Watertight Lease W Right To Transfer Ownership

[Dragonman]

sleepyjohn. Regarding "power of attorney". This only requires notarisation not legalisation so if your lessor is happy for this OK, but it will not stop him being devious if he really wants to mess with you.

I'm afraid "executors" are only appointed by the Court in Thailand, but he could include in his will that he would like you to act on his behalf and it would be up to the judge if he agreed. Of course any relative of the lessor could challenge this.

With regard to your friend he will of course take resposibility for his son's interests up to age 18, but he will have little say over the property, he cannot sell without Court consent, and if Court consent is given it must be shown that his SON is buying a new property and that dad makes no money out of it. He has no "power of attorney" over the property.

ben37. A couple of points regarding the scenario.

How can a 16 million mortgage be secured on an 8 million property? If you fell out, and you demanded payment she would legally have to give you 8 million more than the property's value. Ensure she has an independent lawyer to advise her, or you could have problems.

You could not marry in this situation! Is she happy with this?

The lawyer's advice in your last paragraph in incorrect! Contract is enforceable irrespective of ID cards. Don't understand how you can sell the house though, as it will never be yours unless she defaults.

It never ceases to amaze me the complicated lengths some lawyers will go to in order to be "smart". Take it from me there are always pitfalls

[ben37]

Dear Dragonman, dear sleepyjohn,

first of all thank you very much for your thoughtful and interesting independent information. I really appreciate it and I'm very thankful.

Dragonman, as I wrote before I'm not a native english speaking person. Therefore I didn't really understand your remarks.

You wrote :

"How can a 16 million mortgage be secured on an 8 million property? If you fell out, and you demanded payment she would legally have to give you 8 million more than the property's value. Ensure she has an independent lawyer to advise her, or you could have problems.

You could not marry in this situation! Is she happy with this?"

I want a 16 million mortgage because surely the property and building will be worth it in 30 years (too much to explain why, but it is like this).

What you mean by ''if I fell out "" ?

Why you think she needs to have an independent lawyer to advise her and why otherwise I would have problems ?

Why couldn't I marry her ?

A lawyer told me that I can marry her but that I would have to make a marriying contract with her which ensures all my obligations.

I was thinking that the lawyers advise to do this thing with the ID card is not really working. Thanks for clarifiying this. It's so hard to find a perfect (or shall I say just honest lawyer).

Shame on me, I really love this girl and I want to marry her. She is more educated than me (and I'm well educated) and doesn't deserve to be treated as somebody who just wants to take an advantage of this situation. But I'm sort of paranoid since I life here and reading so much on the net. Want to stop this !

Again, thanks Dragonman and sleepyjohn (think we are looking for the same security).

All the Best !

Ben

[Dragonman]

Dear Dragonman, dear sleepyjohn,

first of all thank you very much for your thoughtful and interesting independent information. I really appreciate it and I'm very thankful.

Dragonman, as I wrote before I'm not a native english speaking person. Therefore I didn't really understand your remarks.

You wrote :

"How can a 16 million mortgage be secured on an 8 million property? If you fell out, and you demanded payment she would legally have to give you 8 million more than the property's value. Ensure she has an independent lawyer to advise her, or you could have problems.

You could not marry in this situation! Is she happy with this?"

I want a 16 million mortgage because surely the property and building will be worth it in 30 years (too much to explain why, but it is like this).

What you mean by ''if I fell out "" ?

Why you think she needs to have an independent lawyer to advise her and why otherwise I would have problems ?

Why couldn't I marry her ?

A lawyer told me that I can marry her but that I would have to make a marriying contract with her which ensures all my obligations.

I was thinking that the lawyers advise to do this thing with the ID card is not really working. Thanks for clarifiying this. It's so hard to find a perfect (or shall I say just honest lawyer).

Shame on me, I really love this girl and I want to marry her. She is more educated than me (and I'm well educated) and doesn't deserve to be treated as somebody who just wants to take an advantage of this situation. But I'm sort of paranoid since I life here and reading so much on the net. Want to stop this !

Again, thanks Dragonman and sleepyjohn (think we are looking for the same security).

All the Best !

