30 + 30 Lease Agreement

[Dragonman]

I have a thirty year lease on “my” house and land which is owned by my Thai wife although obviously paid for by myself. The lease is registered at the Land Office (the lease was prepared by a lawyer – shark rather – and then modified by the officials at the Land Office to their satisfaction). What I would like to know is if anyone has a similar setup and actually had to take the situation to court to obtain legal protection against being sold out, evicted etc. Legal documents may be wonderful things but the actions of the courts and legal system is what counts in the end.

The onus is not on you to seek legal protection.It is up to the lessor to take Court Action to enable her/him to sell the property or get you evicted. This has to be due to a breach in conditions of the lease, not because they feel like it! Any Court Action will need to state the breach before the case will be allowed. Actually despite the many "urban myths" regarding Courts and their treatment of foreigners, the law is the law in 99% of cases. There are of course exceptions, particularly when large amounts of money involving powerful people are concerned. A survey of Judges and influential Court Officials in Thailand found 70% had been offered money for "help". They didn't of course ask how many accepted.

[Sir Burr]

I'm not sure about this, but, I think clause 3 makes the whole lease null and void. You are not allowed to mention a further lease on the original lease.

If it is legal to get first refusal, it is meaningless anyway. the owner, if they don't want to renew the lease will offer it to you for a billion baht per year. End of story.

A 30 year lease is the maximum you can have under Thai law. If you start involving periods of time and payment on the original lease, then, this in effect becomes longer than a 30 year lease, which is illegal.

Edited June 27, 2006 by Sir Burr

[Dragonman]

I'm not sure about this, but, I think clause 3 makes the whole lease null and void. You are not allowed to mention a further lease on the original lease.

If it is legal to get first refusal, it is meaningless anyway. the owner, if they don't want to renew the lease will offer it to you for a billion baht per year. End of story.

A 30 year lease is the maximum you can have under Thai law. If you start involving periods of time and payment on the original lease, then, this in effect becomes longer than a 30 year lease, which is illegal.

It will not make the lease "null and void", but it will be taken as a separate contract within the lease and hence not enforceable on any third party. In most countries I would definitely suggest as you say. But in Thailand, Judges have come up with some strange decisions regarding leases in contract law. Nowadays lawyers stick everything they can in the lease, but I think a separate "option agreement" is preferable.

[yorkman]

I have a thirty year lease on “my” house and land which is owned by my Thai wife although obviously paid for by myself. The lease is registered at the Land Office (the lease was prepared by a lawyer – shark rather – and then modified by the officials at the Land Office to their satisfaction). What I would like to know is if anyone has a similar setup and actually had to take the situation to court to obtain legal protection against being sold out, evicted etc. Legal documents may be wonderful things but the actions of the courts and legal system is what counts in the end.

Don't lease the land or set up a company or any other such dodgy scheme.

Get a "superficies". This allows you to have control of the land and and all buildings on it, and lasts for the rest of your natural life (not just 30 years).

The land still belongs to your wife, but you have absolute control. I don't want to spell doom, but this also means if you separate you can decide who lives there, her or you. On your death the superficies expires and the land ( which, of course, belongs to her) reverts to her control.

On a brighter note, a back to back will giving her the house and its contents, and in her case leaving the land to whoever she chooses is a wise addition. The superfices would still be in force in your case. If she leaves it to you you have a short period in which to sell it (1 or 2 years, I cannot remember, because you are farang, or ownership reverts to the state (as I recall), so thats not a wise move; ensure she leaves it to a Thai National)

It's 100% legal, involves a competant lawyers fee and a very small fee at the local land registry. It is recorded on the land registry papers, and in case anybody doubts the legality of this, the land office officials are instructed to inform the lady concerned of the implications of what she is signing...and they do.

It was originally intended for things like rubber plantations etc, but is fine for houses too. I recently registered such an agreement at the land office in Udonthani, it takes about 2 hours there after passing through 3 sections of rubber stamping and counter signing... I have an example of the agreement I can upload (deleting the personal sections of course) in English. You need a Thai legalise version for the land office of course (my English version is competently translated, but I would not want to risk a translation back to Thai), hence the lawyer. It will need 2 witnesses, not family members.

Why everyone does not do this, instead of being sucked by fee seeking lawyer/accountants into the dodgy company route (which the Thais seem likely to outlaw) I am not sure.

Of course if you are 75+ a lease would be equally secure......

[Khun Jean]

My goodness. The nonsense that is said on these forums about leases and usefructs or 'superficies', not to mention company structures and another 101 ways to circumvent the law.

