Buying Land/house In Thailand

[gdhm]

Hello All,

I originally posted this as part of the "New Property Law For Foreigners Spreads Confusion" thread but it seems to have got lost in other issues regarding this subject OR I was mistaken in posting it as part of that thread.

Anyway I am re-posting in the hope this is the correct section and that members will be able to advise me or, point me in the appropriate direction.

1) Forgive my ignorance on this subject as I have only recently married and decided to apply to retire in Thailand permanently. I have done my best to glean information but am still unsure of what is legally permissible / possible, and what is not.

I agree that the Thai people have the right to make laws as they choose in their own country, and it is for foreigners to find solutions that comply with the law.

Accordingly, can anybody advise me on the following:

1) Is it within the Thai Law for the Wife (Thai National) to buy and own the LAND in her name (obviously funded from our joint money -originally mine) AND for me the buy and OWN the HOUSE outright in my name. My belief is that this is totally acceptable within Thai law – but I am no expert.

2) Additionally, am I allowed to set up a private BINDING (within Thai law) contract between my wife and myself PRIOR to land and house purchase that basically agree conditions such as

i) that she cannot sell the land from under me without my agreement or/and

ii) without us getting full market value or/and

iii) in the event we mutually agree to sell the land and house that I receive a specific percentage of the LAND value (which is in her and owned by her name)

OR SOMETHING SIMILAR, that protects my interests in the event of a divorce etc.

I would never seek to disobey Thai Law but obviously am happy to apply its rules that best protects my interests (avoidance under Thai law NOT EVASION of the Law) so that in the event of a divorce (which I do not anticipate) I am not left penniless in Thailand.

2) I wish to ask a "chicken and egg" question and maybe members can tell me which subject group I should post my question "If I apply and get my retirement visa I think I have 6 months maximum to move my house contents that I wish to bring here before ALL would be taxable. However I do not know how long it will take to sell my house in Spain (maybe a year plus, maybe a month or two)". What do members suggest I do to get round the problem of both not happening in the same 6 month period"

Regards

Dave

[donx]

1) Is it within the Thai Law for the Wife (Thai National) to buy and own the LAND in her name (obviously funded from our joint money -originally mine) AND for me the buy and OWN the HOUSE outright in my name. My belief is that this is totally acceptable within Thai law – but I am no expert.

2) Additionally, am I allowed to set up a private BINDING (within Thai law) contract between my wife and myself PRIOR to land and house purchase that basically agree conditions such as

i) that she cannot sell the land from under me without my agreement or/and

ii) without us getting full market value or/and

iii) in the event we mutually agree to sell the land and house that I receive a specific percentage of the LAND value (which is in her and owned by her name)

I am assuming you plan on buying a property that already has a house built on it. I don't know if you will be able to separate the purchase of the land from the purchase of the house. I have heard of cases where a Thai spouse will purchase raw land and then lease the land to the foreign spouse. The foreign spouse then has a lease with protections similar to those you outline in 2) above, however you will not be able to receive a single baht for the land. This is because you will be required to sign a paper that states that you don't have any right to own the land when the land is purchased. You will be able to own the house and it could be understood that the value of the house is comparable to the value of the land, but that may not be easy to protect. Your house may be worth significantly more or less than the land depending on variables such as the location of the land and the amount of money invested in building the house.

You will definitely need a lawyer to help you with the process of setting up a lease of land from your spouse. I am sure others that already have such an arrangement will speak up soon enough.

[gdhm]

Hello Donx,

Many thanks for this information and advice.

I am based in Khon Kaen where BOTH land and house prices seem very low compared to the more popular areas of Thailand.

I am most likely to purchase a property that is being built or just been completed. So any advice assuming this would be helpful.

I do not foresee my wife and I parting (but you never know the future) However, I am NOT unhappy for my wife to own and receive 100% for any land sale PROVIDED I can own and receive the market value of the house on it AND any sale would allow the buyer to buy both in his/her name.

I feel this would be reasonable, bearing in mind all monies for land and house purchase would be funded by me. I do not want a situation where possible marital problems could be fuel financial temptation and consequently leave me financially (and unfairly) exposed because of Thailands' land laws.

My primary concern is not to have to put EVERYTHING in my wife's name and in the unlikely event of a separation or divorce that my wife could:

a) Get ALL monies for house and land and/or

Dictate the selling date AND price of combined sale and/or

c) Sell her land under me (leaving me vulnerable to the wishes of the new owner of land).

I hope this clarifies my situation, concerns and wishes for you Donx, and any other members who may be able to advise me

Once again, thank you for your input

Regards

Dave

[number6]

Hello Donx,

Many thanks for this information and advice.

I am based in Khon Kaen where BOTH land and house prices seem very low compared to the more popular areas of Thailand.

I am most likely to purchase a property that is being built or just been completed. So any advice assuming this would be helpful.

I do not foresee my wife and I parting (but you never know the future) However, I am NOT unhappy for my wife to own and receive 100% for any land sale PROVIDED I can own and receive the market value of the house on it AND any sale would allow the buyer to buy both in his/her name.

I feel this would be reasonable, bearing in mind all monies for land and house purchase would be funded by me. I do not want a situation where possible marital problems could be fuel financial temptation and consequently leave me financially (and unfairly) exposed because of Thailands' land laws.

My primary concern is not to have to put EVERYTHING in my wife's name and in the unlikely event of a separation or divorce that my wife could:

a) Get ALL monies for house and land and/or

Dictate the selling date AND price of combined sale and/or

c) Sell her land under me (leaving me vulnerable to the wishes of the new owner of land).

I hope this clarifies my situation, concerns and wishes for you Donx, and any other members who may be able to advise me

Once again, thank you for your input

Regards

Dave

[number6]

Hi

Ill repeat post i put on another thread but best advice is get a good lawer but also check yourself

You cannot own land - dont rely on agreements and assume if its in your wifes name you can loose it all - anyway if your selling in Spain i reckon price you pay here is a fraction - personally id wait a bit to make sure u trust your wife

Hope post below helps

It seems we have a lot of cynical, moaning, wingers who post on Thai visa who probably would and are not happy anywhere. I really can’t understand why they stay if its that bad – just go if you don’t like it – its not your country unless your Thai.

As far as buying property here is concerned – you all know or should its illegal for foreigners to own land – that’s the law and its up to Thais to make their own law weather we agree with it or not – personally I think it’s a silly law and does not help them get investment but its up to Thais - and those using tricks and schemes to try to get around the law get what they deserve.

I’e been coming to Thailand for 15+ years on business and lived here full time for over 4 years with my Thai wife and new family. Some years ago I bought a Condo for our main home in my name and a couple of years back we bought a house up North in my Thai wife’s name (for holidays). No problems everything legal and fair. If something happens to me, my wife has use of our Condo or income from it for her life then it goes to our child. If something happens to her I get the house which as a non Thai I must sell or if I can put in our child’s name. All arranged under proper Thai law and proper wills etc.