Ben

The property may be worth 16 million in 30 years, but her mortgage with you is based on today's value. Therefore who would take out, or give, a mortgage of 16 million on a property valued at 8 million. It should be forgotten that this this is currently your girlfriend, it is a financial transaction in law!

When I said "fell out" I meant if you finish on not very good terms. ( it happens)

If she proves to a judge that you tricked her into signing a mortgage that strictly speaking is a way around the alien ownership laws, you may find you get nothing more than the original value of 8 million. Her being advised by a lawyer, and saying she understands the financial implications will help.

Presumably the lawyer said that a pre nuptial agreement would clear the fact that she will now have a mortgage from her husband, on a property she purchased before marriage, and is therefore outside community property laws. I am unclear on whether such a contract is permitted in thai law, and you should clarify with a good financial advisor.

Best of luck anyway Ben. Hope like in my marriage, (so far) none of the advice will be necessary.

[ben37]

Hi Dragonman,

thanks again for great info !

Apart from the mortgage (if I fell out). What's about the lease. I can live with only getting 8 million Baht. But would it be possible that I also loose the right of the 30 years lease ?

What should I do then in your opinion ? A mortgage of 8 million Baht ?

The actuall selling price is 4 million Baht. But with swimming pool, upgrades, furnitures etc (i can prove that through receipts) I would have spent more than 8 million baht.

Thanks again for your time and info !

Ben

[sleepyjohn]

sleepyjohn. Regarding "power of attorney". This only requires notarisation not legalisation so if your lessor is happy for this OK, but it will not stop him being devious if he really wants to mess with you.

Thanx Dragonman,

I think this power of attorney may be well worth writing along with the lease agreement in case of disappearance or otherwise of the lessor.

One would not want to make it onerous or dangerous for the lessor so presumably one could take a "limited" power of attorney, stipulating that one had power "only in relation to property such-and-such".

Presumably one could also ask one's friend to also sign to "in the event of my death and in relation to property such-and such" which may help in that event.

Reasonable?

Edited March 5, 2006 by sleepyjohn

[Dragonman]

sleepyjohn. Really your total control of the property could be included within the lease, other than the fact you will not be the owner.

I do not feel the contract regarding "in the event of my death" would have any influence on the judge appointing an overall Executor for the lessor's estate.

Ben. The lease is a permanent fixture for the 30 years whatever happens. As long as you do not breach any of the clauses.

Personally I would see the 8 million mortgage being OK. That is if by law you can offer a mortgage to a lawful or unlawful wife. I am not convinced, and you need to check it out, probably with the local Land Office.

[Bobcat]

but preference shares do not give a right to a preferential payment out of the capital in case of a winding up!

Nadia 2 - why do you believe this? I know a number of private limited companies whose articles of association provide preferrential rights to preferred shareholders in the event of a dissolution of the company. These have been accepted by the Ministry of Commerce for registration. I would be very interested to hear why you believe that no preferrential payment is possible.

regards,

Bob

[sleepyjohn]

I have made a provisional decision between company and lease.

I have had two meetings with a lawyer in the last two days. My opinion is confirmed that it is quite hard to get the strict letter of the law as a starting point. Rather the lawyers here to a man will tell you what they think you can get away with. I think it's well worthwhile knowing this, but the basic legal arguments should come first.

I get a different opinion from practically everyone I listen to, including lawyers.

The company method has great advantages and might be excellent for active shorter term developments, round trip deals. Also if one already has a business and can blend the two things together. For someone who simply wants to own a house, however, it has elements of deceipt and illegality. One probably WILL get away with this, but it is as it is.

I have come to the decision that if one has a really good "lessor" it is the best way to go.

I have been told by the lawyer today that the options are weak in law. It occurred to me to say I thought that must apply much more so to the company setup. It's leaky including the Thai partners. When I spoke to a friend who actually HAS a lease deal today however he said well it's written in black and white and accepted as such and registered at the Land Department at some cost, so how could they turn round and refute it. He personally has a very old friend as lessor.

I don't, but I am now going to transfer my energy to doing the very best I can to find one. I shall wrap them up in legal safety measures as best i can. It is completely above board with no possible repercussions from the authorities that can conceivably happen anytime to a company.

I shall go for the lease if I can find the person.

Thanx for all your help and may still have more questions.

Sleepyjohn

Thanx for all your help and may still have more questions.

