30 yr lease has run 5 years and is being sold

[nithisa78]

On the subject of leases and lawyers, has anybody had a good experience with a lawyer in Chiang Mai area that they can recommend? I need someone with solid experience in structuring land acquisitions such that ones interests are protected to the maximum possible permitted by Thai laws, and then also experience with building approvals, which I understand are not straight-forward for a foreigner with a land-lease. Would greatly appreciate references/recommendations in this regard as I am new to Thai property regs and also new to Thai Visa forum. Tx

John Lewis, Anglo Thai Legal. very dialed in. Truthful and trustworthy. 082-455-2734

[alfieconn]

Why any person would "lease" property in thailand for 30 years is beyond my comprehension. You will lose.

It is a prepaid 30 year rental, and can be interesting in some cases.

Again: the discounted cash flows of monthly rental payments will break even with the freehold price of a property in Thailand on a duration of 13 to 18 years depending on the interest rate used as well as on the property and rental prices, obviously.

Can you explain how it can be interesting ?

[Galangal]

@nithisa78 Thanks a mil. I really appreciate the reference:)

[monkeycountry]

Why any person would "lease" property in thailand for 30 years is beyond my comprehension. You will lose.

It is a prepaid 30 year rental, and can be interesting in some cases.

Again: the discounted cash flows of monthly rental payments will break even with the freehold price of a property in Thailand on a duration of 13 to 18 years depending on the interest rate used as well as on the property and rental prices, obviously.

I fail to see how anything will break even if rent is paid upfront for the entire lease?

Person A buys a house. Person B rents an identical house, paid upfront for 30 years. They have now both spent the same amount of money.

Over time both houses will increase in value by the same amount, but person B will have less and less time left on his lease, which means his asset becomes less and less valuable compared to person A's asset, and after 30 years, the value of person B's asset will be 0 baht.

An example:

Person A and B both spend 1 million on identical houses, A = freehold, B = 30 year lease paid upfront.

After 10 years both houses have increased in value by 20%, to 1.2 million.

Person A can now sell his house for 1.2 million

Person B can sell his house for 1.2 million x 20/30 = 800,000 baht as there is only 20 years left on the lease.

In other words, Person B has now lost 400,000 baht compared to person A.

Please show me just one example, where Person B makes the same or more money than person A?

[khunPer]

If it’s a sub-lease – and not a transfer on the whole leasing agreement (that may need registration at the Land Office) – then I will presume the original lessee is the one responsible to the freeholder/lessor, and the sub-lessee to the original lessee, i.e. the contract continues between the two original parties.

[OLDMANHARRY]

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On the subject of leases and lawyers, has anybody had a good experience with a lawyer in Chiang Mai area that they can recommend? I need someone with solid experience in structuring land acquisitions such that ones interests are protected to the maximum possible permitted by Thai laws, and then also experience with building approvals, which I understand are not straight-forward for a foreigner with a land-lease. Would greatly appreciate references/recommendations in this regard as I am new to Thai property regs and also new to Thai Visa forum. Tx

I agree Siam Legal they are professional, helped me out when i built my house in phuket nearly 8 years ago no doubt you would be aware falang cannot own the land only a thai man or lady i utilized a very ancient law called superficie infact this law go's back to roman day's and believe it or not it is recognised in the kathu Phuket lands office's and courts in thailand it's still active,i payed cash for the land my thai lady got the title, i then submitted plans and land area to build a house on the said site and requested a separate title, Siam Legal handled everything at the lands office on our behalf that day, i payed the fee's and received my title in my name.

I did not jump straight in to building a house i spent 6 months just looking at construction sites not quantity / quality i then subcontracted the works, i have a great deal of experience in the trade.

I also used the same method in khon kaen at our farm i have 51 rai there two new brick and concrete house's and sheds once again all the structure's are in separate titles in my name i paid cash for everything, hope you don't think im blow'en smoke up your ass - the reason why for the long story - my wife cannot sell the property because of my title's and i can not sell the property because of her title, i did this to protect my investment if it came to the crunch it would be 50/50 agreement, now im over all that worry and bullshit that i created in my own mind.

Now days, i totally trust her with everything, she is my friend and soul mate.

My friend everyone is correct try to avoid lease's and don't jump the gun as you will shoot yourself in the foot, eyes open one step at a time.

"O" how much is say 1 rai worth in Chiang Mai these days just wondering.

WORD OF THE DAY

YOU MAY HAVE MANY FRIENDS BEHIND YOU, BUT DO YOU HAVE ANY FRIENDS IN FRONT OF YOU, IN THE LAND OF SMILE'S.

