A New Angle On Long Term Leases

[chownah]

Is it possible to sign a legally binding lease in Thailand which starts at some time in the future? For example, could I sign a one year lease on a house and have it go into effect jan 1, 2010 and run until dec 31 2011?

I guess the bottom line is: I know that leases are limited to 30 years....so....can I have two leases on the same house?....one that starts immediately and runs until the year 2036 and in addition to that lease can I have a lease that starts in 2036 and runs until the year 2066?

[Khun Jean]

If you could register this second lease with the land office it would be great. But seriously, it is just a 60 year lease. so, no it won't work. Point is you sign the leases on the same day (or close in time), not sign one lease now and the other 30 years later.

Just accept the fact 30 years is maximum and work with that. If 30 years is not acceptable than don't lease.

[Jimbo551]

Is it possible to sign a legally binding lease in Thailand which starts at some time in the future? For example, could I sign a one year lease on a house and have it go into effect jan 1, 2010 and run until dec 31 2011?

I guess the bottom line is: I know that leases are limited to 30 years....so....can I have two leases on the same house?....one that starts immediately and runs until the year 2036 and in addition to that lease can I have a lease that starts in 2036 and runs until the year 2066?

This is in line with a suggestion made to me a couple of weeks ago by a developer who claimed that they had an agreement with the Land Office that such an arrangement was possible and not only for the second thirty year term but for a third one as well.

I am inevitably sceptical that this can be done as it would have resolved most of the land issues that are currently plaguing the market. However he was insistent that his lawyer had received written confirmation from the Land Office that they could do this, but he has yet to produce a copy to convince me.

The Law restricts the registered period to 30 years, but I have not seen anything that restricts registering a lease for a future period. Maybe some of the legal eagles out there can enlighten us.

[Sunbelt Asia]

Is it possible to sign a legally binding lease in Thailand which starts at some time in the future? For example, could I sign a one year lease on a house and have it go into effect jan 1, 2010 and run until dec 31 2011?

I guess the bottom line is: I know that leases are limited to 30 years....so....can I have two leases on the same house?....one that starts immediately and runs until the year 2036 and in addition to that lease can I have a lease that starts in 2036 and runs until the year 2066?

This is in line with a suggestion made to me a couple of weeks ago by a developer who claimed that they had an agreement with the Land Office that such an arrangement was possible and not only for the second thirty year term but for a third one as well.

I am inevitably sceptical that this can be done as it would have resolved most of the land issues that are currently plaguing the market. However he was insistent that his lawyer had received written confirmation from the Land Office that they could do this, but he has yet to produce a copy to convince me.

The Law restricts the registered period to 30 years, but I have not seen anything that restricts registering a lease for a future period. Maybe some of the legal eagles out there can enlighten us.

Sorry this is not possible.

www.sunbeltasiagroup.com

[Dragonman]

Is it possible to sign a legally binding lease in Thailand which starts at some time in the future? For example, could I sign a one year lease on a house and have it go into effect jan 1, 2010 and run until dec 31 2011?

I guess the bottom line is: I know that leases are limited to 30 years....so....can I have two leases on the same house?....one that starts immediately and runs until the year 2036 and in addition to that lease can I have a lease that starts in 2036 and runs until the year 2066?

This is in line with a suggestion made to me a couple of weeks ago by a developer who claimed that they had an agreement with the Land Office that such an arrangement was possible and not only for the second thirty year term but for a third one as well.

I am inevitably sceptical that this can be done as it would have resolved most of the land issues that are currently plaguing the market. However he was insistent that his lawyer had received written confirmation from the Land Office that they could do this, but he has yet to produce a copy to convince me.

The Law restricts the registered period to 30 years, but I have not seen anything that restricts registering a lease for a future period. Maybe some of the legal eagles out there can enlighten us.

The Land Office registering something does not make it legal!

I believe they probably mean "options", not leases.

Whatever anyone says to the contrary, 30 years is it.

[Jimbo551]

The Land Office registering something does not make it legal!

I believe they probably mean "options", not leases.

Whatever anyone says to the contrary, 30 years is it.

Isn't this the whole problem with the registered lease situation that in most cases the enforcement of the option may be impossible, even if registered.

The only way I see the option scenario working is on one of the managed developments where the management company/land owner (being a corporate entity) is unlikely to die or disappear by the time the option comes round.

An option with an individual seems to me not to be worth the paper it is printed on.