Sleepyjohn

You didn't think i was going away that quickly did you?

Question:

My friend holds the title documents to the land he is leasing. is this worth doing to try to halt sale of the land or raising of funds?

What physically happens to the title normally when a lease is registered?

Edited March 7, 2006 by sleepyjohn

[Dragonman]

I have made a provisional decision between company and lease.

I have had two meetings with a lawyer in the last two days. My opinion is confirmed that it is quite hard to get the strict letter of the law as a starting point. Rather the lawyers here to a man will tell you what they think you can get away with. I think it's well worthwhile knowing this, but the basic legal arguments should come first.

I get a different opinion from practically everyone I listen to, including lawyers.

The company method has great advantages and might be excellent for active shorter term developments, round trip deals. Also if one already has a business and can blend the two things together. For someone who simply wants to own a house, however, it has elements of deceipt and illegality. One probably WILL get away with this, but it is as it is.

I have come to the decision that if one has a really good "lessor" it is the best way to go.

I have been told by the lawyer today that the options are weak in law. It occurred to me to say I thought that must apply much more so to the company setup. It's leaky including the Thai partners. When I spoke to a friend who actually HAS a lease deal today however he said well it's written in black and white and accepted as such and registered at the Land Department at some cost, so how could they turn round and refute it. He personally has a very old friend as lessor.

I don't, but I am now going to transfer my energy to doing the very best I can to find one. I shall wrap them up in legal safety measures as best i can. It is completely above board with no possible repercussions from the authorities that can conceivably happen anytime to a company.

I shall go for the lease if I can find the person.

Thanx for all your help and may still have more questions.

Sleepyjohn

Thanx for all your help and may still have more questions.

Sleepyjohn

You didn't think i was going away that quickly did you?

Question:

My friend holds the title documents to the land he is leasing. is this worth doing to try to halt sale of the land or raising of funds?

What physically happens to the title normally when a lease is registered?

Title normally registered at Land Office, documented and held by owner of land. Only lease is retained by lessee.

Some people hold the title, but it has no meaning in law and an Injunction for release will be granted quickly.

[Nadia 2]

but preference shares do not give a right to a preferential payment out of the capital in case of a winding up!

Nadia 2 - why do you believe this? I know a number of private limited companies whose articles of association provide preferrential rights to preferred shareholders in the event of a dissolution of the company. These have been accepted by the Ministry of Commerce for registration. I would be very interested to hear why you believe that no preferrential payment is possible.

regards,

Bob

A preference as to repayment of capital may be given. In general preference shares do not give a right to a preferential payment out of the capital.

You don't have to study too much Thai property law to know that the whole landholding ownership is illegal and should the Thai Government start striking companies off the register these companies will no longer exists as a juristic person. The land will be transferred (by law) to the shareholders, co-ownership irrespective preference or ordinary shares. The foreign shareholder will be commanded by the chief of the land Department to sell out his (minority) co-ownership of the said land within at least 180 days but no more than 1 year pursuant to article 94 of the Land Code Act.

[sleepyjohn]

Dear Dragonman and Nadia or anyone else ....

I have been reading back through this thread and, having decided to use the lease, I am a bit shocked to have forgotten that a legal argument was unresolved.

It is all in posts 8,9,10, and 12.

It started with Nadia's:

'The lessee is the essence of the lease agreement. Therefore, should the lessee die, the lease contract will be terminated and the lease rights WILL NOT transfer to the heirs of the lessee'.

Dragonman then suggested that the new lease laws overturned this, and later we have:

"Ben. The lease is a permanent fixture for the 30 years whatever happens. As long as you do not breach any of the clauses."

The two statements are mutually exclusive.

I am rather shocked if the first quote is true. Why should something that I have paid for disappear with my death? Why shouldn't it go to where it belongs, my family or charity or wherever i want.

Must I assume this is still up in the air? It would be a serious minus to my choice of lease as the way to go.

thanx SJ

[Dragonman]

Dear Dragonman and Nadia or anyone else ....

I have been reading back through this thread and, having decided to use the lease, I am a bit shocked to have forgotten that a legal argument was unresolved.

It is all in posts 8,9,10, and 12.