Sure if we fall out of love or whatever she has the house – she’s more than entitled to it and more for all wonderful times we’ve had together. I happily gave my first wife 50% of everything when through no fault of either of us we drifted apart. I’m happy to give my second wife at least as much.

My advice is:-

1. Do everything here 100% under law and 100% in spirit of Law – its clear foreigners are not allowed to own land.

2. So if you have a Thai wife but don’t trust her yet - don’t buy a house yet – buy a condo until you trust her or why marry her if u don’t trust her. Are all forangs unable to think with more than their junior members or are they just desperate.

3. Yes like everyone says be careful. Most Thais in my experience like most forangs are honest but too much money (like anywhere) temps even honest folk. Anyway if your not careful you’re going to get your fingers burnt (I’ve had mine burnt more often in UK and US, its just done a different way there) and anyone who trusts lawyers anywhere must need their head examining.

4. Stop getting paranoid, obey the law and you will be fine. If you try silly tricks then like anywhere you can get caught and pay the price.

5. Don’t trust anyone unless you’ve known him or her for a long time or they have a long good provable track record. This applies in any country.

6. Keep things in prospective. If u can afford it buy land/houses in your wife or Thai partners name or get another partner. Our 2 homes here cost a fraction of my previous home in UK.

7. It’s obviously not sensible to put all your life’s savings in a country you are not a citizen off . As a rough rule and dependent on how long you’ve been here and weather you intend to stay the rest of your life I’d say maximum 50% of your worth if you’ve been here over 5 years and intend staying for ever or 25% maximum if mot.

I’m glad I only discovered the Thai visa site long after I’d settled here – if you looked through a lot of post you’d be forgiven to believe that all Thais are crocks, all Thai girls only want forangs (forget age thing) for money and its impossible to have a fair chance here – utter rubbish – in my experience people are same world over – most like money, some will steal for it, some will try scams etc, most people are jealous to some extent of those who seem to have it all and so dislike them (same world over). Same applies here where most forangs have more than most Thais could ever dream of.

Some will say cynically that ill think different when I’ve been here another 5-10 years – maybe but I doubt it and if I do well that’s life – I’ve had a far better life and time here for 15 years than anywhere else I know.

So will wingers, mouners, doubters, sceptics etc play fair theirs tons I could say is wrong with UK or USA and theirs lots wrong here as well – enough said

[ando]

Your fears are well founded.

If you and your spouse did split and things turned nasty, you would be at a distinct disadvantage, even if you legally owned the house on her land. The best that you could hope for would be that she might be kind enough to give you the value of the house if you split. But no doubt she would have a lot of pressure from relatives not to do so.

If you have any doubts at all about the future of the relationship, it would be better to rent.

And renting may well turn out to be a better financial proposition, in the short term anyway.

House prices in Thailand are generally grossly overinflated due to the real estate boom and lots of speculation. So house prices are a bit over the top. People are asking 10,20, 50,100% more than they know they are worth in the hope of making a big profit. In the mean time they rent them out to try to make some immediate income from their capital outlay. But rents are very much demand driven and so they only get what people are willing to pay. You might be better off to pay 25,000 a month for a house that someone is asking 5 million for than buying it at the inflated price right now.

Unless you are a speculator and figuring on making some capital gains out of the house I would suggest rental is a better proposition right now. And if you are a speculator, I would suggest you might loose a lot of money if you buy right now.

[gdhm]

Thank you Ando & Number6,

I personally would prefer to go the "buy house" route because at the end of the day rent is NO investment for me (be it possible protection from a dishonest wife).

I DO trust my wife (100%) and she is a very moral and correct person. However, trust and assuming the future will always be rosy is not a wise basis to build my future financial life on. My only income is my pension and my only capital (of any consequence) is the value of my Spanish home. To base my financial survival on trust on anybody I feel is not prudent.

If my wife and I are together for many years and parted for whatever reason I would be the first to say she is entitled to 50% (even though 100% of my money went into any land and house) BUT to place myself in a position after 1 month of marriage on 100% reliance to a everlasting marriage (as much as I expect and hope it to be the case) I think would be folly and naive.

I loved my first Thai wife but during the 6 weeks of marriage she was a lying spiteful, money grabbing user and I thank God my Lawyer insisted I have a pre-nuptial contrary to my belief of its necessity.

I do not think Thai women are bad and I think they are mostly wonderful people and I love Thailand but in every country there are bad eggs and some marriages started in 100% love, trust and good faith can go wrong.

Regarding Thai Law:

Are you saying that it is not possible to allow the land to be in my wife’s name (and her 100% ownership) and the house to be in mine and 100% ownership and for any sale BY EITHER of us to be contractually bound to each other so any sale has to be mutual OR at minimum for the full market value.

I ACCEPT the money from the LAND part of the sale will be 100% my wife's but I wish the money from the House part of the sale to be 100% mine. This way, we are BOTH equitably protected in the sad event of a Divorce, separation or serious difference of opinion regarding the sale of the land and house.

I do not want to go the company route (even if possible) as (in my personal opinion) I do not think it in the spirit of the law BUT I do not think it is outside the spirit of the Law to accept my wife has the Land and its proceeds, and I have the house and its proceed AS MY UNDERSTANDING OF THAI LAW is that it is ONLY LAND I am not allowed to own, but I AM allowed to own anything ON the land -OR IS MY UNDERSTANDING FLAWED?

Regards

Dave

[RAZZELL]

.

I loved my first Thai wife but during the 6 weeks of marriage

[pepi1]

WHICH EVER ROUTE YOU DECIDE TO TAKE WORK ON THE PRINCIPAL THAT YOU NEVER GET YOUR MONEY OUT OF THAILAND. IN MY OPINION THE VAST MAJORITY OF LTD COs ARE A SHAM AND THESE WILL BE THE FIRST IN THE FIRING LINE. ANYONE WHO HAS BOUGHT WITH DODGY MONEY WILL HAVE A PROBLEM SOON ENOUGH. THAI GOV. NOT STUPID. HOPE YOU FIND A GOOD THAI GIRL , TAKE CARE, DONT RUSH, RENT FIRST, LAND IN HER NAME, YOU LEASE FOR 30YEARS> BE LEGAL!! ALL THE BEST AND ENJOY THAILAND>

[donx]

I think what we are trying to tell you is that you can have a house owned 100% by you, but since she will own the land 100%, all she needs to do to get rid of you is bring all her family there to harass you. It won't matter what you have written in a contract. If she doesn't want to sell the land she won't have to. She can claim that she doesn't want a divorce. So all the legal protections you may have in place provide no guarantee that you will be able to retain ownership of the house.

If you have most of your money tied up in a Spanish house, can't you just keep that house, rent it out and use the money from that property to finance your rental here in Thailand? If you sell your Spanish house, build a house in Thailand, and you wife dies and her relatives chase you off their land (your house but their land), what will you have left? At least if you are renting, all you will be out will be a security deposit.

