Buying a house, leasing the land

[usernamex]

Hi all,

I am looking at buying a house in a housing estate by a reputable developer (Quality Houses.) Obviously as a foreigner I have to lease the land, which the company leases to me (actually a subsidiary of Quality Houses.) The lease is good for 30 years. My understanding is that if I sell the house before the 30 years lease is up to a Thai then the new Thai owner takes over the ownership of the land (without the lease) whereas if I sell it to a foreigner they will have to take over the lease, which of course can be renewed after the 30 years is up. I'm just wondering if anyone has any advice/experience in this and if I missing anything. WIll it be more difficult for me to sell it because I have lease on the land and not outright own it? Will it affect the value because I have a lease on it compared to if a Thai owned it? Have there been many cases where leases are suddenly invalidated? Is this more risker than buying a condo? Any advice/comments (of the intelligent nature!) are welcomed! The housing estate by the way is near Rayong, its near waterfront but not right on it.

Thanking you in advance.

[bangkoklawyer24]

If it is a "reputable developer", how can he really promise to you that you get legal ownership in the house?

[chiang mai]

From memory: there's a problem with new house builds trying to separate the sale of the land and the house structure, Land and House in Chalong in Phuket would only sell to Thai nationals because of that, three years ago.

You will never be allowed to own the house that sits on the land other than through a legal Will. You cannot own the land other than through a bank of Thailand investment program.

Yes, a property can be sold and the lease becomes void, unless you have a registered ufsrtuct at the Land Office, that gives you the right to live in the house for the duration of the lease.

Selling such a property to a Thai person will not be difficult, as long as the price is right, selling to a farang may be problematic, dunno.

Yes, owning a condominium in your name, in the farang quota, is far far less risky.

Please find a decent lawyer to advise you before you agree any contract, seek many recommendations for this and don't be pressured by wife/girlfriends, take it all VERY slowly.

[usernamex]

Thanks Chiang Mai. Will certainly be using lawyer as you suggest. So in your view it would be best (if possible) to make sure there is a separation between the sale of the house and the land, is that correct?

Cheers,

[chiang mai]

Thanks Chiang Mai. Will certainly be using lawyer as you suggest. So in your view it would be best (if possible) to make sure there is a separation between the sale of the house and the land, is that correct?

Cheers,

Typo in my previous post: should have read, "cannot own the land the house sits on", but I think that may have been understood.

Yes, you have to separate the two elements.

If I read your post correctly the developer is the land owner hence he is the lease owner, there's nothing to prevent him from selling the land which would cancel the lease, unless you have a registered ufstruct.

On a new build the developer is likely to own all of the land so it will be difficult to separate the purchase of the two elements, I would guess. It's an easier process with a new build for an individual where the land lease can be established, the uftsruct granted and the buyer/lessor (you) then owns the building that is built on that land which is then registered.

I can recommend a good lawyer in Chiang Mai if needed, cannot help elsewhere.

Good luck

[Boycie]

usernamex you ask a few questions in your OP but you believe one big detail to be a legitimate

'My understanding is that if I sell the house before the 30 years lease is up to a Thai then the new Thai owner takes over the ownership of the land (without the lease) whereas if I sell it to a foreigner they will have to take over the lease, which of course can be renewed after the 30 years is up.'

Even if you are the owner in 30 years time, there is no guarantee of a renewal of the lease.

http://www.thaivisa.com/forum/topic/755283-developers-sales-deal-of-3-x-30years-lease/

[dBrown]

.

You will never be allowed to own the house that sits on the land other than through a legal Will. You cannot own the land other than through a bank of Thailand investment program.

Excuse me but I owned the house that has been built on land I leased, and when I sold it just recently, it was transferred the legal way through the land department to another foreigner, who now owns it in his name.

[chiang mai]

.

You will never be allowed to own the house that sits on the land other than through a legal Will. You cannot own the land other than through a bank of Thailand investment program.

Excuse me but I owned the house that has been built on land I leased, and when I sold it just recently, it was transferred the legal way through the land department to another foreigner, who now owns it in his name.

I corrected that typo in my following post.

[zeekgarcia]

.

You will never be allowed to own the house that sits on the land other than through a legal Will. You cannot own the land other than through a bank of Thailand investment program.

Excuse me but I owned the house that has been built on land I leased, and when I sold it just recently, it was transferred the legal way through the land department to another foreigner, who now owns it in his name.