It started with Nadia's:

'The lessee is the essence of the lease agreement. Therefore, should the lessee die, the lease contract will be terminated and the lease rights WILL NOT transfer to the heirs of the lessee'.

Dragonman then suggested that the new lease laws overturned this, and later we have:

"Ben. The lease is a permanent fixture for the 30 years whatever happens. As long as you do not breach any of the clauses."

The two statements are mutually exclusive.

I am rather shocked if the first quote is true. Why should something that I have paid for disappear with my death? Why shouldn't it go to where it belongs, my family or charity or wherever i want.

Must I assume this is still up in the air? It would be a serious minus to my choice of lease as the way to go.

thanx SJ

This was the case up to 1999, but I believe from Reports and Legal Papers this is not now the case.

Probably best to ask your lawyer drafting the lease his opinion, but another lawyer's opinion may be found on www.phuketgazette.com/issuesanswers/details.asp?id=501

[Nadia 2]

Dear Dragonman and Nadia or anyone else ....

It started with Nadia's:

'The lessee is the essence of the lease agreement. Therefore, should the lessee die, the lease contract will be terminated and the lease rights WILL NOT transfer to the heirs of the lessee'.

Dragonman then suggested that the new lease laws overturned this, and later we have:

"Ben. The lease is a permanent fixture for the 30 years whatever happens. As long as you do not breach any of the clauses."

The two statements are mutually exclusive.

This was the case up to 1999, but I believe from Reports and Legal Papers this is not now the case.

Probably best to ask your lawyer drafting the lease his opinion, but another lawyer's opinion may be found on www.phuketgazette.com/issuesanswers/details.asp?id=501

The general rule; in the event of death of the lessee the lessor (assuming the lessor has concrete proof in the form of a death certificate) can request the Land Office to remove the lease from the title or in case of a short lease the lease will simply be terminated. Supreme Court Judgment 1108/ 1994; 'The lessee is the essence of the lease agreement. Therefore, should the lessee die, the lease contract will be terminated and the lease rights will not transfer to the heirs of the lessee'.

Section 544; ‘Unless otherwise provided by the contract of hire, a hirer cannot sublet or transfer his rights in the whole or part of the property hired to a third person’ - therefore you should include a clause that in the event of death of the Lessee prior to the expiration of the lease Term your heirs shall continue to lease the land - or that the lease will be assigned subject to a condition that takes effect when the condition is fulfilled etc… will in my opion be a lease right that will pass on to future heirs/ lessors. Without this clause the lease will be terminated.

Again - the 30-year renewal options are not secure (as these are not real rights) and these will not pass on to the heirs or future lessors (unless….).

[Dragonman]

Dear Dragonman and Nadia or anyone else ....

It started with Nadia's:

'The lessee is the essence of the lease agreement. Therefore, should the lessee die, the lease contract will be terminated and the lease rights WILL NOT transfer to the heirs of the lessee'.

Dragonman then suggested that the new lease laws overturned this, and later we have:

"Ben. The lease is a permanent fixture for the 30 years whatever happens. As long as you do not breach any of the clauses."

The two statements are mutually exclusive.

This was the case up to 1999, but I believe from Reports and Legal Papers this is not now the case.

Probably best to ask your lawyer drafting the lease his opinion, but another lawyer's opinion may be found on www.phuketgazette.com/issuesanswers/details.asp?id=501

The general rule; in the event of death of the lessee the lessor (assuming the lessor has concrete proof in the form of a death certificate) can request the Land Office to remove the lease from the title or in case of a short lease the lease will simply be terminated. Supreme Court Judgment 1108/ 1994; 'The lessee is the essence of the lease agreement. Therefore, should the lessee die, the lease contract will be terminated and the lease rights will not transfer to the heirs of the lessee'.

Section 544; ‘Unless otherwise provided by the contract of hire, a hirer cannot sublet or transfer his rights in the whole or part of the property hired to a third person’ - therefore you should include a clause that in the event of death of the Lessee prior to the expiration of the lease Term your heirs shall continue to lease the land - or that the lease will be assigned subject to a condition that takes effect when the condition is fulfilled etc… will in my opion be a lease right that will pass on to future heirs/ lessors. Without this clause the lease will be terminated.

Again - the 30-year renewal options are not secure (as these are not real rights) and these will not pass on to the heirs or future lessors (unless….).