Remember the golden rule regarding buying property in Thailand - never invest (spend) more than you can afford to walk away from.

[pepi1]

CORRECT! BE PREPARED TO LOSE YOUR MONEY, THEN YOU HAVE THE WORST CASE SENARIO, ANYTHING AFTER THAT IS A BONUS! BE HAPPY!

[number6]

Hi Dave

From what I read but I might have got wrong end of stick – you’ve been stung once here by a Thai lady – your only married 1 month and your thinking of buying a house land in her name house in yours – I don’t want to be rude at all but are u nuts (mad) –

?? How long have u been in Asia

?? Don’t even think u can protect yourself via house route, if it goes bellies up you accept loss whatever legalities.

?? Why are u so keen to buy a house here so quickly

?? If your only asset is your home in Spain and some other income don’t become another sad story.

Read books; understand at least a bit about Thai and Asia culture. In west our kids are most important thing – in Asia parents are everything normally. Beware the family really I have had no problem but only because I made it clear from the start and my lovely Thai lady was already western in beliefs before I met her.

I’m sure you’re a good guy and I really hope your wife is also. I’ve been coming here for over 15 years and lived here full time with my Thai wife over 4 years and anyway would not trust anyone even in Europe if I’d only known him or her a short time.

I’m very very lucky – I have not been stung (yet) here – I have a lovely wife and child.

I don’t want to spoil what may be a wonderful life for u and your Thai wife – it does happen but 80%+ of time it goes sour

My advice

- buy a condo in your name for now or better rent for at least 12 months – After at least and I stress at least 2 years together then think of buying property etc.

- if she complains tell her straight why you’re worried, be honest about your fears but ask for hers (lots of Thai ladies have also been stung by foreigners). If she’s honest she will understand but be patient and get a book called Thailand Fever (its in English and Thai).

- If her family are at all involved and pushing u or u through here - worry like hel_l.

Good luck but honestly if your only real asset is your place in Spain and you’ve already been stung here once and your thinking of this my STRONG ADVICE IS FORGET IT – 80%+ your going to get stung again

I’m happily married here for a long time – I’m lucky but I accept it could go pear shaped (don’t think it will) and as stated before if it does my Thai wife and child here are welcome to all I have here (which is a lot).

Your in a different boat - beware as an old friend of mine used to say dragons be there

[Explorer]

WHICH EVER ROUTE YOU DECIDE TO TAKE WORK ON THE PRINCIPAL THAT YOU NEVER GET YOUR MONEY OUT OF THAILAND. IN MY OPINION THE VAST MAJORITY OF LTD COs ARE A SHAM AND THESE WILL BE THE FIRST IN THE FIRING LINE. ANYONE WHO HAS BOUGHT WITH DODGY MONEY WILL HAVE A PROBLEM SOON ENOUGH. THAI GOV. NOT STUPID. HOPE YOU FIND A GOOD THAI GIRL , TAKE CARE, DONT RUSH, RENT FIRST, LAND IN HER NAME, YOU LEASE FOR 30YEARS> BE LEGAL!! ALL THE BEST AND ENJOY THAILAND>

CORRECT! BE PREPARED TO LOSE YOUR MONEY, THEN YOU HAVE THE WORST CASE SENARIO, ANYTHING AFTER THAT IS A BONUS! BE HAPPY!

Sorry OP off topic for a sec -

pepi1 would be nice if you were to lose your caps in your post as it meant you are shouting in here.

Thanks

Explorer

[gdhm]

Hi,

Firstly my answer to Number6: Yes, I have been stung (or she tried to but the pre-nuptial limited the damage she could do). But all bitterness is gone BUT having been stung has weakened me financially (to the detriment of me, my new wife and my inherited son) and is making me more cautious.

My wife is a good, honourable lady who HAS been stung and hurt by an Englishman who she fell in love with (first love at age of 37). She became pregnant after agreeing to his sexual requests (first time) and then was dumped (to be fair he did give her some maintenance during pregnancy and the first 4 months of his son's life BUT them he bailed (with I have lost my job and cannot send anymore money). My wife being trusting and loving him accepted this BUT then the @#$%$ also broke off all contact, despite her initial attempts to maintain contact (he didn’t have the decency to tell her he was dumping her as well as not paying for his son. He has not been in contact for 40 months.

My current wife therefore understands what being used and hurt by a Farang is like, and she is aware I have been burned and hurt emotionally and financially by several women and friends who I trusted.

My current wife was in fact the translator and friend of my Ex wife BUT she was tricked and lied to as much as I, and was appalled at what happened to me during my 6 weeks of marriage and also by what she herself found out and became aware of about the activities of my Ex wife before we married. My current wife was totally unaware of all this, (and all the lies my Ex Wife asked her to feed me in emails) until I had married my Ex wife. My current wife did try to warn me when things started going wrong, but was in a hideous position as she knew I loved and trusted my Ex wife AT FIRST.

My current wife’s, (throughout our pre marital relationship and now) driving concern was/is NOT to hurt me as my Ex wife and other have, and for me to never ever feel she is like them or would use me as they did. She resists me spending money on her (be it one offs or small for a Westerners income).

I have told you all this Number6, NOT to prove our marriage will last even though we are BOTH committed to the concept of marriage is for life and the working though any problems (IF they arise). I am telling you this to demonstrate that THIS THAI LADY and HER FAMILY are nothing like my Ex wife (or her family). I am now married to a good Thai woman, and whether our marriage survives or not (we pray it does) she will still be a Good Thai woman and her family will still be nice people (her father deserted my wife's mother when my wife was tiny, her mother is now 70 and lives 500 kms away. My wife has lived nearly all her life with her Aunt (a wonderful and kind Lady who I am very fond of) after her mother was deserted by her husband and needed to move to Bangkok in search of work to survive.

I am currently living in the house of my wife's Aunt and I am 100% welcome and equal as a family member. To be honest I have not felt this close and part of a family even with my own family and it is a lovely feeling.

+++++++++++++

OK on to comments and advice kindly posted about Land and House purchase

There seems to be a lot of distrust of Thais here (maybe based on sad experiences)

If I was harassed and/or chased off my land I assume I could legally sell my house BUT the land owner could make it that no new buyer would be prepared to buy.

I cannot afford and will permit legalized robbery or losing ALL the money put into Land and a house (here, in Spain or anywhere) as I would have to live somewhere after a divorce and I will struggle whilst a wife lives in the house and land I bought.