Hello dBrown are you saying that you leased some land and then had a house built on the land?

Was this a lease or a usufruct?

If it was a lease, after the house was built did you have to make a newspaper announcement of your intention to register the house into your name for 30 days as the lawyer on here says you have to do with a usufruct?

When the transfer took place at the land department did the foreigner get a new lease for how ever many years were left on your original lease or did they get a lease from the Thai land owner?

And did you have to notify the Thai landowner about you doing this or is it in your original lease that you can lease the land out to a third party?

Also if the foreigner took over your lease did they pay you upfront for the time left on the lease and then pay you upfront for your house or are they simply making your lease payments on the original lease of the land?

thanks so much for your time and explanations. And any other information that you can add to this would be a help to all. Plus what jangwat/province did you do this?

[chiang mai]

Some misconceptions here:

A lease is the temporary transfer of the title for up to 30 years.

An ufrstruct is the right of the lease holder to live on the land for the duration of the lease.

Ufstructs do not come automatically with leases, they must be applied for separately.

From experience, not every land office will offer an ufstruct, even those that are side by side in the same province.

Edited September 21, 2014 by chiang mai

[alfieconn]

Thanks Chiang Mai. Will certainly be using lawyer as you suggest. So in your view it would be best (if possible) to make sure there is a separation between the sale of the house and the land, is that correct?

Cheers,

Typo in my previous post: should have read, "cannot own the land the house sits on", but I think that may have been understood.

Yes, you have to separate the two elements.

If I read your post correctly the developer is the land owner hence he is the lease owner, there's nothing to prevent him from selling the land which would cancel the lease, unless you have a registered ufstruct.

On a new build the developer is likely to own all of the land so it will be difficult to separate the purchase of the two elements, I would guess. It's an easier process with a new build for an individual where the land lease can be established, the uftsruct granted and the buyer/lessor (you) then owns the building that is built on that land which is then registered.

I can recommend a good lawyer in Chiang Mai if needed, cannot help elsewhere.

Good luck

If the landlord can sell the land the lease would still stand !

Edited September 21, 2014 by alfieconn

[zeekgarcia]

From reading the ask the lawyer section and if I memory is correct you would have to either:

1. Get a lease for the house and the land for more than 3 years but no longer than 30 years and have that lease

registered at the local land department. Then if the owner sells the house & land the new owner will have to honor

the lease because it will be registered on the title/deed of the land, unless the original owner can find some way to

have the court or land office void the lease.

** I am not sure but you may be able to get a lease on the land for more than 3 years but no longer than 30 years and have that lease registered at the local land department and then have the house built on the land after you have the lease registered and then I think you may be able to get a "house book/document" showing you are the owner of the house but not the land. This would be a good question for you to ask the lawyer on here and let us know when you do it, so we can see their answer

2. Get a usufruct on the land for 30 years or your lifetime or the owner's life time etc and then have the usufruct registered at the land department. Then you have the house built on the land. After the house is built on the land you will have to make a newspaper announcement of your intention to register the house in your name for 30 days, Then if no one objects in the given time the house can then be registered in your name.

As I said this comes from me reading the ask the lawyer section but I do not know of anyone that has done either of these. But it would be good to meet someone that has done this and actually see a copy of their papers or if someone that has done this already will up load their papers with making sure that their personal information is blacked out, would be a great example for everyone interested in this.

Edited September 21, 2014 by zeekgarcia

[chiang mai]

Thanks Chiang Mai. Will certainly be using lawyer as you suggest. So in your view it would be best (if possible) to make sure there is a separation between the sale of the house and the land, is that correct?

Cheers,

Typo in my previous post: should have read, "cannot own the land the house sits on", but I think that may have been understood.

Yes, you have to separate the two elements.

If I read your post correctly the developer is the land owner hence he is the lease owner, there's nothing to prevent him from selling the land which would cancel the lease, unless you have a registered ufstruct.

On a new build the developer is likely to own all of the land so it will be difficult to separate the purchase of the two elements, I would guess. It's an easier process with a new build for an individual where the land lease can be established, the uftsruct granted and the buyer/lessor (you) then owns the building that is built on that land which is then registered.

I can recommend a good lawyer in Chiang Mai if needed, cannot help elsewhere.

Good luck

If the landlord can sell the land the lease would still stand !

