90-year (3x30) Leasehold?

[johnnyk]

I want to buy a house with leasehold property in a new development.

I have seen/heard different information saying:

1) I can have one 30-year lease with one 30-year extension = 60 years

2) I can have one 30-year lease with two 30-year extensions = 90 years

How would I know the developing company actually has chanote title to the land?

Any information regarding this would be most appreciated.

Thanks.

[Thaipwriter]

I want to buy a house with leasehold property in a new development.

I have seen/heard different information saying:

1) I can have one 30-year lease with one 30-year extension = 60 years

2) I can have one 30-year lease with two 30-year extensions = 90 years

How would I know the developing company actually has chanote title to the land?

Any information regarding this would be most appreciated.

Thanks.

This statement is nearly true:

1) I can have one 30-year lease with one 30-year extension = 60 years

more accurate is that "the 30 year extension" is an "option to renew the original 30 year lease"

dont bank on getting a renewal at 30 years.

forget about 90 year leases...

[Sir Burr]

This statement is nearly true:

1) I can have one 30-year lease with one 30-year extension = 60 years

more accurate is that "the 30 year extension" is an "option to renew the original 30 year lease"

dont bank on getting a renewal at 30 years.

forget about 90 year leases...

This is true. The most you can have is a 30 year lease with option to renew the lease when it expires.

It is not allowed to specify the term of the second lease, or, the price. If it does, the original 30 year lease can be deemed as null and void in a court of law.

Do not fall for the 30+30+30 scam. It has no basis in law.

[Gary A]

That's the way I understand it too. The first 30 year lease is legally binding and is filed at the land office. The second 30 years is at the discretion of the owner. The chanote is not important because no matter who holds it you have a legal 30 year lease.

[johnnyk]

OK, I'm still up in the air.

The following is from Thaivisa.com Nov. 15, 2002:

Most foreigners who “own” land and houses – as opposed to condos, which can be owned outright – go for a leasehold agreement of typically 30 years, with two prepaid 30-year renewals. The lease will include clauses that automatically allow freehold ownership if the laws of foreign ownership change in the future, and the right to sell and/or transfer the property.

This gives you 90 years with strong backup, making it effectively ownership.

From Sunbelt Asia Properties webpage:

Foreigners may also own a condominium with a leasehold agreement. In this case, the property remains in the Thai owner's name, but you sign a 30, 60, or 90 year leasehold agreement, with all the legal obligations and benefits that this offers, including the right to buy, sell, trade and Will the lease to heirs. Our lawyers can help set up all the correct legal procedures and paperwork needed for this type of purchase.

The following is translated from Thai:

Lease of Immovable Property by Aliens and Alien Juristic Persons

Pursuant to Section 538 of the Civil and Commercial Code and the Lease of Immovable Property for Commerce and Industry Act, B.E. 2542 (1999), effective as of 19 May 1999, aliens or alien juristic persons may enter into any contracts for leases of immovable property subject to requirements and criteria set out below.

Lease Term

The term of any lease contract may not exceed 30 years.

Any leases of immovable property for longer duration than 30 years may be made by renewal of the lease contract upon its expiration. Should it be uncertain whether the lessor will lease out such property after the lease contract has expired, an additional provision in respect of the lessor's promise of doing so must be included in the lease contract by simply stating that "at any time prior to the expiration of the lease, the lessee may renew the lease contract upon giving a written notice stating its intention to do so in advance to the lessor".

The duration of a lease of land on which building/s on it take many years to be constructed could be varied as follows;

The parties may agree that the lease term will commence only after a specified date which maybe estimated on the date immediately upon the completion of the construction;

The parties may specify in the contract that the lessee will construct building/s upon the lessor's land and will thereafter take on lease land including said building/s for a period of 30 Years as from the date of the completion of such construction.

Bottom line, I'm still not sure. Anyone else have any experience and/or comments?

Thanks to all who reply.

[Gary A]

This being Thailand I would trust no one who has a dog in the fight. That means a company or person who wants to sell me something.