I assume even if I had a 30 year lease that in the event of a marital breakdown my wife could make a new purchasers life hel_l (so they wouldn’t buy) OR would a lease give me complete protection I am 54 so I would not expect to necessarily outlive a 30 year lease

I know a 30 year lease is the maximum permitted under Thai Law (or is my information incorrect as I have read 10 years is the maximum enforceable under Thai Law) BUT does Thai law recognize and enforce automatic First option renewal. My Thailand Lawyer suggested to me, many months ago, that it is permitted to have the FIRST right of renewal when the 30years are up and the original lease agreement can be drawn up legally to prevent the Landowner offering the renewal to me at terms that would be impossible to accept (i.e. the basis of the renewal terms can be written into the original lease agreement). IS ANYBODY ABLE TO COLLABORATE THE ACCURACY OF THIS OPTION? If so, a 30 year lease with renewal option seems a good option (I think you could be harassed in any country of the world by wife, husband, relatives or friends if they so felt inclined, BUT even Thailand must have Laws to call upon if this was to occur.

If I do not like the rental idea are there any legal options here in Thailand except Rent or a condo where I cannot be robbed or controlled (worst case scenario). Is Thailand willing to allow illegal activities such as harassment?

Another interesting issue is that I have a pre-nuptial with my wife which has been drawn by a Bangkok Thai Lawyer and signed by my wife.

I have been assured Pre-nuptials are accepted, recognized and enforceable under Thai Law provided they do not conflict with Thai Law (mine does not) and have been written with Thai Laws in mind.

My prenuptial states that in the event of a divorce I will retain 100% of my money in my UK bank at the time of my marriage (amount declared in the document), my Spanish house and its contents and my car. The pre-nuptial ALSO stipulates that I retain 100% right in ANY monies from the selling of these assets whether the money is used to re-buy or not.

This is interesting, because if I use my house money to pay for land and a house then technically in the event of a divorce my wife is legally bound to make sure I have the value of what I declared in the prenuptial. I suppose I could take her to court after any land/house sale and demand recompense in accordance with the pre-nuptial as it is legally binding until my death (the wording does not even allow me to rescind the pre-nuptial if I wanted to). My Lawyer said the reason is in case I did so under duress OR, became mentally unstable and was tricked into doing so against my best interests.

I think I need to speak to my lawyer to find out how we can make Thai Law protect the innocent, not an unscrupulous Thai National *which I do not believe my wife to be) and to make sure buying land/house is mutually safe and fair and also when a sale occurs.

I would like to mention (by the way) that my wife AND her family are the nicest and most honourable people you could wish to meet, and if my marriage was to fail they are not the kind of people to try and cheat me. They are also genuinely very religious (by that I mean they live their lives by their beliefs, morality and what is right and wrong - they are not just token Buddhists who go through the cosmetic motions and consider that makes them good Buddhists). They are certainly not like some Christians I know personally, who think saying they believe in God, who go to church most Sundays but spend the rest of their lives acting in every way other than what you would expect from a good moral person (let alone a God fearing Christian).

Sorry for such a long message

Regards

Dave

[pepi1]

Sorry Explorer, the problem is I am deaf in one ear. Is this better? Cheers

[Dragonman]

I will try and answer some of your queries. Let me know if I miss any.

You may purchase the house in your own name. This must be done on a back to back basis with the 30 year lease taken up on your wife's land. Ignore any lawyer who tells you an "option agreement" for a further 30 years is worth the paper it is written on.

Your pre-nup will not cover you for disposal of Land value, as the Land Office insists you sign an equivalent of a post-nup which outlaws this. If you divorce you can attempt to sell the property, but the best you could achieve is an agreement with your wife, as you are only really selling your lease, which will be a diminishing asset. Good luck in your quest.

[number6]

Hi Again Dave

All I can say is good luck - yes good honest Thais exist - i really hope youve found 1 of rair ones

You know the problems - the risks - go with your heart and i hope in a few years youll be able to

post here with a happy story - it does and can happen and then its the most wonderful thing.

My last bit of advice is once youve decided which way dont worry about it anymore and if it goes wrong thats life

Best of luck

[pepi1]

Please refer to my post re Land Clarification Law Then as they in Thailand Up To You

[pepi1]

Please refer to my post Re Land Law Clarification Then a they say in Thailand Up To You

[gdhm]

I will try and answer some of your queries. Let me know if I miss any.

You may purchase the house in your own name. This must be done on a back to back basis with the 30 year lease taken up on your wife's land. Ignore any lawyer who tells you an "option agreement" for a further 30 years is worth the paper it is written on.

Your pre-nup will not cover you for disposal of Land value, as the Land Office insists you sign an equivalent of a post-nup which outlaws this. If you divorce you can attempt to sell the property, but the best you could achieve is an agreement with your wife, as you are only really selling your lease, which will be a diminishing asset. Good luck in your quest.

Thanks for this Dragonman. Things are becoming MUCH clearer for me “little by little”. I am assuming I am safe and untouchable for 30 years provided I do not wish to move during that time.

1) Can I ask a question from another angle? At the moment everybody is saying my wife (land owner) would have strong control over me. However WHAT ABOUT THE REVERSE? If my wife decided to sell HER land I am assuming she herself would find this near impossible without my co-operation because a person could buy the land BUT I would own all that was in it (namely house) and have an enforceable lease for 30 years. However what happens at the end of the lease? I assume a land owner in Thailand cannot just through the house owner off or demolish the house without payment at the end of the lease if the land owner decides not to offer lease renewal to me OR IS MY ASSUMPTION NAÏVE OR IGNORANT OF THAI LAW?

2) If I cannot have an auto lease renewal option at 30 years then what is the legal situation. My wife owns the land and I assume lease or not I STILL own the house on it (but my lease has expired) in Thailand does that mean MY HOUSE automatically become the land owner's property or can they order me to remove my house and get nothing for it at 30 years when the lease expires. Can someone enlighten me what happens in the event of me not being permitted to extend my lease at 30 years. Do I have any rights or protection to enable me to get the money back on my house if I am forced to move out, OR can I have legal rights into my original 30 year lease agreement (e.g. in the event of the land owner refusing to offer a further lease then they must purchase my house for market value at that time ("as though a new 30 year lease existed at that time" OR WORDS TO THAT EFFECT).

Basically it seems to me that form everybody is saying the Land owner is in a powerful situation and I therefore need IF LEGAL to build in conditions with the 30 year lease agreement to protect my asset value at time the 30 years lease expires.

Any comments and especially confirmation of what I can do will be appreciated. I know I would need a Lawyer to draw up any lease contract and/or attached contract, BUT it helps to know in advance what is possible so I can steer my Lawyer in that direction IF he has not thought of it already.

Regards and thanks

Dave

[Dragonman]

I will try and answer some of your queries. Let me know if I miss any.

You may purchase the house in your own name. This must be done on a back to back basis with the 30 year lease taken up on your wife's land. Ignore any lawyer who tells you an "option agreement" for a further 30 years is worth the paper it is written on.

Your pre-nup will not cover you for disposal of Land value, as the Land Office insists you sign an equivalent of a post-nup which outlaws this. If you divorce you can attempt to sell the property, but the best you could achieve is an agreement with your wife, as you are only really selling your lease, which will be a diminishing asset. Good luck in your quest.

