Lease For Business Premises 3+3+3 Years

[Riley'sLife]

Could someone please explain how the 3+3+3 year leases that seem common here differ from a 9year lease?

Is there any advantage for the tenant, or does this term of lease only provide benefit for the landlord?

[jamescollister]

As no one has responded and I have little knowledge on the subject. I will give you what I am lead to believe, maybe wrong though.

Thai law only allows a 3 year lease, after which period a new lease has to be obtained and registered. So a 3 plus 3 plus 3 gives you an option to renew the lease, but it is only an option. The contract will give the owner the option to increase rent etc. Which means in real terms you re negotiate the lease every 3 years.

Think better to see a real lawyer, not the owners friend or some notary to make sure there are clauses in the agreement that say what the terms for re leasing are.

Have had friends who leased bars on 3 plus 3 only to find that at the end of the first 3 the owner seeing a money making bar tripled the rent.

Step carefully. Jim

[Riley'sLife]

Thanks for that Jim. As you say, it seems a bit of a con geared to the benefit of the landlord with reduced benefit for the tenant. I'm pretty sure your assessment is on the mark otherwise what would be the point for the landlord.

I also heard that a short (3yr) lease doesn't need to be registered on the Chanote, so even less protection for the tenant.

This country needs some serious re-organisation of the property laws!

If anyone has anything else to add to perhaps increase our collective knowledge on the topic please do so.

[brit1984]

My (also limited) understanding is that the 3+3+3 method is much less hassle for the landlord and gives both parties more flexibility.

The major concern for the tenant is that, after the 3 years, the landlord will refuse to extend or will ask for a significant rental increase.

On another thread, someone suggested ripping up the contract every year and signing a new one (so you always know where you stand).

[jimmybkk]

Any lease longer than 3 years needs to be registered at the land office and the landlord is then potentially liable to pay tax on the rental income. As such, most landlords shy away from anything longer than 3 years and prefer to offer the 3+3+3 options.

The problem with this for the tenant (according to what my lawyer told me) is that there is virtually no security beyond that first 3 year term. If, for whatever reason, the owner decides he doesn't want to rent to you for the second lease term he can kick you out. You are then entitled to take him to court and sue him for loss of earnings etc... The problem with this is that the case could spend years in the courts... There will be legal costs associated with the court action and no guarantee that you will win.... And even if you do win, assuming that your accounting firm has been acting in your best interests (as most do) and submitting "tax efficient" balance sheets then the damages awarded will be based on this "tax efficient" figure and you will end up being awarded the best part of sweet F.A.

The best solution may be to request a 10-year lease (for example) and to offer to pay any and all taxes incurred by the owner on top of whatever rent is agreed. There's a good chance the owner will not agree to this as they may not want their ownership of the land to be documented anywhere, but it's worth a try...

[hgma]

As i understood from my lawyer leasing is up to 5 years and renting up to 3 years valid.

No need to register at the land office in case of rentals,in case of leasing a long term, say 30 year lease, it must be registered with land registration office.

An 30 year "accumulated" 5 year lease is, according to my lawyer, the only legal way to have a valid long-term lease.

Accumulated lease works as follows.

specify in the lease contract that every 5 years a new 5 year lease starts with a new accumulated lease fee higher then the previous fee.

Maintenance fee can be implemented to pay for registration tax.

You might even be able, like me, to transfer your lease rights to a new lessee.