30 Year Land Lease From Farang

[5ky]

When purchasing land on a 30 year lease, should it only be done from a Thai national ??

I don't see how my investment would be safe, if bought from a farang who owns the land via a Thai Ltd co.

Sorry if this is a silly question

[Delight]

In my view a lease with a Thai company is better than similar with a Thai national. If the Thai national dies –so does the lease.

Safer with a company I think.

I am no expert –others will confirm or suggest better alternatives

[johnnyk]

In my view a lease with a Thai company is better than similar with a Thai national. If the Thai national dies –so does the lease.

Safer with a company I think.

I am no expert –others will confirm or suggest better alternatives

Under Thai law a legally registered lease is binding upon heirs and successors. They are legally bound to honour the lease to its conclusion. They have no obligation to renew or extend it.

[jbrain]

You will not get the lease from the farang, you will get it from the Thai company he has shares in.

[5ky]

In my view a lease with a Thai company is better than similar with a Thai national. If the Thai national dies –so does the lease.

Safer with a company I think.

I am no expert –others will confirm or suggest better alternatives

Under Thai law a legally registered lease is binding upon heirs and successors. They are legally bound to honour the lease to its conclusion. They have no obligation to renew or extend it.

"binding upon heirs and successors" .... is this done automatically or does the Thai "owner" need to have drawn up a Will ??

[Ticketmaster]

Automatic if your lease was legally binding in the first place and registered. I say "legally binding," because a lot of people try to draw up their own legal documents and get them wrong. If you care about your future, go to a lawyer for the lease and have the lawyer register it.

[BrianCR]

You will not get the lease from the farang, you will get it from the Thai company he has shares in.

And...if the Company gets into trouble in any way so could your lease! All be it that, subject to the Company being legal you would have a legal claim against it but, to prove that in a court of law could take years and cost a fortune

[jbrain]

You will not get the lease from the farang, you will get it from the Thai company he has shares in.

And...if the Company gets into trouble in any way so could your lease! All be it that, subject to the Company being legal you would have a legal claim against it but, to prove that in a court of law could take years and cost a fortune

I don't know what your point is as the same consequences would apply if he got the lease from a Thai private person. If the Thai gets in financial troubles and sells the land and/or cancxels the lease you end up in court.

My point was that the OP should be aware that even if the Foreigner is director of the company that owns he land, the lease has to be issued by the company and not by the foreigner.

[hgma]

just curious

Is this a lease in NongKhai?

Dutch?

If so better check the Thai co.ltd

[jvs]

Do you mean if a company is not 100% legal and was just set up just for the purchase of land?

I do not think you can buy or lease legally from a company that is illegal,even if you would buy a condo from a company that has a foreign director i would have some doubts.

[AlexDorneles]

what's the advantage of leasing for 30 years? You give back with a house or whatever you built on it and all the appreciation.

[Naroge]

I don't understand your worries at all. As long as the lease is established in a correct way and registered, the land is yours for 30 years. The Thai landowner cannot cancel the lease or make any other trouble.

[Arkady]

You need to bear in mind that, if the company is investigated at any time in the future and found to have been a nominee used by a foreigner to own land, the company would be forced to sell the land and, failing that, it would be sold at public auction. Then you are dealing with a new owner who might look for ways to avoid honouring the lease, since the land will be worth a lot more without you on it. You might also be regarded by the police and public prosecutor as a party to the illegal ownership of land by paying for the lease, knowing full well the illegal land ownership structure. You cold be extorted and/or prosecuted as an accessory. Apart from that the company could go bust or even be forced into dissolution by the Business Development Dept for being inactive, if it has no real business. In the event of liquidation, the land will be sold to raise funds to distribute to the company's creditors. Apart from all that, it is highly likely that control of the company will change at some point within the 30 year lease period and the new controlling shareholders might be interested in finding a way to extract more value from the company's land holdings. At the very least, do your due diligence on the company but getting hold of its latest financial statements and lists of directors and shareholders and company affidavit from the Business Development Dept and see if the business is a going concern and who has the power to bind the company.