Thanks for this Dragonman. Things are becoming MUCH clearer for me “little by little”. I am assuming I am safe and untouchable for 30 years provided I do not wish to move during that time.

1) Can I ask a question from another angle? At the moment everybody is saying my wife (land owner) would have strong control over me. However WHAT ABOUT THE REVERSE? If my wife decided to sell HER land I am assuming she herself would find this near impossible without my co-operation because a person could buy the land BUT I would own all that was in it (namely house) and have an enforceable lease for 30 years. However what happens at the end of the lease? I assume a land owner in Thailand cannot just through the house owner off or demolish the house without payment at the end of the lease if the land owner decides not to offer lease renewal to me OR IS MY ASSUMPTION NAÏVE OR IGNORANT OF THAI LAW?

2) If I cannot have an auto lease renewal option at 30 years then what is the legal situation. My wife owns the land and I assume lease or not I STILL own the house on it (but my lease has expired) in Thailand does that mean MY HOUSE automatically become the land owner's property or can they order me to remove my house and get nothing for it at 30 years when the lease expires. Can someone enlighten me what happens in the event of me not being permitted to extend my lease at 30 years. Do I have any rights or protection to enable me to get the money back on my house if I am forced to move out, OR can I have legal rights into my original 30 year lease agreement (e.g. in the event of the land owner refusing to offer a further lease then they must purchase my house for market value at that time ("as though a new 30 year lease existed at that time" OR WORDS TO THAT EFFECT).

Basically it seems to me that form everybody is saying the Land owner is in a powerful situation and I therefore need IF LEGAL to build in conditions with the 30 year lease agreement to protect my asset value at time the 30 years lease expires.

Any comments and especially confirmation of what I can do will be appreciated. I know I would need a Lawyer to draw up any lease contract and/or attached contract, BUT it helps to know in advance what is possible so I can steer my Lawyer in that direction IF he has not thought of it already.

Regards and thanks

Dave

Dave, unless you breach lease conditions you are protected in law for 30 years.

Regarding 1); There is little if any chance of your wife being able to sell the land within the first 25 years. However if your marital conditions change it is likely that the property could be sold shortly before the lease is up in order for any "option" to be nullified. You may include a clause within the lease that she gives you, or your nominee, first refusal for purchase of the land.

You are correct that an eviction order is required after 30 years and recompense must be given for the house. This will likely be not much in value however, as you now have a house with implicit access, but no land around it. Who would want to live in a house with no land?

2) You are literally in the Judge's hands. There is no clause you can build in that will guarantee renewal, but many lawyers will tell you that you can. Any clause you establish that goes against the law will be nullified.In fact the more clauses you place in the lease the more any Judge will consider you are trying to circumvent Land Laws for foreigners, which basically allows you 30 years, and that's it.

[pepi1]

Agreed Sign lease for 30 years and enjoy your lfe. No worries

[Nadia 2]

2) If I cannot have an auto lease renewal option at 30 years then what is the legal situation. My wife owns the land and I assume lease or not I STILL own the house on it (but my lease has expired) in Thailand does that mean MY HOUSE automatically become the land owner's property or can they order me to remove my house and get nothing for it at 30 years when the lease expires. Can someone enlighten me what happens in the event of me not being permitted to extend my lease at 30 years. Do I have any rights or protection to enable me to get the money back on my house if I am forced to move out, OR can I have legal rights into my original 30 year lease agreement (e.g. in the event of the land owner refusing to offer a further lease then they must purchase my house for market value at that time ("as though a new 30 year lease existed at that time" OR WORDS TO THAT EFFECT).

Basically it seems to me that form everybody is saying the Land owner is in a powerful situation and I therefore need IF LEGAL to build in conditions with the 30 year lease agreement to protect my asset value at time the 30 years lease expires.

Any comments and especially confirmation of what I can do will be appreciated. I know I would need a Lawyer to draw up any lease contract and/or attached contract, BUT it helps to know in advance what is possible so I can steer my Lawyer in that direction IF he has not thought of it already.

Regards and thanks

Dave

It’s of course important that your lease is drafted correctly.

The options in a lease agreement

Under present law the renewal options in the lease agreement do not pass to heirs or future lessors.

Supreme Court Judgment 6763/ 1998; 'In case the lessor promises in the lease agreement to extent or renew the lease term, but has sold the leased land before the lessee was entitled to accept, the 'contractual rights' are not binding upon the new owner and only lease rights that are 'real rights' will transfer to the new owner'.

A lease agreement in Thailand is in the first place an agreement between two parties and the lease rights that are not 'real rights' (though these are included in the lease agreement registered at the Land Office) do not transfer to the successors of the property. 'Real rights may be created only by the virtue of this code or other laws' (section 1298 CCC).

The new owner must explicitly accept the lease and the contractual options or he or she will not automatically be bound by the option obligations. This could be effected in the form of an additional clause in the Sale and Purchase agreement between the lessor and future lessor;

CLAUSE: The Land is encumbered with a Lease dated the <> day of <> 2006 and made between the Seller of the one part and <> of the other part for an initial term of 30 years with an option to renew for a further 30 year term. (Copy attached hereto and marked Schedule <>)

CLAUSE: 'The Purchaser hereby warrants and guarantees that he has read and fully understands the content of the Lease and is ready and willing and does hereby purchase the Land subject to the Lease and subject to all the terms and conditions contained therein as if he were the Seller and to indemnify the Seller against all and any claim or claims, dispute or disputes arising from any breach of the terms or conditions agreed to by the Seller contained in the said Lease and to indemnify the Seller in respect of any Government taxes that may be due or in due course fall due in respect of the said Lease'.

Without such a clause (it would be up to the lessor to include this in a sale and purchase agreement) the option obligations will under present law not pass to future lessors and the future lessor will again be bound by the 'real rights' only. Then again, these options will merely be a contractual obligation and if enforceable, difficult to enforce in Thailand (and cannot be enforced by the heirs of the lessee).

Only the first 30-years lease term is secure, regardless what the developer, seller, or registered lease say otherwise.

The lease will also not automatically be renewed after the expiration and the cooperation of the then owner is required.

Section 570 Civil and Commercial Code: 'If, at the end of the agreed period, the hirer remains in possession of the property and the lessor knowing thereof does not object, the parties are deemed to have renewed the contract for an indefinite period'. As I read it, should there not have been a new lease registered, section 566 CCC is applicable: 'If no period is agreed upon or presumed, either party may terminate the contract of hire at the end of each period for the payment of rent, provided that notice of at least one rent period is given, but no more than two months notice need be given'.

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'.

As a general rule, in the event of death of the lessee the lease will be terminated and the lessor (assuming the lessor has concrete proof in the form of a death certificate) could ask the Land Office to remove the lease from the title or in case of a short-term lease the lease will simply be terminated. In practice problems will in most cases arise at the expiry date of the lease between heirs and the then lessor.

