Lease Not 30 Years If Pre-decease?

[thaiwanderer]

Does a lease die with the lessee?

I have attempted to search for previous discussions on this but have not found anything particularly focused (excuse me if I have missed something in amongst the numerous threads concerning lease renewals, usufructs etc.).

There was a recent article in the Bangkok Post followed up by Phuket Post concerning the situation whereby the lessee dies during the lease and whether the lessee's heir/s can continue with the lease to the expiry of the currently registered term (this is not about renewals).

Essentially the Bangkok Post article suggests that the (entire) lease dies with the death of the Lessee.

The Phuket Post article included comments by certain foreign lawyers who concede its a grey area (i.e. who knows?).

Barring any discussion of the various ways around this (which themselves are grey areas or have their own 'issues' and have been frequently discussed) I was interested what if anything other posters knew about this, as often we discuss ways for farangs to secure the beneficial use and effective control of real estate with (as far as I can see) no significant mention of this issue.

Also by analogy (without any research so far on my part) does the same apply with the death of the lessor? (I suspect the case for that may not be as strong but....).

So, I am interested in other posters views on:-

1. does the lease automatically die with the death of the lessee?

2. does the lease automatically die with the death of the lessor?

3. are people getting ahead of themselves discussing renewals and the like when the first term is perhaps not so secure?

[kplesq]

A lease is theoretically an asset of estate just like any other asset. It's unusual for the issue to arise (at least in the U.S.), however, because in most instances, at the death of the lessee the lease would ordinarily be considered a liability that the estate would and could disavow. There would ordinarily be no reason for a decedent's heirs to continue to fulfill a personal lease, say for a rental apartment or a car. (There are definitely exceptions, though -- and reasons why the lessor would want to terminate the lease at the death of the lessee.) But theoretically, particularly in the case of the lease for the use of real property where the underlying lease and statutory framework really reflect ownership (as in U.K. or Thailand), I don't see any reason why the heirs couldn't claim a right to continue the term of the lease if they so chose. Compare that to a commercial setting, though, where the lessee would ordinarily be a corporation and lease would (and should) continue unabated.

The short answer to your question, then, is, unless there is some peculiarity of Thai law (which there very well might be), even a lease entered into by an individual and tied to real property would, most likely, be able to be bequeathed or transfered just like any other asset. If a corporation was formed to enter into the lease then there is clearly no question. The executor would need to notify the lessor and advise them of the situation, indicating that the term of the lease will be fulfilled by the testator's heirs.

[stgrhe]

The answer to questions 1 and 2 is no providing the agreement has a binding clause, e.g. "The Parties agree hereto that this Agreement shall be binding on their respective heirs."

For no. 3: No, a renewal clause is important to have in the agreement as the law permits one time renewal.

[andrisdg]

The answer to questions 1 and 2 is no providing the agreement has a binding clause, e.g. "The Parties agree hereto that this Agreement shall be binding on their respective heirs."

For no. 3: No, a renewal clause is important to have in the agreement as the law permits one time renewal.

one way round the situation could be to name your heirs as co -leasees including maybe non adult thai children ,so that if u kark it the property cannot be sold without the consent of the remaining leasees

[thaiwanderer]

Thank you for the replies.

Kplesq:

Unfortunately not in Kansas. Extrapolation of foreign laws or experience tends to lead to disappointment.

Stgrhe:

The idea is that the Lessee is essential to the lease so his/her death automatically ends the lease, in which case any clauses are void. Also if the clause offends the law it is void from the outset.

Andrisdg:

Am aware of that and that is one of the methods to get round the problem – but by the same principle – once last co-lessee dies does the lease?

[kplesq]

Thank you for the replies.

Kplesq:

Unfortunately not in Kansas. Extrapolation of foreign laws or experience tends to lead to disappointment.

Stgrhe:

The idea is that the Lessee is essential to the lease so his/her death automatically ends the lease, in which case any clauses are void. Also if the clause offends the law it is void from the outset.

Andrisdg:

Am aware of that and that is one of the methods to get round the problem – but by the same principle – once last co-lessee dies does the lease?

Much of American law is based on English law, as is Thai property law. e.g. 30-year lease. Entirely a modern concept. What do you base your analysis on? Thai law? I suggest you consult with a Thai lawyer, then. It seems to me, however, that you are, as they say, too clever by half. Good luck.

[thaiwanderer]

Thank you for the replies.

Kplesq:

Unfortunately not in Kansas. Extrapolation of foreign laws or experience tends to lead to disappointment.

Stgrhe:

The idea is that the Lessee is essential to the lease so his/her death automatically ends the lease, in which case any clauses are void. Also if the clause offends the law it is void from the outset.

Andrisdg:

Am aware of that and that is one of the methods to get round the problem – but by the same principle – once last co-lessee dies does the lease?

Much of American law is based on English law, as is Thai property law. e.g. 30-year lease. Entirely a modern concept. What do you base your analysis on? Thai law? I suggest you consult with a Thai lawyer, then. It seems to me, however, that you are, as they say, too clever by half. Good luck.

I was half jokingly pointing out a common trap.

This is a Thai forum, Thai real estate section and the thread concerns Thai leases.

My very very amateur analysis is of Thai law - but even I would not suggest to a Thai supreme court judge that he consider English or American law in the first instance when considering a Thai lease.

Its a matter of general interest to me and 'consult a lawyer' is the sensible answer for all threads in this section (though 2 lawyers tend not to agree) - but that really would rule out much discussion here.

It personally does not affect me as I have freehold but thank you for your comments.

[chiangmaibruce]

1. does the lease automatically die with the death of the lessee?

2. does the lease automatically die with the death of the lessor?

3. are people getting ahead of themselves discussing renewals and the like when the first term is perhaps not so secure?

For a conclusive answer qualified legal advice should be sought

1. Yes, unless you asked for and obtained a clause stating the lease would pass to an heir should you die

2. No, the obligation is transferred to the person who inherits the property

3. No, if the lease is properly drafted and signed (and registered!) then the first term is secure. NB: And remember that leases cannot legally be attached to all forms of land title in Thailand

Edited July 22, 2009 by chiangmaibruce

[samILO]

So, I am interested in other posters views on:-

1. does the lease automatically die with the death of the lessee?

Depending on, if the lease is not considered a reciprocal lease (by supreme court decision) ie. payment for lease is not more then the rental, the Lease dies with the Lessee. For example Lease of Apartment or land and building together. If the lease though is for land and a house is to be build on it whereas the lease agreement states, that upon termination of lease or its expiry the building goes into ownership of the Lessor the lease is not automatically terminated by death of the Lessee. Such lease rights can be passe don to the Lessees hire.

2. does the lease automatically die with the death of the lessor?

Not at all, if registered with the government ie. over 3 years registered, otherwise only binding for 3 years.

3. are people getting ahead of themselves discussing renewals and the like when the first term is perhaps not so secure?

First term secure, but not really the second term. Terms in agreement under point 1 can also state that the hires will receive a new lease at a certain optional price, this would be binding.

Renewals a different subject, but I guess that was discussed already over and over in here.