Isn't it time to have a pinned topic with the title

"30 year leases" with subtitle "extension are not enforcable! Whatever you will write in the contract and whatever your lawyer is saying."

That would make it clear for people who are looking for info. As clear as the law is on this subject.

And while were at it. Include a pinned topic. "Foreigner can not own land!" Subtitle "Period!"

The laws are simple, why make them seem difficult with all these fantasies.

Even if you are 75+ it would be nice to be able to leave something for your children when you die!

rant over.

[Dragonman]

Aedes Superficiariae, or building on another man's land, has been around for over 2,000 years. It has been included in many Civil Law Societies, such as Thailand. Why doesn't everyone use it? Simple, there are pitfalls and caveats! Firstly it is not your land, whatever any lawyer tells you! However you have Interdictum de vi, meaning you have rights to occupy the "building" even if threatened with eviction. However when you sit in the garden you are on another person's property, and hence any decent lawyer would tell you a land lease would be required. You have under Thai Law an implicit right of access to your home however. Superficies has been used in Thailand, by thais, for a long time. Mainly on the King's property, where eviction and problems, rarely came into it. It is the right for a "pleb" to have his own little space whilst the master/landowner can enter the land at will. History will show, with the increase of these "Servitudes", "Farangs the new plebs of the 21st century."

[JimShortz]

Don't lease the land or set up a company or any other such dodgy scheme.

Get a "superficies". This allows you to have control of the land and and all buildings on it, and lasts for the rest of your natural life (not just 30 years).

The land still belongs to your wife, but you have absolute control. I don't want to spell doom, but this also means if you separate you can decide who lives there, her or you. On your death the superficies expires and the land ( which, of course, belongs to her) reverts to her control.

On a brighter note, a back to back will giving her the house and its contents, and in her case leaving the land to whoever she chooses is a wise addition. The superfices would still be in force in your case. If she leaves it to you you have a short period in which to sell it (1 or 2 years, I cannot remember, because you are farang, or ownership reverts to the state (as I recall), so thats not a wise move; ensure she leaves it to a Thai National)

It's 100% legal, involves a competant lawyers fee and a very small fee at the local land registry. It is recorded on the land registry papers, and in case anybody doubts the legality of this, the land office officials are instructed to inform the lady concerned of the implications of what she is signing...and they do.

It was originally intended for things like rubber plantations etc, but is fine for houses too. I recently registered such an agreement at the land office in Udonthani, it takes about 2 hours there after passing through 3 sections of rubber stamping and counter signing... I have an example of the agreement I can upload (deleting the personal sections of course) in English. You need a Thai legalise version for the land office of course (my English version is competently translated, but I would not want to risk a translation back to Thai), hence the lawyer. It will need 2 witnesses, not family members.

Why everyone does not do this, instead of being sucked by fee seeking lawyer/accountants into the dodgy company route (which the Thais seem likely to outlaw) I am not sure.

Of course if you are 75+ a lease would be equally secure......

Yorkman, I'd love to see this agreement if you are prepared to post it... PLEASE!!

[chiangmaibruce]

For anyone interested, the section of thai law relating to 'superficies' is section 1410 of the thai civil and commercial code ... which you can view at www.thailawonline.com

[loverboy44]

Posted: Mon Apr 06, 2009 6:21 pm Post subject:

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That's the naked trueth on Ltd. bying land and leasehold 30 plus 30 plus ............bullshit.

It's from a Hua Hin forum and i never read something better then that.

Wake up guys!

CraigDunn and Super Joe, many thanks to both of you for sharing your knowlede with us and for your advice. We consulted our lawyer in Bangkok this morning and explained the advice you gave us but to be completely frank with you he said what you are telling us is a typical sales argument from real estate agents and it has always been known by insiders in the property trade that a Thai limited company does not and never has offered a secure method to own land.

He told us foreigners are restricted from using Thai nominee or proxy shareholders partners in the company and the use of nominees is illegal and will lead to unlawful foreign land ownership. Are you already aware of this and if so are you advising us to buy the land illegally or do you dispute what our lawyer is telling us? This is a genuine question as we are a little confused. There isno doubt you have valuable local knowledge but we also trust what our lawyer tells us.