Section 544 Civil and Commercial Code; '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'. The lessee should ask the lessor to include a clause that allows sublet and transfer of lease rights, and that in the event of death of the lessee prior to the expiration of the lease term, his or her heirs shall continue to lease the land etc… Such a clause will (in my opinion) be a lease right that will be bound upon future lessors and the transfer of the lease (on proper evidence produced) cannot unreasonably withheld by the lessor (the lease won't transfer automatically). Though, without such a clause in the lease agreement will be automatically terminated (section 544 Civil and Commercial Code).

One could also include others as co-lessees or party in the lease agreement who each could independently continue to lease. This would prevent the necessity of re-registering or transferring the lease in the event of death of the lessee.

In the event of death of the lessor the lease will not be terminated. Section 569 Civil and Commercial Code; 'A contract of hire of immovable property is not extinguished by the transfer of ownership of the property hired. The transferee is entitled to the rights and is subjected to the duties of the transferor towards the hirer'.

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.

Buildings can be owned freehold by the foreigner

The building(s) on the leased land can be owned freehold by the lessee (Scj. 301/2538 (1995)). The lease should only include the land (not only for tax reasons) and the buildings should preferably be owned freehold.

The house will not be a component part of the land under the Civil Law and the lessor cannot seize the house upon expiration the lease.

Buildings as distinct from its land can be owned freehold and transferred (to the heirs), though, buildings (apart from condominiums) do not have any form of title document, but their sale or long lease can be registered at the local land office. Proof of ownership, must be established either from proof of construction (construction permit) or documents showing previous sale-purchase. Transfer of a building as distinct from its land requires a posting of 30 days public notice (to see if anyone wishes to contest the ownership).

In this construction the lessee would not be left with nothing at the end of the lease term. However, it is still uncertain, given the fact that the concept of leases is still new in Thailand, what exactly would happen at the end of the 30-year lease term. Should the lease not be renewed the then owner must (most likely) pay at his option either the price of the building or the sum representing the increase of value accruing to the land by reason of the building or the owner must allow the lessee to lease the whole or part of the land at the market price.

This most likely option is within the system of the law and based on the provisions of the Undue Enrichment Code (Title VI, Undue Enrichment Civil and Commercial Code) and in the alternative the 'Acquisition of Ownership' (Title II, Ownership, Chapter I 'Acquisition of ownership', Civil and Commercial Code). Whichever way, if the parties cannot agree it would be up to a judge to decide what will happen at the end of the 30-year lease term.

Section 1310; 'If a person has, in good faith, constructed a building upon another person's land, the owner of the land becomes the owner of the building, but he must pay the constructor for any increase of value accruing to the land by reason of the building.

However, if the owner of the land can show that there was negligence on his part, he may refuse to take the building and require that it be removed by the constructor and the land put in its former condition, unless this cannot be done at reasonable costs, in which case he may require the constructor to buy the whole or part of the land at the market price'.

Section 1313; 'If the conditional owner of a piece of land has constructed a building on it and the land becomes afterwards the property of another person by effect of the condition, the provisions of this Code concerning Undue Enrichment shall apply'.

The lease should of course not include clauses like;

Clause; All things constructed or repaired shall not be removed from the Property or destroyed when the Lessee vacates the Property; all such things shall become the property of the Lessor.

Clause; Upon expiration of the lease, the Lessee shall not claim any damages or removal costs from the Lessor.

Short term

In case of commercial property a lease term of three years is often offered with an option for another 2 years. Again, this option will be only a contractual obligation on the lessor and the lease will only be enforceable for the first three years.

Supreme Court Judgement 6451/ 1995; 'Should both parties have made 10 lease agreements at the same time, each contract has a three year term and pre-specified dates of execution consecutively for 30 years, it will only be enforceable for the first three years'. This will be seen as an avoidance of 538 CCC and therefore not enforceable. Section 538; 'A hire of immovable property is not enforceable by action unless there be some written evidence signed by the party liable.

If the hire is for more than three years or for the life of the letter or hirer, it is enforceable only for three years unless it is made in writing and registered by the competent official'.

A land lease NOT filed with the land department is only valid for 3 years regardless of the term of the lease. All leases for a period over 3 years MUST be registered at the Land Office and written in Thai. The competent official in the Land Office will register the lease on the backside of the land title deed and a Thai version of the lease will be attached to the land title deed as held in the Land Office.

Sub-Lease

Section 544 Civil and Commercial Code: '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'. Only if the lease contains this option, the leasehold interest can be owned and sold or passed on (assigned) to another leaseholder. This right to assign is generally subject to the permission of the lessor/ landlord, which cannot be unreasonably withheld.

Should the lessee lease raw land (and not be allowed to sub-lease the land) and then build a house on the land and sub-leases the house, this will not be seen a sub-lease or breach of the lease contract (Scj. 2237/1981). Should the lease contract state that the lessee is not allowed to let someone else use the land, then, in the same situation, it will be seen as breach of the lease contract (Scj. 6843/ 1998).

Taxes

Lease registration fee shall be collected at the rate of 1% of the total rental throughout the lease term. Rental shall include the remuneration for the lease, the remuneration during the construction, the key money, the fee for the land's survey, the construction cost contribution or other amount of money paid by the lessee to the lessor for the lease benefits. Stamp duty shall be collected on the register of the lease at the rate of 0.1% of the total rental throughout the lease term. It is common that leases are registered at the Land Office for one-fifth of the actual lease price.

In case the lessee transfers the lease rights (must be in writing) there shall also be a value added tax collected at a rate of 7% of the remuneration of the transfer of lease rights. The transferor is responsible to pay the tax and must also apply for value added tax registration before payment. The value added tax shall be paid only in case the remuneration of the transfer of the lease right throughout the remaining lease term exceeds 1.2 million Baht or higher.

On the value of the land and buildings or any other improvements, annual tax is lieved at the rate of 12.5 percent of the assessed assumed annual rental value of the property, and only owner-occupied residences are exempt.

The foreigner is allowed to own a buildings distinct from the land freehold and the lease should for tax reasons only include the land and not the house (if possible).

Building and land tax

Building and land tax shall be collected at the rate of 12.5% of the yearly rental according to the lease agreement or the annual value assessed by the Land Department, whichever is higher (Land and House tax Act B.E. 2475). The annual value means the amount of money which the property may reasonably be gained from the lease out of a property for each year if the property is offered for lease. If anyone leases a property at a rent lower than the Revenue Department thinks is a reasonable rent, the lessor will, when found out, be taxed on what the rent should have been.

There is also a tax on non-rental property (local development tax) imposed upon the person who either owns or is in possession of the land. The rate depends on location and land classification and assessed value, and varies from 0.25% to 0.95% a year.

If you rent out the property, the tax is 12.5% per year on the annual rental revenue, which is why so many local rentors want the lessee to pay tax for them, as they don't want to lose 12.5% of their revenue.