[pattayacube]

I did have subleased beach land in Ko Samui 15years ago. Build 5 houses on it and subleased again.

Each sublease have to be registered at the land office and taxes paid. The original lease is joined in each lease and obligations are bounding and known for all parts.

[manarak]

Why any person would "lease" property in thailand for 30 years is beyond my comprehension. You will lose.

It is a prepaid 30 year rental, and can be interesting in some cases.

Again: the discounted cash flows of monthly rental payments will break even with the freehold price of a property in Thailand on a duration of 13 to 18 years depending on the interest rate used as well as on the property and rental prices, obviously.

I fail to see how anything will break even if rent is paid upfront for the entire lease?

Person A buys a house. Person B rents an identical house, paid upfront for 30 years. They have now both spent the same amount of money.

Over time both houses will increase in value by the same amount, but person B will have less and less time left on his lease, which means his asset becomes less and less valuable compared to person A's asset, and after 30 years, the value of person B's asset will be 0 baht.

An example:

Person A and B both spend 1 million on identical houses, A = freehold, B = 30 year lease paid upfront.

After 10 years both houses have increased in value by 20%, to 1.2 million.

Person A can now sell his house for 1.2 million

Person B can sell his house for 1.2 million x 20/30 = 800,000 baht as there is only 20 years left on the lease.

In other words, Person B has now lost 400,000 baht compared to person A.

Please show me just one example, where Person B makes the same or more money than person A?

As I said earlier in response to your previous question, the comparison is made with a regular rental with monthly payments, not compared with a 30 year lease.

Edited December 10, 2014 by manarak

[manarak]

Why any person would "lease" property in thailand for 30 years is beyond my comprehension. You will lose.

It is a prepaid 30 year rental, and can be interesting in some cases.

Again: the discounted cash flows of monthly rental payments will break even with the freehold price of a property in Thailand on a duration of 13 to 18 years depending on the interest rate used as well as on the property and rental prices, obviously.

Can you explain how it can be interesting ?

Yes.

One valid case is leasing premises to run a business. A long term lease protects the business from greedy landlords and at the same time 30 years is ample time to become successful and to move on.

Another valid case is when a person is paranoid about holding the property illegally through a company and as a consequence doesn't want to buy but wants to rent long term.

If that person has the cash on hand, the 30 year lease is much cheaper than a 30 year rental.

[Neeranam]

Why would anyone buy a 30 year lease? Can a foreigner own the house/land if it is a lease?

Why not just buy the property or get a mortgage which I did?

[2fishin2]

Why any person would "lease" property in thailand for 30 years is beyond my comprehension. You will lose.

It is a prepaid 30 year rental, and can be interesting in some cases.

Again: the discounted cash flows of monthly rental payments will break even with the freehold price of a property in Thailand on a duration of 13 to 18 years depending on the interest rate used as well as on the property and rental prices, obviously.

I fail to see how anything will break even if rent is paid upfront for the entire lease?

Person A buys a house. Person B rents an identical house, paid upfront for 30 years. They have now both spent the same amount of money.

Over time both houses will increase in value by the same amount, but person B will have less and less time left on his lease, which means his asset becomes less and less valuable compared to person A's asset, and after 30 years, the value of person B's asset will be 0 baht.

An example:

Person A and B both spend 1 million on identical houses, A = freehold, B = 30 year lease paid upfront.

After 10 years both houses have increased in value by 20%, to 1.2 million.

Person A can now sell his house for 1.2 million

Person B can sell his house for 1.2 million x 20/30 = 800,000 baht as there is only 20 years left on the lease.

In other words, Person B has now lost 400,000 baht compared to person A.

Please show me just one example, where Person B makes the same or more money than person A?

Houses or condos in Thailand lasting 30 years is a DREAM

Houses or condos increasing in value over any amount of time is a DREAM

A house or condo that would last for 30 years would be in an area that no white person or for that matter any Thai person would want to live in

Purchasing or leasing property in Thailand you are just throwing or giving your money away to someone else

[alfieconn]

Why any person would "lease" property in thailand for 30 years is beyond my comprehension. You will lose.

It is a prepaid 30 year rental, and can be interesting in some cases.

Again: the discounted cash flows of monthly rental payments will break even with the freehold price of a property in Thailand on a duration of 13 to 18 years depending on the interest rate used as well as on the property and rental prices, obviously.

Can you explain how it can be interesting ?

Yes.