I agree that it is necessary to draw up the lease to include the inheritance provision. However I still do not see as a matter of law, why the definition of "lease" for commercial property should be different. This no longer makes it a "general rule" for leases as previously seen by the Supreme Court.

[sleepyjohn]

Thankyou Dragonman and Nadia for your opinions. Although they differ a little I do think you are both really doing your best.

I intend to draw up the best lease possible. You may remember I have as a starting point the lease a friend of mine is using. It seems pretty comprehensive although there is no mortgage agreement from lessee to lessor in his case. In this case it includes covenants pertinent in the event of the death of the lessor or the lessee:

8.4 SUCCESSION

The Lessor agrees that this Agreement shall be held binding to all statutory heirs, legatees, administrators and executors of the estates, custodians, curators, subrogees, receivers, liquidators or statutory assigns of both Parties hereto according to the following:

8.4.1 In the event of assignment of this Agreement on the part of the Lessor in accordance with this Clause 8.4, the Lessor promises to the full extent legally possible cause the successor to the Lessor in right or assign to bear full performance of the Lessor according to this Agreement which shall be executed in writing and brought for registration at the concerned Land Department Office.

8.4.2 In the event of this Agreement is extinguished by the death of the Lessee during the lease term hereunder, the Lessor agrees and consents to allow the statutory heirs, descendants, legatees or statutory assign of the Lessee to lease the Leased Land for the remainder of the lease term hereunder and subject to the same provisions and covenants contained herein.

8.4.3 In the event the successor of the Lessor in right or assign is a natural person, the Lessor promises to the full extent legally possible cause such person to include the provisions of this Clause into the provisions of their last will and testament, if any, for the future benefit of the Lessee and successors to the Lessee in right or assign.

VERY important.

Would this cover BOTH the events....the death of the lessor OR the lessee? Are they valid ?

I have also seen one of your answers:

Section 544; ‘Unless otherwise provided by the contract of hire, a hirer cannot sublet or transfer his rights in the whole or part of the property hired to a third person’ - therefore you should include a clause that in the event of death of the Lessee prior to the expiration of the lease Term your heirs shall continue to lease the land - or that the lease will be assigned subject to a condition that takes effect when the condition is fulfilled etc… will in my opion be a lease right that will pass on to future heirs/ lessors. Without this clause the lease will be terminated.

Would the following which is in my friend's agreement cover this adequately do you think? You may see it also provides for a renewal of the ageement with any person the lessee chooses.....opinion on that?

7.1 SUBLETTING OR LEASE ASSIGNMENT

The Lessee is entitled to sublet or assign all or any part of the Leased Land or assign the leasehold hereunder to others and/or lease or transfer all or any part of the building structures erected by the Lessee on the Leased Land to others and register the same without obtaining further approval from the Lessor whereupon it shall be deemed that all the particulars set forth and agreed upon in this Agreement shall be held binding and in effect between the recipient of such rights from the Lessee under this clause and the Lessor as originally stated herein.

In the event the Lessee desires to terminate this Agreement to allow the recipient of such assign from the Lessee enter into a new lease agreement for the Leased Land and register the same with the Lessor subject to the same terms and conditions contained in this Agreement, the Lessor agrees to proceed with the same within thirty (30) days of receiving written intention thereof from the Lessee.

[Dragonman]

The clauses seem fine, other than I don't like leases, or any legal documents for that matter, written in early 20th century legal jargon. My old Law Prof. would have been proud however.

[sleepyjohn]

As a seperate issue to the last post I have started trying to draw up a mortgage agreement relevant to the land. I have never done this before or even seen one. I am very interested to receive, perhaps by private message, anyone else's mortgage agreement to study, to check if I am thinking of everything...probably not. I would be willing to return my prospective wording for your aid also.

Would the mortgage agreement normally be attached to the lease itself or separate?

Thanx to all

Sleepyjohn

Edited March 13, 2006 by sleepyjohn

[Dragonman]

As a seperate issue to the last post I have started trying to draw up a mortgage agreement relevant to the land. I have never done this before or even seen one. I am very interested to receive, perhaps by private message, anyone else's mortgage agreement to study, to check if I am thinking of everything...probably not. I would be willing to return my prospective wording for your aid also.