We asked him why then is it possible to buy land using a Thai company with Thai nominees as they aparently do in Hua Hin and he told us local land officials may turn a blind eye because of corruption and pressure from leading figures with a financial interest in the property market. He informed us that all the land officers have been instructed to investigate the income of every Thai shareholders by looking into their work history of what kind of work they have done and what monthly salary they earned and the Thai shareholders must financially be able to actually invest the amount of capital in the company. So our question is do we have to bribe the land official so he doesn’t ask questions to our Thai nominee shareholders or do you use Thai’s who can tell a good story at the land office? What is the secret???

Our lawyer also told us foreigner directors of a Thai Limited company may be required to have a work permit before any signed document will be accepted and if the company is not a trading company it would be almost impossible for us to obtain a work permit. How do your customers manage to get over this problem?

Another thing which puts us off forming a company to buy the land is our lawyer informed us that under Thai law, every year one third of the directors must retire from office and future law and regulations could make a foreign retiring director ineligible for re-election, therefore the foreigner could under possible future law loose control over the company. Have you heard of this?

Finally, we were told if we were to die our shares in the company do not get transfered to our heirs so our Thai nominees would be in control of the company and therefore own the land and it would be a very complicated process for our heirs to get control of the company. Do you agree with this?

It all sounds very messy and risky to us and we don’t really want to be breaking the law in a foreign country even though many other people are doing the same and seem to be getting away with it, but on the other hand getting the land into a company might be preferrable than the lease we have with our diminishing assett and a company may be the only way we can sell the house, so our next problem is to find our landlady and ask her to do this for us! Our Thai Lawyer has refused to help us with the company route because he says it’s illegal so we will need to find someone who is up on how the corruption works locally in Hua Hin!

Craig, we may take you up on your kind offer to help us but we are returning home this week so whatever we do will need to wait until next October when we return to Hua Hin.

Lev, I hope you don’t mind us pointing out the legal part of your website in the property section states that ‘you can use a Thai Nominee to purchase the house/land and have a 30 year lease with a 30 by 30 year option from the nominee’. As we have now found out it is illegal to use a Thai nominee and there is no legal basis of a 30 by 30 year option, so perhaps you should consider removing this misleading information? To be fair you do make a qualifying statement further down the page ‘Thai law stipulates that a property sold with a Leasehold title deed is only valid for up to 30 years. Renewal for a further 30 years only is at the discretion of the lease holder (land owner)’ I would also state your website is full of excellent information and thank you for allowing us to contribute about this obviously delicate subject!

Sargeant – we wish we had taken your advice before we got ourselves into this mess. You certainly talk a lot of sense on this subject.

A big thanks for all the other supportive responses and we hope with your help we might have saved at least one buyer from getting conned into splashing out their cash for the so-called 90 year lease deception!

[stgrhe]

For anyone interested, the section of thai law relating to 'superficies' is section 1410 of the thai civil and commercial code ... which you can view at www.thailawonline.com

This is the English translation of the law relating to Superficies:

THE CIVIL & COMMERCIAL CODE – CHAPTER III

TITLE VI – SUPERFICIES

Section 1410 – The owner of a piece of land may create a right of superficies in favour of another person by giving him the right to own, upon or under the land, buildings, structures or plantations.

Section 1411 – Unless otherwise provided in the act creating it, the right of superficies is transferable and transmissible by way of inheritance.

Section 1412 – A right of superficies may be created either for a period of time or for life of the owner of the land or the superficiary.

If it is created for a period of time, the provisions of Section 1403, paragraph 3*), shall apply mutatis mutandis.

*) If it is granted for a period of time, the period may not exceed thirty years; if a longer period is stipulated, it shall be reduced to thirty years. The grant may be renewed for a period not exceeding thirty years from the time of renewal.

Section 1413 – If no period of time has been fixed, the right of superficies may be terminated at any time by any partner giving reasonable notice to the other. But when rent is to be paid, either one year's previous notice must be given or rent for one year paid.

Section 1414 – If the superficiary fails to comply with essential conditions specified in the act creating superficies or, when rent is to be paid, he fails to pay it for two consecutive years, his right of superficies may be terminated.

Section 1415 – The right of superficies is not extinguished by destruction of the buildings, structures or plantations even if caused by force majeure.

Section 1416 – When the right of superficies is extinguished, the superficiary may take away his buildings, structures or plantations, provided he restores the land to its former condition.

[stgrhe]

I suppose the law firm in HH he is referring to is one of the "farang based" so-called law firms there. I would never use any of them.

I come to think of the lyrics from the old song "Where have all the flowers gone, long time passing...", which should probably be changed to: "Where have all the money gone, long time passing...", and then "...when will they ever learn, when will they ever learn?"