The link the below came from:

http://www.bia.co.th/011.html

Leases - Although foreigners usually may not buy land, they may lease land on a short or long term basis. Leases for up to three years may be entered into by simple contract and need not be registered.

Leases for more than three years are valid for only three years unless the lease is registered on the Title Deed or the Certificate of Use. Leases for three years with an option to renew may in certain cases be treated as a lease for more than three years and the renewal option may not be valid, unless the lease with the renewal option is registered.

Leases may be registered for up to 30 years (or the life of either party) and where the lease is for a period of years it may provide for a renewal clause allowing the lease to be renewed for an additional period of up to 30 years. However, the renewal provision is not automatic, the parties must appear at the Land Department to register the renewal. There are court decisions which indicate that the renewal clause is personal to the landlord, and thus may not be binding on his heirs or successors.

A change in the law has been made to permit a lease for industrial or commercial purposes to be granted for a term of up to 50 years, and this may also include an option to renew for a further 50 years. The granting of such longer leases has not yet become popular in practice.

[trajan]

A change in the law has been made to permit a lease for industrial or commercial purposes to be granted for a term of up to 50 years, and this may also include an option to renew for a further 50 years. The granting of such longer leases has not yet become popular in practice.

<{POST_SNAPBACK}>

The bottom line is that you should not rely on the enforceability of any leases beyond an initial 30 year lease which is officially registered on the back of the relevant title deed (chanot) at the Land Department. So if you are going to pay rent in advance for the entire 30 years (or make a substantial downpayment), make sure you have an officially registered lease on the title deed.

For future renewal options contained in the lease agreement (beyond the initial 30 year term), they are uncertain given the fact that you will need to register the next 30 year renewed lease term when and if it arises in the future....

(and who knows what will happen so far in the future--in the interim, the underlying land might be sold to another owner who then refuses to honor the lease renewal option contractually granted by the old land owner--the new land owner would still have to wait for the initial 30 year lease term to expire and then could kick you out).

By the way, I heard on the market that the new 50 year initial lease term (under the new law) has actually been used in the new Ascott on South Sathorn Road....so those residential leaseholders have an initial 50 year lease term (instead of the usual initial 30 year lease term)....anyone hear of any other examples of 50 year lease term being implemented??

[Dragonman]

A change in the law has been made to permit a lease for industrial or commercial purposes to be granted for a term of up to 50 years, and this may also include an option to renew for a further 50 years. The granting of such longer leases has not yet become popular in practice.

<{POST_SNAPBACK}>

The bottom line is that you should not rely on the enforceability of any leases beyond an initial 30 year lease which is officially registered on the back of the relevant title deed (chanot) at the Land Department. So if you are going to pay rent in advance for the entire 30 years (or make a substantial downpayment), make sure you have an officially registered lease on the title deed.

For future renewal options contained in the lease agreement (beyond the initial 30 year term), they are uncertain given the fact that you will need to register the next 30 year renewed lease term when and if it arises in the future....

(and who knows what will happen so far in the future--in the interim, the underlying land might be sold to another owner who then refuses to honor the lease renewal option contractually granted by the old land owner--the new land owner would still have to wait for the initial 30 year lease term to expire and then could kick you out).

By the way, I heard on the market that the new 50 year initial lease term (under the new law) has actually been used in the new Ascott on South Sathorn Road....so those residential leaseholders have an initial 50 year lease term (instead of the usual initial 30 year lease term)....anyone hear of any other examples of 50 year lease term being implemented??

<{POST_SNAPBACK}>

This is basically correct. Having worked in Civil and Property law for nearly 30 years in the UK before my retirement, I have never come across an option agreement that could not be broken if the owner wished. I should imagine in Thailand it is even easier!

With regard to 50 year leases on residential properties. there have been no changes to leasing laws in the past 6 years, and the 50 year lease is specifically for immovable commercial and industrial property.

[johnnyk]

All very helpful guys.

My friend did his MBA in BKK and studied property law and says 2X30 is max.

I've e-mailed the developer asking about this.

Anyone else have info?

Many many thanks to all who have replied so far.