Land+house Lease From Thai Wife

[NotaNutter]

Please can somebody confirm that if I buy a house in my (Thai) wife’s name, with myself as the guarantor of mortgage (this part is already agreed with my bank), then my wife can lease the property to me or not? A lawyer has told me that a wife can’t lease a property to her husband because they are classed as the same entity in Thai law. I’d prefer the lease in case we ever split up.

[Sumitr Man]

A lawyer has told me that a wife can’t lease a property to her husband because they are classed as the same entity in Thai law

There are currently 2 schools of thought on this issue:

1 - that they're the same entity - so the lease cannot be done;

2 - that this only applies to "joint" assets and that as a house can only belong to the wife, this is hers to do with as she pleases.

The second school of thought is the one I most frequently see applied in the case where the property is owned by a Thai wife and leased to a farang husband (the first of which would be applied if both parties were Thai).

IMO, the bigger problem you have is that the Bank, who provided you with the mortgage, will put a charge against the property at the Land Dept. and will not allow your wife to lease to you (otherwise they cannot enforce against the security - you're a sitting tenant). It would then be up to you to show them that this structure is financially more preferable - hard to do, given you'll be providing a guarantee and be the sitting tenant. Alternatively you'll have to agree to a lease of less than 3 years (no requirement to register the lease at the Land Dept.).

SM

Edited January 18, 2005 by Sumitr Man

[NotaNutter]

Thanks SM. I know that the lease option is popular, but I'm wondering who do most foreigners lease from if they are not married. Their lawyer?

[Ajarn]

A lawyer has told me that a wife can’t lease a property to her husband because they are classed as the same entity in Thai law

There are currently 2 schools of thought on this issue:

1 - that they're the same entity - so the lease cannot be done;

2 - that this only applies to "joint" assets and that as a house can only belong to the wife, this is hers to do with as she pleases.

The second school of thought is the one I most frequently see applied in the case where the property is owned by a Thai wife and leased to a farang husband (the first of which would be applied if both parties were Thai).

IMO, the bigger problem you have is that the Bank, who provided you with the mortgage, will put a charge against the property at the Land Dept. and will not allow your wife to lease to you (otherwise they cannot enforce against the security - you're a sitting tenant). It would then be up to you to show them that this structure is financially more preferable - hard to do, given you'll be providing a guarantee and be the sitting tenant. Alternatively you'll have to agree to a lease of less than 3 years (no requirement to register the lease at the Land Dept.).

SM

<{POST_SNAPBACK}>

Valuable info (and opinions!), SM! Thanks!

[Sumitr Man]

Most lease from their wife - but (1) the wife uses her Thai name and the farang his name (thereby disguising the marriage); and (2) in nearly all cases, if not all cases, the house is already paid for (i.e. no mortgage). Most bankers I know would not give you a mortgage + 30 year lease. And if you want to know why, read Section 569 of the Civil and Commerical Code:

A contract of hire of immovable property is not extinguished by the transfer of the ownership of the property hired.

QED - default - no enforcement action [repossession sale] as they cannot kick you off the property.

EDIT - sorry rereading your post, if they are not married - they're gf, bf, or friend. Never, ever, ever, put land in the name of your lawyer and lease it back from him. He, for sure, is going to know that Thailand doesn't recognise the concept of Trust law and as legal owner, can do what he wants...

OTH, I have heard of people leasing from the property company that sold them the house in the first place. Up to you whether or not you'd feel happy going down this route. Personally, I would caution agaianst it.

SM

Edited January 18, 2005 by Sumitr Man

[NotaNutter]

I guess I should forget the lease for my own case (because I will borrow the money from a bank, and also my wife’s ID Card/Tabian Ban show her Western surname).

I’m wondering if there’s some protection (however weak) provided by being the guarantor of the mortgage (whilst the mortgage is being paid off of course). For example, do the banks hold onto the title deeds until the mortgage is paid off? Do they seek the guarantor’s approval before handing over the deeds? How does this work? Anybody know?

[Sumitr Man]

NN:

The bank will keep the deeds until such time as the mortgage is repaid.

As for the guarantee, that depends on the wording in the guarantee. If you have the bargining power to do so, you'll not be jointly liable but only have a secondary liability. This way they'll (the bank that is) need to take all actions against your wife (including getting a supreme court judgement) to get the money out of her before coming after you. Of course, if you're jointly liable they won't have to bother with that process

In all seriousness, work-out what your maximum potential liability is. Put that money in an interest bearing account offshore and forget it exists. That way you'll be ok if the worst happens. And, remember, never use all your savings to buy a house in Thailand - 6 Feb is less than a month away, your next visa application is less than 365 days away - no one, not even a PR, can say they'll be in Thailand forever. Make sure you have an exit stragey. Sure, buy the missus a house - but don't sink everything into it.