Leasing law is not well developed in Thailand and 30 years is pitifully the maximum tenure that can be registered with the Land Dept, except for commercial land which in certain clearly defined circumstances can be 50 years. Personally I wouldn't consider buying property on this basis at all and certainly not from a man of straw company set up by a farang for the purpose of illegally acquiring land. Stick to freehold condos you can own in your own name or rent. If you want exposure to Thai property, why not buy a tax free property fund (REIT) listed on the SET which pays a high dividend and use the dividends to pay your rent. You can sell the fund any time you want at the market price and get the proceeds in 3 days time that you can legally remit overseas. Try selling the stub of a 30 year lease on land owned by an illegal farang shell company and see what happens.

Edited April 28, 2013 by Arkady

[jbrain]

I don't understand your worries at all. As long as the lease is established in a correct way and registered, the land is yours for 30 years. The Thai landowner cannot cancel the lease or make any other trouble.

New to Thailand I assume ?

[mike123ca]

Thailand makes it very clear that it doesn't want foreign ownership of land.

The playing field is stacked against the foreigner and unless you have Thai

citizenship, I would just walk away.

[Khun Jean]

A lease is no ownership and is a very good way of using land. If it is financially the best can only be judged by the person taking the lease. Buying a freehold condo can also be a financial disaster.

Just get the leases registered with the land office, make sure the one that signs the contract is the one that is allowed to do it and don't add silly clauses to try to get around existing laws, it will make the contract weak.

If the company goes bust, the land is probably sold for cheap as it has a registered lease on it.

The new owner choose to buy land with a registered lease. No problems whatsoever.

Now you can get into a dark area where criminals try to break laws, but that has nothing to do with it.

If the new owner is the biggest mafia boss and sends his goons to kill you, would that then mean that all leases in Thailand are not 'safe'. No, it just means that he is a criminal.

[khunPer]

Any land lease over three years shall be registered at the Land Department, otherwise not valid. The Land Department will note the lease (kind of servitude) on the back of the land deed and the lease is binding, also if the land is sold or transferred (to another person or company). There will be a lease tax to be paid upon registration, believe it is 1% of the total lease sum. Maximum lease period is 30 years. Some makes an agreement with an option for lease at a further 30 years term. That option cannot be stated on the land deed, but the agreement is a legal binding document, if taken to court (according to my Thai lawyer).

So, to answer the question: As long as your lease period is registered on the land deed at the Land Department, you are safe to lease from both a Thai national and a Thai company.

[Naroge]

I don't understand your worries at all. As long as the lease is established in a correct way and registered, the land is yours for 30 years. The Thai landowner cannot cancel the lease or make any other trouble.

New to Thailand I assume ?

Well, "new" is a matter of definition. Even IF the land owner would like to cancel the lease he has no legal right to do so. And if he would like to make trouble, your rights with a lease in hand are not different compared with if you would have had proper ownership of the land (apart from the time frame).

I would have no problem going into a lease with a Thai as long as I'm OK with the 30 year period, but I would never sign a lease with a Thai company were there are many more risks.

Of course I wouldn't sign a lease or any other document with someone I believe is a "crook", as he might control the neighbors and officials and can make my life a misery for 30 years. But that's just common sense and is not different if you lease or buy the land.

Good luck.

[bumpkin]

After reading all the "advice" here, find a good lawyer with experience of land and leasing matters, if you are serious about this.

This question is far from silly, and it really calls for expert legal advice to avoid the many pitfalls.

Edited April 28, 2013 by bumpkin

[BrianCR]

You will not get the lease from the farang, you will get it from the Thai company he has shares in.

And...if the Company gets into trouble in any way so could your lease! All be it that, subject to the Company being legal you would have a legal claim against it but, to prove that in a court of law could take years and cost a fortune

I don't know what your point is as the same consequences would apply if he got the lease from a Thai private person. If the Thai gets in financial troubles and sells the land and/or cancxels the lease you end up in court.

My point was that the OP should be aware that even if the Foreigner is director of the company that owns he land, the lease has to be issued by the company and not by the foreigner.

My point is quite simple (it needs to be) supposing in the Company memorandum of understanding there is no clause that allows leasing then, the company can't legally lease.