However Dragonman as you seem to have good knowledge of these things. What if you pre-paid the second thirty years, but registered it as a loan to be repaid with interest only if the second thirty years was not granted but was deemed fully re-paid if granted? As a loan registered on the titled deed it would be fair warning against an incoming purchaser of the freehold and I would therefore have thought to be enforceable. Comments?

[Dragonman]

The Land Office registering something does not make it legal!

I believe they probably mean "options", not leases.

Whatever anyone says to the contrary, 30 years is it.

Isn't this the whole problem with the registered lease situation that in most cases the enforcement of the option may be impossible, even if registered.

The only way I see the option scenario working is on one of the managed developments where the management company/land owner (being a corporate entity) is unlikely to die or disappear by the time the option comes round.

An option with an individual seems to me not to be worth the paper it is printed on.

However Dragonman as you seem to have good knowledge of these things. What if you pre-paid the second thirty years, but registered it as a loan to be repaid with interest only if the second thirty years was not granted but was deemed fully re-paid if granted? As a loan registered on the titled deed it would be fair warning against an incoming purchaser of the freehold and I would therefore have thought to be enforceable. Comments?

Yes, options are generally worthless, unless there is a good financial reason for the lessor to renew. Most of my working life was spent "breaking" option agreements, and there was not one that couldn't be broken with little financial penalty!

With regard to your final paragraph, it is an interesting concept which of course would have to be decided in Court. However if I was retained by the lessor I would contest that the financial contract was invalid and hence voidable in law by virtue of the attempt of an illegal act in order to circumvent Leasehold Laws and the Land Code. If granted you would, I fear, struggle to get your money back from the landowner and the lien would be extinguished.

[chownah]

For a 30 year lease could you write it so that half is paid up front and half is paid a the tail end and the tail end payment is subject to a successful negotiation of a new lease?

[LoveDaBlues]

Topics like this on TV......are interesting and funny........the bottom line is the intent of the law. It seems clear the intent of the law is to only allow a 30 year lease. Period. End of Story. Get over it.

[Jimbo551]

Topics like this on TV......are interesting and funny........the bottom line is the intent of the law. It seems clear the intent of the law is to only allow a 30 year lease. Period. End of Story. Get over it.

We are not questioning the intent of the law in restricting a lease to thirty years but the enforcement of legal options to renew. I have not seen anywhere that such options are illegal or a circumvention of the law, but I have always questioned their enforceability.

From Dragonmans comments it would seem that they could be enforceable if the Court so deemed, but could equally well be broken subject to some "compensation" if the Lessor (or his lawyers!) argument prevailed.

[johnnyk]

For a 30 year lease could you write it so that half is paid up front and half is paid a the tail end and the tail end payment is subject to a successful negotiation of a new lease?

No problem at all.

Juat find seller/developer/landowner who will agree to wait 30 years for 50% of the money.

No problem at all, would you do it if you were the seller? 555

[LoveDaBlues]

Topics like this on TV......are interesting and funny........the bottom line is the intent of the law. It seems clear the intent of the law is to only allow a 30 year lease. Period. End of Story. Get over it.

We are not questioning the intent of the law in restricting a lease to thirty years but the enforcement of legal options to renew. I have not seen anywhere that such options are illegal or a circumvention of the law, but I have always questioned their enforceability.

From Dragonmans comments it would seem that they could be enforceable if the Court so deemed, but could equally well be broken subject to some "compensation" if the Lessor (or his lawyers!) argument prevailed.

If you could legally renew for 30 years (or any period of time) as an 'option' in the original contract there would be no 30 year max to begin with; it would be meaningless. Seems to me the intent of the law is to only allow a 30 year lease after which the slate is clean and negotiations start again (or not). NO exceptions or options of any kind. IMHO.

[Charma]

Topics like this on TV......are interesting and funny........the bottom line is the intent of the law. It seems clear the intent of the law is to only allow a 30 year lease. Period. End of Story. Get over it.

That is exactly what many people are trying to do!

[Sunbelt Asia]

Topics like this on TV......are interesting and funny........the bottom line is the intent of the law. It seems clear the intent of the law is to only allow a 30 year lease. Period. End of Story. Get over it.

We are not questioning the intent of the law in restricting a lease to thirty years but the enforcement of legal options to renew. I have not seen anywhere that such options are illegal or a circumvention of the law, but I have always questioned their enforceability.

From Dragonmans comments it would seem that they could be enforceable if the Court so deemed, but could equally well be broken subject to some "compensation" if the Lessor (or his lawyers!) argument prevailed.