Would the mortgage agreement normally be attached to the lease itself or separate?

Thanx to all

Sleepyjohn

Before you draft the mortgage get your lawyer to check with Land Office in your area that they will accept. Some have been known to refuse due to de facto foreign ownership rules. Lawyers can sometimes "persuade" the Land Office. I believe scotsman previously posted and seemed to have had some good advice from his lawyer regarding the mortgage agreement.

[sleepyjohn]

Before you draft the mortgage get your lawyer to check with Land Office in your area that they will accept. Some have been known to refuse due to de facto foreign ownership rules. Lawyers can sometimes "persuade" the Land Office. I believe scotsman previously posted and seemed to have had some good advice from his lawyer regarding the mortgage agreement.

I shall certainly follow your advice, and thanx for it D'man.

I have personally never had a mortgage or a lease.

Can the mortgage agreement be attached to the lease itself or should it be separate? The advantage with attachment is I think one can make repayment conditional on non obeyance of covenants in the lease. I include here a snippet from what I have already drawn to illustrate:

"The lessor agrees this loan is repayable in any case after 25 years, or within 30 days in the event of non compliance with any of the covenants of this lease, and that his or her heirs and assignees will also be bound by this repayment and these covenants and the lessor will make these heirs and assignees aware of these conditions"

On the other hand might such a condition be considered tantamount to ownership and thus illegal?

[Dragonman]

Before you draft the mortgage get your lawyer to check with Land Office in your area that they will accept. Some have been known to refuse due to de facto foreign ownership rules. Lawyers can sometimes "persuade" the Land Office. I believe scotsman previously posted and seemed to have had some good advice from his lawyer regarding the mortgage agreement.

I shall certainly follow your advice, and thanx for it D'man.

I have personally never had a mortgage or a lease.

Can the mortgage agreement be attached to the lease itself or should it be separate? The advantage with attachment is I think one can make repayment conditional on non obeyance of covenants in the lease. I include here a snippet from what I have already drawn to illustrate:

"The lessor agrees this loan is repayable in any case after 25 years, or within 30 days in the event of non compliance with any of the covenants of this lease, and that his or her heirs and assignees will also be bound by this repayment and these covenants and the lessor will make these heirs and assignees aware of these conditions"

On the other hand might such a condition be considered tantamount to ownership and thus illegal?

I, personally, would prefer to see the mortgage as a separate entity. Heirs and assignees should have have little effect, as the property is held on mortgage, and repayment conditions are taken on by the heirs of the estate, and the property cannot be sold without your extinguishing the mortgage.

[sleepyjohn]

I, personally, would prefer to see the mortgage as a separate entity. Heirs and assignees should have have little effect, as the property is held on mortgage, and repayment conditions are taken on by the heirs of the estate, and the property cannot be sold without your extinguishing the mortgage.

I'm tending to agree with you now Dragonman.

I'm getting down to having to make concrete proposals to my potential lessors. They are a very nice couple, he educated English and she an educated Thai. I don't want to scare them with the mortgage part.

I think requiring mortgage rate or mortgage rate plus 1% or anything that might be way off in relation to the value of the property in the future could be scary for the lessor and unsatisfactory to the lessee, me, simply because it does not necessarily estimate the value of the property.

Would it be legal to require repayment not for a specific amount but for the value of the property estimated by say the largest local real estate company at that point in the future, or related to that amount?

(I have actually thought that to not scare one's lessors off one could make the potential repayment say 90% of the estimated value repayable within 6 months. This is enough to ease one's mind but not so much as to scare anyone off, and reasonable timewise)

Thanx again, SleepyJ

Edited March 17, 2006 by sleepyjohn

[Dragonman]

I, personally, would prefer to see the mortgage as a separate entity. Heirs and assignees should have have little effect, as the property is held on mortgage, and repayment conditions are taken on by the heirs of the estate, and the property cannot be sold without your extinguishing the mortgage.

I'm tending to agree with you now Dragonman.

I'm getting down to having to make concrete proposals to my potential lessors. They are a very nice couple, he educated English and she an educated Thai. I don't want to scare them with the mortgage part.

I think requiring mortgage rate or mortgage rate plus 1% or anything that might be way off in relation to the value of the property in the future could be scary for the lessor and unsatisfactory to the lessee, me, simply because it does not necessarily estimate the value of the property.

