer otherwise they would not be looking to hang their hat on the verbal agreement to buy back.

2. The 'verbal agreement' is not enforceable. Even if a receipt had been given it would need to have been quite an extensive document so as to have any possibility of being theoretically valid. Thereafter litigation costs would likely be prohibitive (especially to them as they now are relying on the return of the money). As an aside, how were they going to be able to afford to live and build their house if they are so strapped for cash now?

3. I doubt it was necessarily a long con (other than being a lease!!!) as they are only in need of the buy back because they have subsequently split up. However from the Lessor's point of view an opportunity has now arisen as they have split up (regardless of whether there is a potential buyer for the collective plots).

4. Whilst it does not help them now, I do not understand why (especially since they are retirees) they did not register the lease in the name of an offshore company (passing the lease on would then not rely on any action by the lessor, can assist with inheritance and either way is 'tax efficient').

5. I assume they did not take decent legal advice and then form their own opinion on the risks involved and how best to mitigate them. They are in this position because they did not consider possible eventualities before parting with their money.

6. They should certainly not sign the lease back to make negotiations 'less complicated'.

Yes, your aside 'how were they going to be able to afford to live and build their house', does raise other issues, he's a retired teacher and she's rather partial to shopping. Some people are simply useless with money, I doubt they would have been able to afford to pay for the completion of any construction anyway, so was probably for the best they split.

As to the 30 year lease, I can understand why a Thai would offer that, after all Thai life expectancy, coupled with the fact that the Thais were used to simply dismantling their houses every few years, and erecting new ones, 30 years seemed a long time to them. The old Thai style was, after all, simply a baan ruean, something made of wood on stilts, and these 30 year leases don't take into account that most farang want to build something more stable, preferably in a European style, and therefore much more expensive.

But they took very bad advice from a local farang lawyer, and didn't consider at all the ramifications of anything going pearshaped and needing to sell the land. I mean really, who in their right mind would sign something requiring the already cashed up seller's presence at the Land Office? The words 'barrel' and 'over' spring to mind. After the split they had tried to dispose of the land and on a couple of occasions had had some other sucker interested, but the Lessor was always 'out of the country' at the time.

I thought that the 'long con' might have started not at the initial drawing up of a 30 year lease, (which as you imply, is a long con in itself) but that the Lessor, seeing an opportunity, and knowing their situation very well, may well have devised a confidence trick to part with an undocumented and unasked for 10% deposit, and then call them for a meeting stating he had a buyer, who I understand, was supposed to be buying the entire 10 rai and house, in instalments over a period of three years! So why it was so important to have the one rai plot returned to the Lessor's full ownership straight away raises a few doubts as to the truth of the situation. I thought it possible the Lessor, knowing the Lessees for the ingenus (to put it politely) they are, would very well have agreed to sign the land back at the Land Office, for a fraction of it's original asking price, and they would never have heard from the Lessor again!

As it stands, the wife's run out of money and is completely dependant on the balance of re-purchase price being paid. If she were to have to return to her home country, penniless, how could she possibly ensure reimbursement? Come to that, how could she anyway, if the Lessor decides he's nothing to lose by hanging on to his money for another year or several, particularly if the 'potential buyer' disappears?

Some people should just come here for a nice holiday.

Edited October 13, 2008 by jackyseymour

[thaiwanderer]

Just a nice holiday might have been less expensive anyway.

The Lessor now sees an opportunity, so be it. The Lessees put themselves over the barrel - i mean, what could possibly happen during the next 30 years?

A more fully drafted lease would perhaps have helped but regardless the offshore company lessee route would have solved a lot of problems.

A new purchaser for the whole 10 rai or their 1 rai is their only hope but will involve the lessor taking his renewed cut (and why not?).

[jackyseymour]

Just a nice holiday might have been less expensive anyway.

The Lessor now sees an opportunity, so be it. The Lessees put themselves over the barrel - i mean, what could possibly happen during the next 30 years?

A more fully drafted lease would perhaps have helped but regardless the offshore company lessee route would have solved a lot of problems.

A new purchaser for the whole 10 rai or their 1 rai is their only hope but will involve the lessor taking his renewed cut (and why not?).

Thanks for your input. Their problem, monumental in my view, is that the Lessor must be present to countersign the transfer of the existing 30 year lease at the Land Registry. And on at least two previous occasions he's been 'unavailable'. At one stage he told them he was out of the country and had serious doubts about ever returning to Thailand?! And that was all before this 10% and 'potential buyer paying in instalments' malarky.

I think it quite possible he's hoping they'll have to go home, and how will they ever be able to enforce payment of the balance due? Court cases here take years, but from someone potless in the UK?

The wife told me she worked for a large insurance company in the Uk for several years and learned always to read the fine print. Hmmmm

[donx]

The wife told me she worked for a large insurance company in the Uk for several years and learned always to read the fine print. Hmmmm

That's the problem with verbal agreements - there isn't any fine print to read.

[jackyseymour]

The wife told me she worked for a large insurance company in the Uk for several years and learned always to read the fine print. Hmmmm

That's the problem with verbal agreements - there isn't any fine print to read.

Um, I meant the fine print on the Lease Agreement