If you could legally renew for 30 years (or any period of time) as an 'option' in the original contract there would be no 30 year max to begin with; it would be meaningless. Seems to me the intent of the law is to only allow a 30 year lease after which the slate is clean and negotiations start again (or not). NO exceptions or options of any kind. IMHO.

Hire of Immovable Property for Commerce and Industry by Alien

In general, an alien may hire land in Thailand as provided by the Civil and Commercial Code and the contract of hire cannot exceed thirty years thereof. Once the contract comes to an end, it can be renewed, but it must not exceed thirty years from the date of renewal.

Hire of property in the Civil Commercial Code

Section 540. The duration of a hire of immovable property cannot exceed thirty years. If it is made for a longer period, such period shall be reduced to thirty years. The aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal.

Section 541. Contract of hire may be made for the duration of the life of the letter or of the hirer

Nothing in the codes states you cannot ask for a renewal as an alien and this would be illegal.

www.sunbeltasiagroup.com

[Dragonman]

Topics like this on TV......are interesting and funny........the bottom line is the intent of the law. It seems clear the intent of the law is to only allow a 30 year lease. Period. End of Story. Get over it.

We are not questioning the intent of the law in restricting a lease to thirty years but the enforcement of legal options to renew. I have not seen anywhere that such options are illegal or a circumvention of the law, but I have always questioned their enforceability.

From Dragonmans comments it would seem that they could be enforceable if the Court so deemed, but could equally well be broken subject to some "compensation" if the Lessor (or his lawyers!) argument prevailed.

If you could legally renew for 30 years (or any period of time) as an 'option' in the original contract there would be no 30 year max to begin with; it would be meaningless. Seems to me the intent of the law is to only allow a 30 year lease after which the slate is clean and negotiations start again (or not). NO exceptions or options of any kind. IMHO.

Hire of Immovable Property for Commerce and Industry by Alien

In general, an alien may hire land in Thailand as provided by the Civil and Commercial Code and the contract of hire cannot exceed thirty years thereof. Once the contract comes to an end, it can be renewed, but it must not exceed thirty years from the date of renewal.

Hire of property in the Civil Commercial Code

Section 540. The duration of a hire of immovable property cannot exceed thirty years. If it is made for a longer period, such period shall be reduced to thirty years. The aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal.

Section 541. Contract of hire may be made for the duration of the life of the letter or of the hirer

Nothing in the codes states you cannot ask for a renewal as an alien and this would be illegal.

www.sunbeltasiagroup.com

Yes, there is nothing illegal, just not in practice usually attainable. However, an "option" is better than nothing, as long as you are not paying for it.

[piet pompies]

I have been advised that I can renew my 30 yr lease five or 10 years into the contract. The first lease will be cancelled and then another 30 yr lease made. All new fees etc. It seems that this way an original 30 yr lease effectively becomes a 40 yr lease.

Have also been advised that the lease can be in the name of an offshore company, this will eliminate any problem if the leaseholder dies.

Any comments on the above?

[Jimbo551]

I have been advised that I can renew my 30 yr lease five or 10 years into the contract. The first lease will be cancelled and then another 30 yr lease made. All new fees etc. It seems that this way an original 30 yr lease effectively becomes a 40 yr lease.

Have also been advised that the lease can be in the name of an offshore company, this will eliminate any problem if the leaseholder dies.

Any comments on the above?

I would have thought anything is possible with the good will and co-operation of the Freeholder and that is always going to be the potential problem in all the scenarios discussed in this thread.

I wonder if the offshore company as Leaseholder will be that easy. I suspect, and I have no doubt someone will correct me if I am wrong, that you may have to have the company documents translated into Thai to effect a registration.

I would also have thought that you will need a Will in the country of offshore registration to deal with the shares in that company if necessary.

So all in all I would have thought it is taking a sledge hammer etc etc when the registered lease could state that it passes to your heirs and you make a Thai will to the same effect.

[Dragonman]

I have been advised that I can renew my 30 yr lease five or 10 years into the contract. The first lease will be cancelled and then another 30 yr lease made. All new fees etc. It seems that this way an original 30 yr lease effectively becomes a 40 yr lease.

Have also been advised that the lease can be in the name of an offshore company, this will eliminate any problem if the leaseholder dies.

Any comments on the above?

No problems renewing lease if the owner wants to! Best to change terms a bit in order for it not to look too obvious. No need for this offshore company stuff. Terms can be included in the lease.