Would it be legal to require repayment not for a specific amount but for the value of the property estimated by say the largest local real estate company at that point in the future, or related to that amount?

(I have actually thought that to not scare one's lessors off one could make the potential repayment say 90% of the estimated value repayable within 6 months. This is enough to ease one's mind but not so much as to scare anyone off, and reasonable timewise)

Thanx again, SleepyJ

Strictly speaking it should be linked to an interest rate, as it must be open for normal investigation of excessive interest rates under the law.

[sleepyjohn]

Strictly speaking it should be linked to an interest rate, as it must be open for normal investigation of excessive interest rates under the law.

Roger that D'man.

A friend today suggested a way to not scare my lessor by putting in onerous clauses about repayment.

Suppose the price of the land is 2.5m baht. My friend suggested I make the repayment sum 2.5million also so that the lessor would never likely be "in the red" compared to the value of the land.

BUT oneself or another "friend" would have an option to buy at a future date immediately the original lease is lapsed at that same price, 2.5m. Perhaps one would pay a nominal 1000 baht towards the option buy price to "fix"it.

If the land price has risen to 10 million it really doesn't matter as one still has the right to buy at the original rate, which should remove the temptation to not renew for perceived profit.

I might say I feel I personally have found an excellent and honest lessor, but one has to consider the case where one's heirs are dealing with one's lessor's heir, maybe an evil alcoholic uncle.

What do you think of that D'man?

Edited March 18, 2006 by sleepyjohn

[Dragonman]

Strictly speaking it should be linked to an interest rate, as it must be open for normal investigation of excessive interest rates under the law.

Roger that D'man.

A friend today suggested a way to not scare my lessor by putting in onerous clauses about repayment.

Suppose the price of the land is 2.5m baht. My friend suggested I make the repayment sum 2.5million also so that the lessor would never likely be "in the red" compared to the value of the land.

BUT oneself or another "friend" would have an option to buy at a future date immediately the original lease is lapsed at that same price, 2.5m. Perhaps one would pay a nominal 1000 baht towards the option buy price to "fix"it.

If the land price has risen to 10 million it really doesn't matter as one still has the right to buy at the original rate, which should remove the temptation to not renew for perceived profit.

I might say I feel I personally have found an excellent and honest lessor, but one has to consider the case where one's heirs are dealing with one's lessor's heir, maybe an evil alcoholic uncle.

What do you think of that D'man?

This can be included in the lease in that "when cosidering selling the property first refusal must be given to either your thai nominee, or if laws change yourself, at a fixed price of 2.5m baht plus fees." Note however that of course, the more convoluted the lease, the more it can be seen as a front for foreign ownership.

[sleepyjohn]

Note however that of course, the more convoluted the lease, the more it can be seen as a front for foreign ownership.

Very interesting that you finished on this note last time D'man.

I have been looking for the right lawyer....hard to find here I think.

Today I consulted with one who has a good reputation (and very expensive I might add).

He seemed much more thoughtful and less shall we say "basic" than anyone else I have spoken to.

As well as learned law tomes he has Machiavelli and Gore Vidal in his bookshelf. His gown was hanging on the door.

I outlined my story and started about I had decided on a lease method. After a while he stopped me short.

I am going to recommend a loan agreement instead, he said. He feels that leases of the complicated type I am suggesting are just that, too complicated. So he suggested the loan agreement with the mortgage registered against the property.

What if the value goes up as I build, and land values rise, I asked.

If you build the loan is simply raised. We can also build in that you can get a, say 80%.... and here he searched for a word...."consideration" of any rise in value.

It can't be sold, and any potential problems you can potentially just call in the loan, so they won't happen.

Wadya think of that?

[sleepyjohn]

Whoops

[Nadia 2]

Note however that of course, the more convoluted the lease, the more it can be seen as a front for foreign ownership.

Very interesting that you finished on this note last time D'man.

I have been looking for the right lawyer....hard to find here I think.

Today I consulted with one who has a good reputation (and very expensive I might add).

He seemed much more thoughtful and less shall we say "basic" than anyone else I have spoken to.

As well as learned law tomes he has Machiavelli and Gore Vidal in his bookshelf. His gown was hanging on the door.