Good luck

SM

[ZOVOX]

(1) the wife uses her Thai name and the farang his name (thereby disguising the marriage

<{POST_SNAPBACK}>

Your post just raised a question in my head: When we purchased our first house, the house was put in my wife's maiden name, even though we were married a month before, because her id card still had her maiden name. Does this have any legal implications for me; I am specifically thinking about, in the event of a divorce, will the house be considered assets she had prior to marriage because it is her maiden name, because i understand that in thai law assets obtained prior to marriage are not divided ?

[Mobaan]

You have probably heard about the way to register a mortage on the land ,insta\ead of only leasing it back fromyour Thai partner .

The farang pays for the house in cash

House is owned and registr. in Thai patners name

Farang extends mortgage to buy/deveolp house/landto Thai partner at the rate of 6 % per interst per year

Farang registrers mortgage for total purchase price ,plus later improvements.There is a pricetag for the registration of (I believe 2,2% ) of the declared value.

Instead of collecting cash (for the interst) ,farang receives "Rigth of Usage " ,for the duration of the mortgage term -30 years.

This is a scheme recommended by a BKK lawfirm (Vinami) undre German leadership. It is often discrbed in the "TIPP" publication (German)

Has anyone gone this route?

Has anyone heard anything-good or bad about this?

Does anyone know if that has been tested in court?

[ProThaiExpat]

As I have described in a collateral thread that is active, I went the route of loaning the purchase money to my Thai and took back a lease with a penalty clause for disturbance during the term of the lease and a mortgage for the purchase price of the house and the land. Mortgage payments equal rent payments. Recording fees on mortgage, lease, land transfer and tax on rent payments.

I can't think of how to make it stronger.

Pre-nuptial agreements involving the land and house is a consideration for those contemplating marriage and house and land purchase and worried about divorce and the wife taking ones home away from you.

[Sumitr Man]

Pre-nuptial agreements involving the land and house is a consideration for those contemplating marriage and house and land purchase and worried about divorce and the wife taking ones home away from you.

Just one note of caution/heads-up: by its very nature a pre-nup (or ante-nuptial) agreement needs to be made before one gets married. Moreover, the rules, under Thai law, governing ante-nups are strict and are set-out in Sections 1465, 1466, 1467, 1468 and 1469 of the Civil and Commercial Code of Thailand.

In particualr, Section 1469 of the CCC, reads as follows:

Any agreement concluded between a husband and wife during marriage may be voided by either of them at any time during the marriage or within one year from the day of disolution of marriage; provided that the rights of third persons acting in good faith are not affected thereby.

Although I'm not a lawyer, my reading of this has led me to be cautious of any 30 year lease agreement entered into between husband and wife.

it's fun here in Thailand - isn't it!

[NotaNutter]

Just heard of another land/house purchase option from a friend who has first hand experience of this.

Register the land/house in the name of a Thai person and at the same time the Thai person (and their next of kin) sign undated land transfer documents. You keep hold of the title deeds and the signed land transfer docs.

Any comments?

[ProThaiExpat]

Just heard of another land/house purchase option from a friend who has first hand experience of this.

Register the land/house in the name of a Thai person and at the same time the Thai person (and their next of kin) sign undated land transfer documents. You keep hold of the title deeds and the signed land transfer docs.

Any comments?

<{POST_SNAPBACK}>

Since a falang cannot hold title to land in Thailand, I can't see the land office recording those documents since in doing so they would be contravening existing Thai law.

There is support for the notion that a falang can take propterty by will from the Thai owner but must re-convey the property to a Thai within a "reasonable amount of time". Some have suggested that period of time would be six months.

The owner of my house, from whom I have leased, has provided me with such a will, but I can't speak to its effectiveness should it become viable upon death.

[ProThaiExpat]

Pre-nuptial agreements involving the land and house is a consideration for those contemplating marriage and house and land purchase and worried about divorce and the wife taking ones home away from you.

Just one note of caution/heads-up: by its very nature a pre-nup (or ante-nuptial) agreement needs to be made before one gets married. Moreover, the rules, under Thai law, governing ante-nups are strict and are set-out in Sections 1465, 1466, 1467, 1468 and 1469 of the Civil and Commercial Code of Thailand.

In particualr, Section 1469 of the CCC, reads as follows:

Any agreement concluded between a husband and wife during marriage may be voided by either of them at any time during the marriage or within one year from the day of disolution of marriage; provided that the rights of third persons acting in good faith are not affected thereby.

Although I'm not a lawyer, my reading of this has led me to be cautious of any 30 year lease agreement entered into between husband and wife.

it's fun here in Thailand - isn't it!

<{POST_SNAPBACK}>

Section 1469 follows the other quoted sections that refer to pre-nup agreements, which would lead me to surmise 1469 applies to those documents only. There are a lot of Thai lawyers who have misled falang regarding leasing their homes and land from their wives, whether disquised as such or not, if my interpretation is not correct.

[creamontop]

Well my question to all this is : wouldn't it be "easier" to become a Thai instead of keeping "farang" nationality, when you decide to live in your own house in Thailand ? Regarding the ownership what is overhere the big issue.

[udon]

A search of 30+30 in 'all forums' will turn up a lot of extra info.

Good luck.