A Few Questions About Lease Contracts

[cooL_guY_corY]

Hey was curious about the 30 year lease with option for 30 year renewal.. is it possible say 10 years into the first 30 year lease if both parties agree, to null the first lease contract and make a new one, basically giving 40 years before renewal? also can you go in for the renewal before 30 years? for example after 28 years? As i understand it takes all parties involved to go to the land ownership office for the renewal?

Also I saw a sample lease contract on here a few days ago but i cant find it anywhere now, have no idea what the topic was under, if anyone can post that here would be great.

Basically from what ive read, you are set for the first 30 years of a contract but after that its up in the air and totally up to the landowner (thai) if they want to go for the 30 year renewal. Also after 60 years what happens then? If both parties are agreeable can a new contract be made? I guess everythings up to the landowner..

thanks for all the help in advance

[johnnyk]

Hey was curious about the 30 year lease with option for 30 year renewal.. is it possible say 10 years into the first 30 year lease if both parties agree, to null the first lease contract and make a new one, basically giving 40 years before renewal? also can you go in for the renewal before 30 years? for example after 28 years? As i understand it takes all parties involved to go to the land ownership office for the renewal?

Also I saw a sample lease contract on here a few days ago but i cant find it anywhere now, have no idea what the topic was under, if anyone can post that here would be great.

Basically from what ive read, you are set for the first 30 years of a contract but after that its up in the air and totally up to the landowner (thai) if they want to go for the 30 year renewal. Also after 60 years what happens then? If both parties are agreeable can a new contract be made? I guess everythings up to the landowner..

thanks for all the help in advance

A 30-year lease is the maximum the Land Office will register and that's what counts. If you make a new lease 10 years in its good for 30 years from that date only.

If its in the original agreement then you can renew after 28 years for another 30.

However, 30 years is a long time and a lot can happen including illness and death. If you croak it's irrelevant but if the lessor croaks then all bets are off. If the land is sold before 30 years then the new owner must honour your lease to its conclusion but after that he may not be bound as the contract would have been between you and another person who no longer owns the land.

If you are 10 years old then 60 years down the road you may have something to worry about.

If you are 20+ then its not worth thinking about as you will most likely be senile, if indeed you are alive.

[cooL_guY_corY]

Ok thanks for clearing that up. Also say whenever your going in for your renewal what is involved? All parties at the land ownership office, basically registering the 30 year lease renewal?

Also any idea about that sample lease ? I saw it on here about a week ago but havent been able to see it at all since then.

[stevehaigh]

Ok thanks for clearing that up. Also say whenever your going in for your renewal what is involved? All parties at the land ownership office, basically registering the 30 year lease renewal?

Also any idea about that sample lease ? I saw it on here about a week ago but havent been able to see it at all since then.

you can find a sample lease here http://www.buildingthailand.com/btl-ch1.pdf

[johnnyk]

Ok thanks for clearing that up. Also say whenever your going in for your renewal what is involved? All parties at the land ownership office, basically registering the 30 year lease renewal?

That's my understanding of it but I don't know for sure.

That's why I say all bets are off in 30 years as people die, companies get sold, laws change etc etc

I was going to go leasehold on a house and property but after investigation/research/consideration I changed to freehold via the company route. Its not perfect but fewer loopholes than leasehold, IMO.

[Dragonman]

Ok thanks for clearing that up. Also say whenever your going in for your renewal what is involved? All parties at the land ownership office, basically registering the 30 year lease renewal?

That's my understanding of it but I don't know for sure.

That's why I say all bets are off in 30 years as people die, companies get sold, laws change etc etc

I was going to go leasehold on a house and property but after investigation/research/consideration I changed to freehold via the company route. Its not perfect but fewer loopholes than leasehold, IMO.

Yes, you just go through the same process as when you registered the lease initially. Which should include any provisions you originally made in the "option". The "option" is purely a contract that if the owner does not want to lease he can be forced to do so by Court, or suffer financial penalties. As long that is, it is still the same owner.

[johnnyk]

... The "option" is purely a contract that if the owner does not want to lease he can be forced to do so by Court, or suffer financial penalties. As long that is, it is still the same owner.

Exactly.

Realistically you can't absolutely count on it being more than 30 years, which means you "own" a diminishing asset not much different IMHO than a timeshare which is a piece of paper giving you the right of occupancy for a period.

[cooL_guY_corY]

... The "option" is purely a contract that if the owner does not want to lease he can be forced to do so by Court, or suffer financial penalties. As long that is, it is still the same owner.