House and land tax and local development tax are collected by local authorities. The relevant authorities are not very strict in collecting the taxes….

[gdhm]

Hello, Dragonman, Pepi1 and Nadia 2,

Thank you all. My goodness Nadia 2 I feel very humble and am very grateful you have gone to so much work in answering my question but the information is extremely helpful and will not be wasted.

I have 2 final questions about taxes.

1) Can you pay the 30yr lease in 1 go at the outset ALSO

2) In my case the land owner will be my wife. Can the contract set a nominal token lease amount and therefore the tax on rent would be minute or (as this is not in the spirit of the law) is it NOT allowed to agree a token rent. If a token rent is NOT permissible then is there a legal minimum that must be paid?

Regards and thanks once again.

Dave

[Dragonman]

Hello, Dragonman, Pepi1 and Nadia 2,

Thank you all. My goodness Nadia 2 I feel very humble and am very grateful you have gone to so much work in answering my question but the information is extremely helpful and will not be wasted.

I have 2 final questions about taxes.

1) Can you pay the 30yr lease in 1 go at the outset ALSO

2) In my case the land owner will be my wife. Can the contract set a nominal token lease amount and therefore the tax on rent would be minute or (as this is not in the spirit of the law) is it NOT allowed to agree a token rent. If a token rent is NOT permissible then is there a legal minimum that must be paid?

Regards and thanks once again.

Dave

Yes, the total amount for the lease may be paid at commencement. The lease may be a nominal sum, but the Land Office will make their own valuation and the tax will need to be paid on this.

It is dubious from a legal standpoint, but your wife will not need to pay tax on the rental if she is living in the property. This does not exempt her from the "lease set up tax" however.

[gdhm]

Thank you Dragonman. You have been very helpful throughout this enquiry and I very much appreciate your guidance.

I am now much better prepared for when I try to buy a house thanks to yours and others help on this Forum

My Grateful regards to all

Dave

[jumpyjpl]

2) If I cannot have an auto lease renewal option at 30 years then what is the legal situation. My wife owns the land and I assume lease or not I STILL own the house on it (but my lease has expired) in Thailand does that mean MY HOUSE automatically become the land owner's property or can they order me to remove my house and get nothing for it at 30 years when the lease expires. Can someone enlighten me what happens in the event of me not being permitted to extend my lease at 30 years. Do I have any rights or protection to enable me to get the money back on my house if I am forced to move out, OR can I have legal rights into my original 30 year lease agreement (e.g. in the event of the land owner refusing to offer a further lease then they must purchase my house for market value at that time ("as though a new 30 year lease existed at that time" OR WORDS TO THAT EFFECT).

Basically it seems to me that form everybody is saying the Land owner is in a powerful situation and I therefore need IF LEGAL to build in conditions with the 30 year lease agreement to protect my asset value at time the 30 years lease expires.

Any comments and especially confirmation of what I can do will be appreciated. I know I would need a Lawyer to draw up any lease contract and/or attached contract, BUT it helps to know in advance what is possible so I can steer my Lawyer in that direction IF he has not thought of it already.

Regards and thanks

Dave

It’s of course important that your lease is drafted correctly.

The options in a lease agreement

Under present law the renewal options in the lease agreement do not pass to heirs or future lessors.

Supreme Court Judgment 6763/ 1998; 'In case the lessor promises in the lease agreement to extent or renew the lease term, but has sold the leased land before the lessee was entitled to accept, the 'contractual rights' are not binding upon the new owner and only lease rights that are 'real rights' will transfer to the new owner'.

A lease agreement in Thailand is in the first place an agreement between two parties and the lease rights that are not 'real rights' (though these are included in the lease agreement registered at the Land Office) do not transfer to the successors of the property. 'Real rights may be created only by the virtue of this code or other laws' (section 1298 CCC).

The new owner must explicitly accept the lease and the contractual options or he or she will not automatically be bound by the option obligations. This could be effected in the form of an additional clause in the Sale and Purchase agreement between the lessor and future lessor;

CLAUSE: The Land is encumbered with a Lease dated the <> day of <> 2006 and made between the Seller of the one part and <> of the other part for an initial term of 30 years with an option to renew for a further 30 year term. (Copy attached hereto and marked Schedule <>)

CLAUSE: 'The Purchaser hereby warrants and guarantees that he has read and fully understands the content of the Lease and is ready and willing and does hereby purchase the Land subject to the Lease and subject to all the terms and conditions contained therein as if he were the Seller and to indemnify the Seller against all and any claim or claims, dispute or disputes arising from any breach of the terms or conditions agreed to by the Seller contained in the said Lease and to indemnify the Seller in respect of any Government taxes that may be due or in due course fall due in respect of the said Lease'.

Without such a clause (it would be up to the lessor to include this in a sale and purchase agreement) the option obligations will under present law not pass to future lessors and the future lessor will again be bound by the 'real rights' only. Then again, these options will merely be a contractual obligation and if enforceable, difficult to enforce in Thailand (and cannot be enforced by the heirs of the lessee).

Only the first 30-years lease term is secure, regardless what the developer, seller, or registered lease say otherwise.

The lease will also not automatically be renewed after the expiration and the cooperation of the then owner is required.

Section 570 Civil and Commercial Code: 'If, at the end of the agreed period, the hirer remains in possession of the property and the lessor knowing thereof does not object, the parties are deemed to have renewed the contract for an indefinite period'. As I read it, should there not have been a new lease registered, section 566 CCC is applicable: 'If no period is agreed upon or presumed, either party may terminate the contract of hire at the end of each period for the payment of rent, provided that notice of at least one rent period is given, but no more than two months notice need be given'.

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'.

As a general rule, in the event of death of the lessee the lease will be terminated and the lessor (assuming the lessor has concrete proof in the form of a death certificate) could ask the Land Office to remove the lease from the title or in case of a short-term lease the lease will simply be terminated. In practice problems will in most cases arise at the expiry date of the lease between heirs and the then lessor.

Section 544 Civil and Commercial Code; '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'. The lessee should ask the lessor to include a clause that allows sublet and transfer of lease rights, and that in the event of death of the lessee prior to the expiration of the lease term, his or her heirs shall continue to lease the land etc… Such a clause will (in my opinion) be a lease right that will be bound upon future lessors and the transfer of the lease (on proper evidence produced) cannot unreasonably withheld by the lessor (the lease won't transfer automatically). Though, without such a clause in the lease agreement will be automatically terminated (section 544 Civil and Commercial Code).

One could also include others as co-lessees or party in the lease agreement who each could independently continue to lease. This would prevent the necessity of re-registering or transferring the lease in the event of death of the lessee.

In the event of death of the lessor the lease will not be terminated. Section 569 Civil and Commercial Code; 'A contract of hire of immovable property is not extinguished by the transfer of ownership of the property hired. The transferee is entitled to the rights and is subjected to the duties of the transferor towards the hirer'.

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.