One valid case is leasing premises to run a business. A long term lease protects the business from greedy landlords and at the same time 30 years is ample time to become successful and to move on.

Another valid case is when a person is paranoid about holding the property illegally through a company and as a consequence doesn't want to buy but wants to rent long term.

If that person has the cash on hand, the 30 year lease is much cheaper than a 30 year rental.

If your going to make a statement like that then you need to show an example as I would think that a 30 year rental would be cheaper than a 30 year lease, but obviously depends on the price of the house and the rent being charged.

Edited December 11, 2014 by alfieconn

[manarak]

Yes.

One valid case is leasing premises to run a business. A long term lease protects the business from greedy landlords and at the same time 30 years is ample time to become successful and to move on.

Another valid case is when a person is paranoid about holding the property illegally through a company and as a consequence doesn't want to buy but wants to rent long term.

If that person has the cash on hand, the 30 year lease is much cheaper than a 30 year rental.

If your going to make a statement like that then you need to show an example as I would think that a 30 year rental would be cheaper than a 30 year lease, but obviously depends on the price of the house and the rent being charged.

Well, a house selling for 10 million (obviously it also leases out for 30 years at that price) rents out for about 75 to 90k a month. do your math.

(you can research these figures on the property market, they are publicly available, and I know as I was a house owner and also rented out the property)

[manarak]

Houses or condos in Thailand lasting 30 years is a DREAM

Houses or condos increasing in value over any amount of time is a DREAM

A house or condo that would last for 30 years would be in an area that no white person or for that matter any Thai person would want to live in

Purchasing or leasing property in Thailand you are just throwing or giving your money away to someone else

Nonsense.

But of course, one has to invest in property that is likely to last... not cheaply built houses for 2 million or rooms in a cheaply built Thai condo...

[BlackJack]

without seeing the whole lease it is hard to speculate

however there should be something in there about serving notice if either party fails to keep their obligations under the lease agreement

if the notice is ignored then its possible to take action

also there maybe something in there about subleasing and

about succession

hard to say without seeing the DOC

[Harrykrabi]

A sub lease was created rather than a sale & transfer of the original lease.

Within that sub lease it can state the new "tenant" is responsible for maintenance & said fees etc but ultimately the original leasee is responsible for taking action if this is broken.

The freeholder has no recourse against the new "tenant" but only against the original leasee.

The freeholder is right, but I think he is trying to scupper the deal by not allowing a new lease term, seeing the opportunity to recoup the property minus legal fees too late.

Get a proper lawyer & transfer the original lease with the land office.

Once done the freeholder may come round & offer a new lease term at a price.

Way I read it.

Your thinking accords with my own. Thanks.

[Harrykrabi]

A few people have suggested that I get a proper lawyer and of course they are right. The purpose of posting this was to brainstorm the problem amongst others mainly (hopefully) to get some feedback or a suggestion from another person presented with the dilemma. It was not to circumvent proper legal advice. Thanks to everyone who has made the effort to reply to my posting.

[timewilltell]

Why would anyone buy a 30 year lease? Can a foreigner own the house/land if it is a lease?

Why not just buy the property or get a mortgage which I did?

Are you talking about buying a property with a mortgage in Thailand in your name where you are a foreigner with a visa? If so please explain how you managed this feat.

[timewilltell]

A lease in Thailand is a contract for hire. it is not specific to property and the law is ill written, especially with regard to foreigners. Let's continue to use the word 'lease' for ease but with the caveat that people may become misled into thinking it is something akin to a lease you might find in the West - it's not though certain similarities exist.

For a lease over 3 years it is common for it to be registered at the land office - it is then written on the back of the Chanote and supposedly gives you some security for the period. It actually doesn't serve the purpose as in my case the lease was cancelled through fraud and I am yet to have it restored four years on. Anyway that story gets a little complicated and the person who committed the fraud and sold on the property is destitute leaving the money lender holding the baby and protected by Thai law. Anyway back to the OP.

So basically the Thai developer is working the usual twist to unfairly benefit. Unfortunately there is quite a lot the Lessor can do to make life difficult for a Lessee but that is just another downer on the idea of leasing. So your original guy has a 30 year lease, neglects the property and wants to sell on to a new buyer who is OK to buy a 25 year lease because the Thai wants his rented land and building back ASAP having sold it once - so he can sell it again. The new buyer should of course buy out the lease from the original lessee which would put him into the shoes of the original lessee and responsible in the same way as the original lessee to the Lessor developer.