Point 2 Suppose the land belongs to the granny of the Foreign Directors girl friend and is leased to the Company (see above)

Point 3 If you are going to lease get a lawyer to check out the company/land/individual first and, not a lawyer that they recommend

Finally land with an unexpired lease attached can only be sold by the rightful owner with that lease still attached and, even if a bank claims the land the lease is still attached - provided it was put there legally. It is also quite difficult for a private individual to sell land with an attachment as most banks will not finance

[timewilltell]

I used to work in property in my home country. Leases there are properly registered forms of ownership now being transferred to freehold under draconian laws. The mindset of most foreigners is that you get the lease and never see the owner or hear from them unless you want to extend the lease or for maintenance maybe. In the retail world there are few people stupid enough to build a house on leased land to live in as it reverts to the landowner at the end of the lease.

The Thai law for leases is comprise fin one or two simple clauses - and it is the law of Hire. It applies to bikes, rice cookers and valuable land. An attempt to provide protection is made for longer terms where your lease must be registered to protect buyers of the land and the leaseholder. The mindset of the Thai is hire not any form of proprty ownership.

There are huge pitfalls to leases and the Thai justice system is very slow, very expensive, very corrupt, very susceptible to manipulation by lawyers and there are huge problems for expense for foreigners who need its services. You may not need them but then again there is no safety net in reality.

I would never consider a lease as a suitable form of land holding as it is a wasting asset and whist thirty years seems a long time 10 years go quickly - ask yourself if you would be happy buying a lease with 20 years or less to run and what you would pay for it because you will be trying to sell to that buyer.

If for family use eg. To protect you against the wife and you are knocking on then maybe, but Asians and especially Thais are incredibly selfish and break ups between Thai women and foreign men are very common even after children and even more so than on the west. It is their culture so your odds of survi

[puukao]

Let's address the REAL question:

you don't lease for 30-years unless you are married, or going to marry, a thai.

my friend used all his money (you ALREADY know where this is going) to buy one house, and build another on a piece of land. 30-year lease. ah, whatever. After 7 years, she got a divorce without telling him (another story) and kicked him out. there is no practical way he can return, or rent it out. he talked with many lawyers, went to court, whatever. he lost it all. he is 65 and has no money coming in. 10 million baht gone. and soon to be homeless.

good times.

note: if American, you can buy a house in Detroit for 25k or a condo in Miami for 30k.

[johnnyk]

30-year extensions to a lease is a dodge worked up by developers to hoodwink bozo falangs. It can't be put on the chanote (which is what really matters) and is a private agreement between two individuals at best. If the owner dies the agreement dies with him. If the land is sold the agreement is dead. The new landowner signed nothing in that regard so good luck trying to enforce a dubious arrangement 10-20-30 years after the sale.

[johnnyk]

Let's address the REAL question:

you don't lease for 30-years unless you are married, or going to marry, a thai.

my friend used all his money (you ALREADY know where this is going) to buy one house, and build another on a piece of land. 30-year lease. ah, whatever. After 7 years, she got a divorce without telling him (another story) and kicked him out. there is no practical way he can return, or rent it out. he talked with many lawyers, went to court, whatever. he lost it all. he is 65 and has no money coming in. 10 million baht gone. and soon to be homeless.

good times.

note: if American, you can buy a house in Detroit for 25k or a condo in Miami for 30k.

I know a guy bought a house inDetroit for $7500. But condos in Miami for $30K? Where, in Overtown?

[johnnyk]

I don't understand your worries at all. As long as the lease is established in a correct way and registered, the land is yours for 30 years. The Thai landowner cannot cancel the lease or make any other trouble.

New to Thailand I assume ?

The Thai landlord can make plenty of trouble anytime he wants. Doesn't need to be "legal" trouble. They have ways. And don't forget its a home game for him.

Edited April 28, 2013 by johnnyk

[Joe Mamma]

Leasing is like renting. Both are short term with no value in the end. All the buddies i grew up with that rented or leased their whole lives, now have nothing!