Exactly.

Realistically you can't absolutely count on it being more than 30 years, which means you "own" a diminishing asset not much different IMHO than a timeshare which is a piece of paper giving you the right of occupancy for a period.

\\ So if its written into the contract the land owner (thai person) can suffer financial penalties if he/she does not want to renew for another 30 years? So say if the owner is still the same as long as it is in the contract its in his better intrests to just renew ? I was under the impression that the option was totally up to the owner (of course nothing to say that the orginal owner that the option would apply to cant just sell at any time). Either way i am just assuming my house will be gone in 30 years but any info i can get is a great help, thanks in advance, Also on a side note how do property taxes work here?

Edited January 25, 2006 by cooL_guY_corY

[johnnyk]

The option is not registered at the Land Office, only the original 30-year lease is. The option is a private contract and if the land is sold the new owner, IMO, is prolly not bound to honour a contract made betwen you and the previous owner. In any case it could get really complicated (read: expensive) and be a real pain in the arse at the least.

Think of it this way:

I sell you a car and we make a written agreement that I will pay for repairs or whatever for 3 years. After 2 years you sell the car. Am I on the hook to the new owner? I doubt it as the contract is between you and me.

[Dragonman]

The option is not registered at the Land Office, only the original 30-year lease is. The option is a private contract and if the land is sold the new owner, IMO, is prolly not bound to honour a contract made betwen you and the previous owner. In any case it could get really complicated (read: expensive) and be a real pain in the arse at the least.

Think of it this way:

I sell you a car and we make a written agreement that I will pay for repairs or whatever for 3 years. After 2 years you sell the car. Am I on the hook to the new owner? I doubt it as the contract is between you and me.

The new owner is definitely not bound to honour any contract! The best I have achieved in Court, admittedly in UK, not Thailand, is the return of the cost and expenses involved in the setting up of the original option. Does not help when you don't now have a home. Options are not treated in this way in most countries. They are a short term fix in order to find substantial finance or achieve planning permission. Now if you could find a commercial property for lease and sleep in the office you could have a 50 year lease!

[johnnyk]

The option is not registered at the Land Office, only the original 30-year lease is. The option is a private contract and if the land is sold the new owner, IMO, is prolly not bound to honour a contract made betwen you and the previous owner. In any case it could get really complicated (read: expensive) and be a real pain in the arse at the least.

Think of it this way:

I sell you a car and we make a written agreement that I will pay for repairs or whatever for 3 years. After 2 years you sell the car. Am I on the hook to the new owner? I doubt it as the contract is between you and me.

The new owner is definitely not bound to honour any contract! The best I have achieved in Court, admittedly in UK, not Thailand, is the return of the cost and expenses involved in the setting up of the original option. Does not help when you don't now have a home. Options are not treated in this way in most countries. They are a short term fix in order to find substantial finance or achieve planning permission. Now if you could find a commercial property for lease and sleep in the office you could have a 50 year lease!

With a hot plate and a porta-potty

[sfokevin]

One question about these 30 year lease contracts is what is the minimum monthly rent that the land office/courts will allow?... can it be 1 baht per month? Is the 1.5% fee calculated on all 360 monthly payments?

[johnnyk]

One question about these 30 year lease contracts is what is the minimum monthly rent that the land office/courts will allow?... can it be 1 baht per month? Is the 1.5% fee calculated on all 360 monthly payments?

I don't know for sure but they aren't stupid and don't like being taken for stupid.

I think they would look at the market and see what comparable properties rent for.

[sfokevin]

I don't know for sure but they aren't stupid and don't like being taken for stupid.

I think they would look at the market and see what comparable properties rent for.

So I am more confused about the strategy of using Company to buy a House... You put up all the money to buy the house then you must also rent it to yourself at market rates... Would not the Thai owners that have 62% ownership be entitled to 62% of the rent revenue?... seems like you are paying for the property twice.... Can someone clarify the strategy...

Edited January 28, 2006 by sfokevin

[johnnyk]

I don't know for sure but they aren't stupid and don't like being taken for stupid.

I think they would look at the market and see what comparable properties rent for.

So I am more confused about the strategy of using Company to buy a House... You put up all the money to buy the house then you must also rent it to yourself at market rates... Would not the Thai owners that have 62% ownership be entitled to 62% of the rent revenue?... seems like you are paying for the property twice.... Can someone clarify the strategy...

My understanding is do your best to bring income and expenditure into balance.