Instead of that it seems some muppet lawyer - of which there are multitudes in Thailand - drafts some half baked sub-lease. The new buyer becomes sub-lessee and the original Lessee becomes both lessee to to the Developer and sub-Lessor to the new buyer. The new buyer is responsible to the original Lessor and the original Lessee to the Developer. The first buyer must protect himself against a breach of terms by the new buyer for which the first buyer will be responsible. The new Buyer has a problem if the original buyer fails to perform some term in the contract with the Developer over which he may have no control. It is a horrible messy situation and I dealt with plenty of these in the UK before - nearly always commercial in nature because the domestic market does not really have many long term sub-leases.

I think both the original buyer and new buyer both have potential trouble ahead. By far the cleanest method is to take over the original lease and leave just the incoming buyer and the original Developer Lessor as parties to the existing contract. Now it may be that the Thai developer will twist and wriggle to try to find ways to scupper the deal and put all sorts of obstacles in the way because that is just the way it is when you have half-baked laws and a justice system that is dysfunctional, bent lawyers and greedy immoral owners all trying to screw anyone over at the first opportunity.

And when the proverbial hits the fan you will find the court telling you your hire contract really isn;t up to much to rub salt into the wound.

That said - lots of people do it and throw caution to the wind and get away with it. Its a bit like a bungee jump here - take the plunge and hope the thin little rubber band doesn't snap because there is no safety net and no safety precautions you can take - most people pop back up but a few once in a while get splattered all over the ground.

[bangkoklawyer24]

A lease in Thailand is a contract for hire. it is not specific to property and the law is ill written, especially with regard to foreigners. Let's continue to use the word 'lease' for ease but with the caveat that people may become misled into thinking it is something akin to a lease you might find in the West - it's not though certain similarities exist.

For a lease over 3 years it is common for it to be registered at the land office - it is then written on the back of the Chanote and supposedly gives you some security for the period.

The lease legislation in Thailand is very similar to the German rules. Nothing special in the LOS, just a bad English translation. The Thailand lease is a normal lease enhanced with empty promises. This "some security for the period" is wishful thinking.

ABSTRACT: In Thailand the registration of a real estate lease at the local land office is often marketed as a special lessee protection scheme to nicely compensate the foreign investor for the legal restriction to acquire land ownership. The inconvenient truth is that the land office registration does not at all benefit the lessee. It does not provide him with any additional protection against insolvency, default, fraud, loss or other risks.

More at https://www.linkedin.com/pulse/20140925020252-11220814-black-magic-in-thailand

[timewilltell]

A lease in Thailand is a contract for hire. it is not specific to property and the law is ill written, especially with regard to foreigners. Let's continue to use the word 'lease' for ease but with the caveat that people may become misled into thinking it is something akin to a lease you might find in the West - it's not though certain similarities exist.

For a lease over 3 years it is common for it to be registered at the land office - it is then written on the back of the Chanote and supposedly gives you some security for the period.

The lease legislation in Thailand is very similar to the German rules. Nothing special in the LOS, just a bad English translation. The Thailand lease is a normal lease enhanced with empty promises. This "some security for the period" is wishful thinking.

ABSTRACT: In Thailand the registration of a real estate lease at the local land office is often marketed as a special lessee protection scheme to nicely compensate the foreign investor for the legal restriction to acquire land ownership. The inconvenient truth is that the land office registration does not at all benefit the lessee. It does not provide him with any additional protection against insolvency, default, fraud, loss or other risks.

More at https://www.linkedin.com/pulse/20140925020252-11220814-black-magic-in-thailand

I very much doubt the German law does not have specific laws dealing with the leasing of property but I confess my knowledge is English law not German so in truth I do not know if your corollary is correct. Thai law does not have specific laws providing for property lease although it does provide for registration of leases of over 3 years at the land office. The point is the same law is no different for leasing a house than from hiring a motorcycle for a day save for periodicity and registration for long term hire. For that reason it is wholly unsuitable and incomparable to leases that people might be used to in West which provide high levels of protection and even enfranchisement in some jurisdictions.

Leases are used to scam people here and it is well that people are shown that scenario. Thais are happy benefitting from the hoodwinking of foreigners along with many real estate agents who manufacture a misplaced sense of security to foreigners in what are often hugely expensive deals. That is misrepresentation but no one here cares of course.

Be very careful comparing Thai law with other places, there are many twists and turns beneath what appears to be a similar set of laws, in reality they laws and application of them are hugely different and this is to the disadvantage of the average foreigner who is living under severe misapprehension of the facts. Your abstract was a useful addition to your post, of which readers should take careful note.