Only if the lease is registered at the Land Office and is protected by an ufstruct otherwise the new owner of the land has no relationship with the lessee or the lease and does not have to allow it to continue.

[zeekgarcia]

Some misconceptions here:

A lease is the temporary transfer of the title for up to 30 years.

An ufrstruct is the right of the lease holder to live on the land for the duration of the lease.

Ufstructs do not come automatically with leases, they must be applied for separately.

From experience, not every land office will offer an ufstruct, even those that are side by side in the same province.

Please see:

http://www.thaivisa.com/forum/topic/754153-usufruct-30-years-or-100-years-if-live-that-long/?p=8296279&hl=%2Busufruct

http://www.thaivisa.com/forum/topic/747969-what-is-the-best-way-to-own-land-in-thailand/?p=8310901&hl=%2Busufruct

http://www.thaivisa.com/forum/topic/748327-question-re-usufruct/?p=8197951&hl=%2Busufruct

Edited September 21, 2014 by zeekgarcia

[dBrown]

.

You will never be allowed to own the house that sits on the land other than through a legal Will. You cannot own the land other than through a bank of Thailand investment program.

Excuse me but I owned the house that has been built on land I leased, and when I sold it just recently, it was transferred the legal way through the land department to another foreigner, who now owns it in his name.

Hello dBrown are you saying that you leased some land and then had a house built on the land?

Was this a lease or a usufruct?

If it was a lease, after the house was built did you have to make a newspaper announcement of your intention to register the house into your name for 30 days as the lawyer on here says you have to do with a usufruct?

When the transfer took place at the land department did the foreigner get a new lease for how ever many years were left on your original lease or did they get a lease from the Thai land owner?

And did you have to notify the Thai landowner about you doing this or is it in your original lease that you can lease the land out to a third party?

Also if the foreigner took over your lease did they pay you upfront for the time left on the lease and then pay you upfront for your house or are they simply making your lease payments on the original lease of the land?

thanks so much for your time and explanations. And any other information that you can add to this would be a help to all. Plus what jangwat/province did you do this?

I had a lease, but I think you can do the same with a usufruct.

I don't know if I had to announce the house to get it registered, I didn't do it anyway as the blue and yellow book were issued without asking for that, but I had to announce it for 30 days prior to the transfer.

The land was sold at the same time to the Thai wife of the foreigner, while the house was transferred to him.So there were 2 transfers at the landoffice that day.

[usernamex]

Thanks all for the comments and advice, it's much appreciated!

[chiang mai]

Some misconceptions here:

A lease is the temporary transfer of the title for up to 30 years.

An ufrstruct is the right of the lease holder to live on the land for the duration of the lease.

Ufstructs do not come automatically with leases, they must be applied for separately.

From experience, not every land office will offer an ufstruct, even those that are side by side in the same province.

Please see:

http://www.thaivisa.com/forum/topic/754153-usufruct-30-years-or-100-years-if-live-that-long/?p=8296279&hl=%2Busufruct

http://www.thaivisa.com/forum/topic/747969-what-is-the-best-way-to-own-land-in-thailand/?p=8310901&hl=%2Busufruct

http://www.thaivisa.com/forum/topic/748327-question-re-usufruct/?p=8197951&hl=%2Busufruct

I stand corrected in that an ufstruct is for life and not for the duration of the lease, we are in agreement on the remaining aspects.

[usernamex]

Chiang Mai - I have a question for you please!

Form an earlier post you said:

"If I read your post correctly the developer is the land owner hence he is the lease owner, there's nothing to prevent him from selling the land which would cancel the lease, unless you have a registered ufstruct."

I understand your point and I'm not trying to be argumentative, but would a reputable developer (such as Quality Houses) sell the land that they have leased to you that would cancel the lease?? OK i understand that technically they could, but are you or anyone else aware of cases in which this happened in Thailand by a SET-listed company? Is this a genuine risk?

Thanks for your thoughts!

[ricklev]

They can't cancel the lease. It has nothing to do with a usufruct. Don't assume what you read here is true.

[tomme]

Usernamex;

To own a house (or any building) in your name, while you as a foreigner has a lease on the land, you need to register the ownership in landoffice, the fee to pay in landoffice are a few % or the purchase price.