I outlined my story and started about I had decided on a lease method. After a while he stopped me short.

I am going to recommend a loan agreement instead, he said. He feels that leases of the complicated type I am suggesting are just that, too complicated. So he suggested the loan agreement with the mortgage registered against the property.

What if the value goes up as I build, and land values rise, I asked.

If you build the loan is simply raised. We can also build in that you can get a, say 80%.... and here he searched for a word...."consideration" of any rise in value.

It can't be sold, and any potential problems you can potentially just call in the loan, so they won't happen.

Wadya think of that?

Your lawyer may have Machiavelli in his bookshelf, but he is probably thinking about the legal fees involved....

If I understand you correctly, your lessor will sign a loan agreement that he has received 2.5 million from you as a loan and he only has to repay this loan in the event of non compliance with any of the covenants of the lease (like the renewal option after 25 or 30 years), with a mortgage registered against the land as the security for the performance? Doubtful construction. Lets say the lessor fails to comply after 25 years, then you would have to go to Court for a judgment ordering the property mortgaged to be seized and sold..... I do not think any judge will award such a claim. If your claim is not barred by prescription it will probably be seen as one deal together with the lease, as some external penalty clause and would in my opinion not be enforceable under Thai law. But even if it is possible to register the mortgage and say it would be seen as a real loan, I'm curious how it will be drafted. I would think the return of the loan must be started by part payments or interest or your right to claim repayment is barred by prescription. A condition refering to the lease will in my opinion be seen as clear proof that the loan agreement is part of the lease...

In general; (mortgage or not) a claim is barred by prescription if it has not been enforced within the period of time fixed by law. This period can be interrupted by for example by the payment of interest, part payment etc.

It seems unlikely to me that there is a legal secure way that allows you to say after 25 years, by the way you owe me 2.5 million + interest if you do not renew my lease……

But maybe I'm missing something and there is more to it. Keep us updated.

[sleepyjohn]

Thankyou so much Nadia but he does NOT want a lease. He thinks a simple (well, not quite simple) loan agreement and mortgage registration is stronger because the lease is too complicated and smacks of trying to circumvenmtt the Thai law.

The thing i haven't been into in anything except the very basics is that he thinks he can tie a percentage, maybe 80% of any rise in value in teh property to the repayment amount.

This soundeed strange to me, but on consideration why shouldn't an investor get returns tied to rise in value.

What do you think Nadia, D'man?

[Dragonman]

Thankyou so much Nadia but he does NOT want a lease. He thinks a simple (well, not quite simple) loan agreement and mortgage registration is stronger because the lease is too complicated and smacks of trying to circumvenmtt the Thai law.

The thing i haven't been into in anything except the very basics is that he thinks he can tie a percentage, maybe 80% of any rise in value in teh property to the repayment amount.

This soundeed strange to me, but on consideration why shouldn't an investor get returns tied to rise in value.

What do you think Nadia, D'man?

Personally I think a lease is a far stronger concept than anything else under thai law, but of course all lawyers will have their own ideas. Whatever, I would not consider a mortgage without also a lease, as the mortgage may be deemed illegal at any time, not so the lease. I would be interested to find out when your lawyer has seen any commercial mortgage linked to value! I have not!

[sleepyjohn]

Personally I think a lease is a far stronger concept than anything else under thai law, but of course all lawyers will have their own ideas. Whatever, I would not consider a mortgage without also a lease, as the mortgage may be deemed illegal at any time, not so the lease. I would be interested to find out when your lawyer has seen any commercial mortgage linked to value! I have not!

Ah now that's very informative D'man because as a layman I would have thought a recorded debt would have been stronger.

As for the "80% of rise in value" concept , well if this was a regular investment loan, wouldn't it be reasonable to "divide the spoils?" This must happen in so-called "real life" mustn't it? How could one build this in?

I reiterate that I feel I have a fine lessor and don't mind the owed amount being a bit under par....80% of a rise would be sufficient I'm sure.

I shall put what you have said to this lawyer D'man, and thanx again for your advice.

ps: Remembering what you said in a past post about checking if the relevant land department disallows these sort of leases. Would a reasonable option be to register the mortgage but keep the lease non registered....does this weaken the lease's validity much?