Buildings can be owned freehold by the foreigner

The building(s) on the leased land can be owned freehold by the lessee (Scj. 301/2538 (1995)). The lease should only include the land (not only for tax reasons) and the buildings should preferably be owned freehold.

The house will not be a component part of the land under the Civil Law and the lessor cannot seize the house upon expiration the lease.

Buildings as distinct from its land can be owned freehold and transferred (to the heirs), though, buildings (apart from condominiums) do not have any form of title document, but their sale or long lease can be registered at the local land office. Proof of ownership, must be established either from proof of construction (construction permit) or documents showing previous sale-purchase. Transfer of a building as distinct from its land requires a posting of 30 days public notice (to see if anyone wishes to contest the ownership).

In this construction the lessee would not be left with nothing at the end of the lease term. However, it is still uncertain, given the fact that the concept of leases is still new in Thailand, what exactly would happen at the end of the 30-year lease term. Should the lease not be renewed the then owner must (most likely) pay at his option either the price of the building or the sum representing the increase of value accruing to the land by reason of the building or the owner must allow the lessee to lease the whole or part of the land at the market price.

This most likely option is within the system of the law and based on the provisions of the Undue Enrichment Code (Title VI, Undue Enrichment Civil and Commercial Code) and in the alternative the 'Acquisition of Ownership' (Title II, Ownership, Chapter I 'Acquisition of ownership', Civil and Commercial Code). Whichever way, if the parties cannot agree it would be up to a judge to decide what will happen at the end of the 30-year lease term.

Section 1310; 'If a person has, in good faith, constructed a building upon another person's land, the owner of the land becomes the owner of the building, but he must pay the constructor for any increase of value accruing to the land by reason of the building.

However, if the owner of the land can show that there was negligence on his part, he may refuse to take the building and require that it be removed by the constructor and the land put in its former condition, unless this cannot be done at reasonable costs, in which case he may require the constructor to buy the whole or part of the land at the market price'.

Section 1313; 'If the conditional owner of a piece of land has constructed a building on it and the land becomes afterwards the property of another person by effect of the condition, the provisions of this Code concerning Undue Enrichment shall apply'.

The lease should of course not include clauses like;

Clause; All things constructed or repaired shall not be removed from the Property or destroyed when the Lessee vacates the Property; all such things shall become the property of the Lessor.

Clause; Upon expiration of the lease, the Lessee shall not claim any damages or removal costs from the Lessor.

Short term

In case of commercial property a lease term of three years is often offered with an option for another 2 years. Again, this option will be only a contractual obligation on the lessor and the lease will only be enforceable for the first three years.

Supreme Court Judgement 6451/ 1995; 'Should both parties have made 10 lease agreements at the same time, each contract has a three year term and pre-specified dates of execution consecutively for 30 years, it will only be enforceable for the first three years'. This will be seen as an avoidance of 538 CCC and therefore not enforceable. Section 538; 'A hire of immovable property is not enforceable by action unless there be some written evidence signed by the party liable.

If the hire is for more than three years or for the life of the letter or hirer, it is enforceable only for three years unless it is made in writing and registered by the competent official'.

A land lease NOT filed with the land department is only valid for 3 years regardless of the term of the lease. All leases for a period over 3 years MUST be registered at the Land Office and written in Thai. The competent official in the Land Office will register the lease on the backside of the land title deed and a Thai version of the lease will be attached to the land title deed as held in the Land Office.

Sub-Lease

Section 544 Civil and Commercial Code: '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'. Only if the lease contains this option, the leasehold interest can be owned and sold or passed on (assigned) to another leaseholder. This right to assign is generally subject to the permission of the lessor/ landlord, which cannot be unreasonably withheld.

Should the lessee lease raw land (and not be allowed to sub-lease the land) and then build a house on the land and sub-leases the house, this will not be seen a sub-lease or breach of the lease contract (Scj. 2237/1981). Should the lease contract state that the lessee is not allowed to let someone else use the land, then, in the same situation, it will be seen as breach of the lease contract (Scj. 6843/ 1998).

Taxes

Lease registration fee shall be collected at the rate of 1% of the total rental throughout the lease term. Rental shall include the remuneration for the lease, the remuneration during the construction, the key money, the fee for the land's survey, the construction cost contribution or other amount of money paid by the lessee to the lessor for the lease benefits. Stamp duty shall be collected on the register of the lease at the rate of 0.1% of the total rental throughout the lease term. It is common that leases are registered at the Land Office for one-fifth of the actual lease price.

In case the lessee transfers the lease rights (must be in writing) there shall also be a value added tax collected at a rate of 7% of the remuneration of the transfer of lease rights. The transferor is responsible to pay the tax and must also apply for value added tax registration before payment. The value added tax shall be paid only in case the remuneration of the transfer of the lease right throughout the remaining lease term exceeds 1.2 million Baht or higher.

On the value of the land and buildings or any other improvements, annual tax is lieved at the rate of 12.5 percent of the assessed assumed annual rental value of the property, and only owner-occupied residences are exempt.

The foreigner is allowed to own a buildings distinct from the land freehold and the lease should for tax reasons only include the land and not the house (if possible).

Building and land tax

Building and land tax shall be collected at the rate of 12.5% of the yearly rental according to the lease agreement or the annual value assessed by the Land Department, whichever is higher (Land and House tax Act B.E. 2475). The annual value means the amount of money which the property may reasonably be gained from the lease out of a property for each year if the property is offered for lease. If anyone leases a property at a rent lower than the Revenue Department thinks is a reasonable rent, the lessor will, when found out, be taxed on what the rent should have been.

There is also a tax on non-rental property (local development tax) imposed upon the person who either owns or is in possession of the land. The rate depends on location and land classification and assessed value, and varies from 0.25% to 0.95% a year.

If you rent out the property, the tax is 12.5% per year on the annual rental revenue, which is why so many local rentors want the lessee to pay tax for them, as they don't want to lose 12.5% of their revenue.

House and land tax and local development tax are collected by local authorities. The relevant authorities are not very strict in collecting the taxes….

[jumpyjpl]

Building and land tax

Building and land tax shall be collected at the rate of 12.5% of the yearly rental according to the lease agreement or the annual value assessed by the Land Department, whichever is higher (Land and House tax Act B.E. 2475).

Really interesting.

Can you confirm: " If I build the house under my name, I will not have to pay the 12.5% taxe on the building, but if I buy the house I have to pay this taxe ...

[Dragonman]

Building and land tax

Building and land tax shall be collected at the rate of 12.5% of the yearly rental according to the lease agreement or the annual value assessed by the Land Department, whichever is higher (Land and House tax Act B.E. 2475).

Really interesting.

Can you confirm: " If I build the house under my name, I will not have to pay the 12.5% taxe on the building, but if I buy the house I have to pay this taxe ...

Owner occupied residences are exempt.

[jumpyjpl]

Thank you very much DragonMan and Nadia2.