In my own opinion it is useless to register the building, it’s the lease and rules and regulations that are important, and in court it is enough if it says you are the owner of the building on your land office lease contract and its written inside your buyer contract.

Your land office lease contract need rules; lease duration, leasing fee (pay per month or year), inherit rights, lessee is the owner of the building, if the house is for private living or an office or both, see appendix for more rules etc.

You also need a lease contract with the landowner.

Inside you contract you need to have rules, something like;

In the event that the Lessee wishes to sell or transfer the house constructed on the Lease Area to any third person, it shall be deemed that the Lessee wishes to terminate this Agreement.

The buyer or transferee of the Lessee’s house shall have the right and option to lease the Lease Area under a new Lease Agreement, with the same conditions and 30-year duration set forth previously in this Agreement.

If Thai law is changed to allow for a longer lease period than the current 30 years, the Lessee has the right to at such time request a new Lease Agreement for the longer duration.

The Lessor hereby irrevocably agrees that the lease rights it has granted to the Lessee under this Agreement, shall upon the death of the Lessee during the validity of the lease term and the extension thereof, be inherited by the Lessee’s heirs according to the Lessee’s intention statutory heirs.

Upon inherited the lease rights by the Lessee’s heirs, the Lessor agrees to offer the Lessee’s heirs a new lease agreement of 30 years with the same conditions as stated in this Agreement.

ETC.

And attach the contract to the backside of the land office lease agreement (so your written contract with the lease giver is registered in land office), and remember, only legal rules can be registered.

A lease contract is the only agreement that a new landlord must honor, a new landowner are not bound to all other written contracts that are not registered at land office, like buyer contract and maintenance contract etc.

Only 30 years are certain, extensions are up to the landlord, only intensions are written when it says 30+30+30 years lease.

Only way for a lessee to lose the lease right is to NOT pay the leasing fee or break some other rules inside your contract.

Contact a lawyer and check everything before put your signature on a contract, for example Isaan lawyers that sometimes write on this forum.

Always think before you do anything in Thailand, never guess/assume/believe/trust anything Good luck.

T

[chiang mai]

Chiang Mai - I have a question for you please!

Form an earlier post you said:

"If I read your post correctly the developer is the land owner hence he is the lease owner, there's nothing to prevent him from selling the land which would cancel the lease, unless you have a registered ufstruct."

I understand your point and I'm not trying to be argumentative, but would a reputable developer (such as Quality Houses) sell the land that they have leased to you that would cancel the lease?? OK i understand that technically they could, but are you or anyone else aware of cases in which this happened in Thailand by a SET-listed company? Is this a genuine risk?

Thanks for your thoughts!

Your question goes to the morality of the developer which of course I can't answer. But if you ask me whether anyone has ever issued a lease and then sold the land and the lease has been cancelled, I can't recall when or where precisely but I am confident that has been the subject of debates here on TV in the past.

A couple of questions perhaps to ask are, why do ufstruct's exist, what purpose do they serve above and beyond having a lease. I think you'll find the answer is that a lease defines/guarantees the "who, what, where and price" whereas the ufstruct defines/guarantees the "right".

[chiang mai]

And attach the contract to the backside of the land office lease agreement (so your written contract with the lease giver is registered in land office), and remember, only legal rules can be registered.

I agree that the lease must be registered at the Land Office for it to even begin to stand a chance.

[chiang mai]

Here's one article that the OP may find useful, later today I will look for others regarding the sale of the land and lease cancellation:

http://www.sunbeltlegaladvisors.com/property/30-year-lease-agreement/

Here's a second article from the same source:

http://www.sunbeltlegaladvisors.com/property/usufruct/

From the latter:

"With the usufruct, you are registered on the title deed. The land can never be sold or transferred by the owner of the land until the servitude is terminated".

The very clear implications of that statement are that, without the usufruct, the owner of the land can sell or transfer.

Plus one more:

http://www.thailand-lawyer.com/usufruct.html

A key phrase here is:

"Although the Thai law does not necessarily prohibit usufructs for foreigners, the final decision to grant a usufruct is up to the discretion of the Land Department official".

I'll keep looking.

Edited September 22, 2014 by chiang mai

[dBrown]

Chiang Mai - I have a question for you please!

Form an earlier post you said:

"If I read your post correctly the developer is the land owner hence he is the lease owner, there's nothing to prevent him from selling the land which would cancel the lease, unless you have a registered ufstruct."