The people who owned and paid off now have lovely abodes. I wouldn't buy from anything farang connected too. Are you paying the fair price or the farang price tag?

[Langsuan Man]

Don't lease, buy the company from the farang and you get the land for free

[winstonc]

leasing = renting i wouldnt touch land purchasing atall here,your on to a loser there my friend,if your circomstancies change and you have to go back to where your from youve got a little headache to sort out,or you could just walk away from it i think just renting is fine.but good luck and be careful,as op said get a proper english speaking lawyer to do it ..

[aliep]

The law takes a dim view on any scheme to break the law. Foreigners cannot own land PERIOD. Therefore any lease from a Thai company controlled by foreigners is an illegal scheme to own land and any contracts it enters into CAN EASILY be broken. If that Thai company was set up to circumvent the land foreign ownership laws, anything it does or has done can be set aside.

If you really want this land, set up your own company to own this land outright and circumvent the land ownership laws then at least you are in control of the company breaking the law.

[crazykopite]

You need to bear in mind that, if the company is investigated at any time in the future and found to have been a nominee used by a foreigner to own land, the company would be forced to sell the land and, failing that, it would be sold at public auction. Then you are dealing with a new owner who might look for ways to avoid honouring the lease, since the land will be worth a lot more without you on it. You might also be regarded by the police and public prosecutor as a party to the illegal ownership of land by paying for the lease, knowing full well the illegal land ownership structure. You cold be extorted and/or prosecuted as an accessory. Apart from that the company could go bust or even be forced into dissolution by the Business Development Dept for being inactive, if it has no real business. In the event of liquidation, the land will be sold to raise funds to distribute to the company's creditors. Apart from all that, it is highly likely that control of the company will change at some point within the 30 year lease period and the new controlling shareholders might be interested in finding a way to extract more value from the company's land holdings. At the very least, do your due diligence on the company but getting hold of its latest financial statements and lists of directors and shareholders and company affidavit from the Business Development Dept and see if the business is a going concern and who has the power to bind the company.

Leasing law is not well developed in Thailand and 30 years is pitifully the maximum tenure that can be registered with the Land Dept, except for commercial land which in certain clearly defined circumstances can be 50 years. Personally I wouldn't consider buying property on this basis at all and certainly not from a man of straw company set up by a farang for the purpose of illegally acquiring land. Stick to freehold condos you can own in your own name or rent. If you want exposure to Thai property, why not buy a tax free property fund (REIT) listed on the SET which pays a high dividend and use the dividends to pay your rent. You can sell the fund any time you want at the market price and get the proceeds in 3 days time that you can legally remit overseas. Try selling the stub of a 30 year lease on land owned by an illegal farang shell company and see what happens.

WOW anyone reading this would never buy anything in Thailand dare I say even a Freehold Condo how can you Guarantee even that your Condo is Freehold . Even in the Condo world there are many Condo's purchased by way of a Thai Ltd Co . Now days it is no longer required that a Thai Ltd Co needs 7 share holders this has now been changed to 3 so in theory you could have 2 farang and 1 Thai the 2 farang holding a 49% and the Thai a 51% I also see no reason why it could not stay in the farang name for many years providing you put your son/daughter as a director they must be 18 years of age. You can change your shareholders as often as you wish but if you do it at the end of the financial year when submitting your accounts there is no charge . Any lease over 3 years by law has to be submitted to the land office the lease would be made out between the owner of the land which should be a Thai Ltd Co and the person purchasing the lease once this has taken place at the land office and has been stamped I would conclude that it would be very difficult for the Thai Ltd Co or its new shareholders to be able to renege on the agreement taken out What does worry me is these companies who offer 30+30+30 year leases as far as I am aware this is not legal but as it is fairly new it is going to take a number of years long after I have passed to the next world to be tested in a Thai Court of Law. Not all of us want to live in rented homes for the rest of our lives setting up a Thai Co is no less at risk than signiong everything over to your Thai wife/girlfriend or having a Thai be a guarantor to purchase that nice new pick-up Life is a risk, crossing the road is a risk and living in Thailand is most definately a risk because they change the regulations and give you all of 24 hours notice !!!!!!!!!!!!