I understand your point and I'm not trying to be argumentative, but would a reputable developer (such as Quality Houses) sell the land that they have leased to you that would cancel the lease?? OK i understand that technically they could, but are you or anyone else aware of cases in which this happened in Thailand by a SET-listed company? Is this a genuine risk?

Thanks for your thoughts!

The landowner can indeed sell the land, but it doesn't invalidate the lease, and the new landowner will have to respect the lease.

[chiang mai]

From what I've read, it looks like there's various combinations:

Long lease, not registered - lessor can sell and the lessee has little comeback.

Long lease, registered but no usufruct - lessor can sell but lease remains valid although enforcement of the lessee's rights is a civil matter which would take years to go through the courts.

Long Lease, registered and supported by an usufruct - lessor cannot sell, immediately enforceable by the Land Office.

[alfieconn]

From what I've read, it looks like there's various combinations:

Long lease, not registered - lessor can sell and the lessee has little comeback.

Long lease, registered but no usufruct - lessor can sell but lease remains valid although enforcement of the lessee's rights is a civil matter which would take years to go through the courts.

Long Lease, registered and supported by an usufruct - lessor cannot sell, immediately enforceable by the Land Office.

Why would the lease not be registered ? a lease is nothing to do with a usufruct and is legally binding for 30 years, finish.

although enforcement of the lessee's rights is a civil matter

Could you explain the above !

[tomme]

OK, I see there is a lot of readers and not so many Doers at this topic right now.

a Lease signed at land office must be honored by the landlord, never mind who owns the land, even if its sold 100 times while an existing lease are valid, it cant be canceled by the landlord. a registered lease is one of the strongest contracts that exist in Thailand.

Only 2 possible happenings can make a court to cancel the lease (To my own knowledge), 1) the lessee does not pay the rent, 2) the landlord has debt on the land before you register the lease at land office and the lender later claims the land and a court cancel the lease (In this case you must sign a extra document in land office at the same time you register your lease in land office).

All other written contracts between a buyer and a landlord, like; buyer contract, maintenance contract and not registered lease contracts are not valid after the landlord sell hes land to a new landlord.

Thats why you should attach the written contract that are made between the landlord and the lessee at the same time as you are in land office, this means; 1 document is land office lease agreement and another document are attached to the lease agreement like an appendix, this is your lease agreement with the landlord.

Edited September 22, 2014 by tomme

[tomme]

alfieconn

"although enforcement of the lessee's rights is a civil matter"

An dispute between a lessee and a landlord are in most cases a civil matter, time in court to fight a civil matter is approximately 7-12 years long.

[chiang mai]

From what I've read, it looks like there's various combinations:

Long lease, not registered - lessor can sell and the lessee has little comeback.

Long lease, registered but no usufruct - lessor can sell but lease remains valid although enforcement of the lessee's rights is a civil matter which would take years to go through the courts.

Long Lease, registered and supported by an usufruct - lessor cannot sell, immediately enforceable by the Land Office.

Why would the lease not be registered ? a lease is nothing to do with a usufruct and is legally binding for 30 years, finish.

although enforcement of the lessee's rights is a civil matter

Could you explain the above !

Give it a rest Alf!

[chiang mai]

I came across this:

"However, under current Thai law, the maximum lease term that can be officially registered is 30 years.

Thus, it has become quite common for developers who are marketing to foreigners to offer a long-term lease of 30 years with two additional rollovers of 30 years each, for a total of 90 years.

However, according to Section 540 of the Civil and Commercial Code (CCC) any such additional term is not an “extension” of the lease; it is a “renewal” of the lease. This means the new term is essentially a new contract.

The result of this is that if the owner of the land changes during the first lease term, the new owner will not be obliged to honour the renewal of the lease, even if the lessee has already pre-paid the original owner for the renewal term.This is because the new owner never offered to renew the lease and the law does not oblige the new owner to honour an offer made by the original owner and lessor.

In an effort to address this insecurity, many developers offer what the article referred to as a “collective leasehold” structure."

http://www.thephuketnews.com/phuket-law-does-going-collective-fix-your-lease-renewal-problem-38440.php

I think this answers the question for me at least and probably explains past debates on TV on this subject - the original 30 year lease cannot be cancelled but any commitment to renew the lease for a second or third term, is not enforceable if the land has been sold in the interim.