Phuket court rules 'secured' or 'collective' leases are void

[thedude82]

Lets declare a legal contract null and void giving full advantage to the Thai landowner and screwing the farang once again...only after full payment had been received by the Thai landowner. Meaning you just handed over god knows how much for a contract that never existed. Good luck getting that money back. Less than 2 weeks and I am out of this nation of thieves, scammers, and liars. Do not put 1 baht here, remember you are only 1 decree away from capital controls and loss of foreign ownership of your condo. Meanwhile the Thai says 555 give me your money now its time to go home.

[ToddinChonburi]

That is exactly how I am reading this. Foreigner can not own land house or apartment.

[tomacht8]

It is quite surprising as sales and rent contracts longer then 3 Years must be writen in Thai for the public land office.
They write then on the Channot or Nor Sor Sam Paper you name as the renter and the contract number.
As a consequence, even the public land Office, then legalize an illegal purchase.

It would be as well possible then to sue the public land office.

Overall the land and housing markets, employment in construction, building supplies, etc. will be hit hard in the future.
Message is clear: As a private person do not invest in Thailand!

Edited February 27, 2015 by tomacht8

[ToddinChonburi]

So the only way to have a 30 year lease you must have a mortgage involved. I wonder who is going to be drinking heavily tonight.

Good thing i just rent .

[Benmart]

I can just imagine the all the old farts renting a 2,000 baht bedsit in some dump gleefully rubbing there hands together. Must be feeling very good about themselves today.

There are better things to imagine without much effort. Then again, darkness is an easy realm for some.

As for the "Old Farts" comment. Everyone gets old. Some age before their years and fall into mental chaos ahead of others as attested by their writings.

[FiestyFarang]

"The good news, he said, is that secured leases can be restructured to provide actual long-term lease security legally and without any downside to the developer by securing the pre-paid renewal terms with a mortgage over the land involved" - so now the banks become involved with all the terms and conditions of a mortgage no doubt written only in Thai (I went to open a foreign currency account and the bank only had the application forms in Thai, I think the vast majority of people opening foreign currency accounts would be foreign therefore English would be appreciated, but no probably because Thai can be understood 100% in a Thai court) and what happens if the developer does not pay the mortgage. There is currently a court case going on for this reason. I have never and will never buy property in Thailand even if I have the cutest lady say "pleeeeease Tiruk" help my family.

Edited February 27, 2015 by FiestyFarang

[ColdSingha]

bottomline - Thailand is not a place to invest, especially as long as the government is a military dictatorship and the courts are a corrupt, politicized farce.

Just rent. It's cheap and you won't lose a bunch of $.

most houses cost about 10 years rent money to buy so there is a large incentive to buy or lease

Edited February 27, 2015 by ColdSingha

[ToddinChonburi]

When you read the land transportation office is the most corrupt and they smile when they take your purchase donation.

[simon43]

or purchased something you do not really own.

If you purchase with a foreign quota, then it is a freehold purchase, not a lease, (although you may have difficulties passing it to your foreign heirs upon your demise.

If you have leased a house/land for 30 years, then you haven't purchased it!

Edited February 27, 2015 by simon43

[roath]

It depends on the contract because often a contract will have a clause that if one clause is found to be void then it does not invalidate the whole contract and other clauses. If this was in then maybe the buyers have a chance of restitution at appeal.

In common law jurisductions a voided contract in civil law puts the parties in the position they were ab initio i.e. before they entered into the contract. It is not clear from this article whether this applies in this case or whether the contract is treated as if it never existed at all i.e. there is and cannot be restution under thr contract on grounds of illegality althougj even then an innocent party is normally entitled to equitable relief such as misrepresentation. If lawyers were involved then technically they would be liable for negligence. Thats yhe theory (bearing in mind that Thai law is meant to be based on common law) but who knows how it would work out though in reality.

[roath]

So the only way to have a 30 year lease you must have a mortgage involved. I wonder who is going to be drinking heavily tonight.

Good thing i just rent .

The land office may refuse to register a mortgage given from a foreigner to a Thai on the grounds that it could be a device for the Thai to act as nominee.

[bangarang]

I understand how bad this ruling is... but if you really think about it... Do people really think many of these properties will last 90 years let alone look desirable on the market after 30 years anyways? If you cant own it, I would say 30 years is long enough and then sell it to someone else if you want to move.

[Alwyn]

I'm reading comments here such as "anybody who fell for that is a moron" and even worse comments as to the intelligence of people who chose to invest in property etc in Thailand (and any other country according to a couple of posters) I guess these are the people that could never affords to buy anything and rent 8000 baht a month places in the sticks, but that aside, what more can people do? They take advice from Lawyers (farang or Thai) who set up "legitmate ownership" systems etc. They then go personally to the Land Office - which is a government office, right? - and get everything processed and they walk away with ownership documentation from the government office to show they own this lease under the conditions set out by the lawyers. There a bunch of websites offering similar information. What more could a buyer do? Thai Lawyers, Farang Lawyers and government offices approve everything, so, what more can these guys do?

[Alwyn]

hi guys , not sure i get that right.

Farang bought a lease of appartment. They sold him the 3*30 years stuff wich means. He registered a lease of 30 years and he signed an other contract stating that the developer will renew for free 2*30 years more. Is that correct ?

In this case this other " contract " is illegal and means nothing because its not allowed by laws to give 90 years.

Now the farang go to court for some reasons , and he shows this piece of paper. Court rules that this is illegal and then cancel the first one ?

How can they cancel a 30 years " official " lease based on a paper who is basically toilet paper because it does not have any legal power.

Am i missing something here ?

He did not sign another contract, he signed just one contract, for 3 x 30 years. And that is legally not possible, therefor apparently invalid and void.

Well he had to sign an other contract no ? by that i mean he signed a lease at the land office for 30 years. There is no way he could sign a lease of 30*3 at the land office ?

By an other contrat i mean , he goes to sign a 30 years lease at land office , which is legal , and he have an other contract stating that the developer will renew it 2 times ?

That's how it worked, apprently this isn't legal? I don't get it either

[Yann55]

For years, Iv'e been telling Western tourists or newly-arrived expats here that the only safe way to buy property in Thailand was/is within the 49% rule on condominiums. I told everyone, again and again, if you want to buy land and/or a house, you do it at your own risk, because all the systems offered by contractors, lawyers and other such respectable businessmen, are nothing but ways to sneak around the law.

When you sneak around the law in a foreign country you run the risk of being caught, blackmailed, or downright denied your ownership eventually. When that foreign country happens to be Thailand, the risk is multiplied by ten. Why ? because 90% of legal matters here work on a rule-bending system. Rules are made, and immediately thereafter they are twisted, sneaked around, used for corruption purposes. The good aspect of that is that things can be done fast and easy if you know the right people in the right place and give the right amount. The bad aspect of that : very few agreements are ever straight, plain, fully understandable and upholdable in a Thai court of Law.

How many times have I heard real estate agents here, Thai or foreign, calmy explaining to gullible potential customers that "there are several ways of acquiring property in Thailand" and then citing the company or lease systems as perfectly acceptable alternatives to plain ownership of a condo within the 49% rule. These guys were lying through their teeth, and they knew it. They should be held accountable.

Edited February 27, 2015 by Yann55

[LivinginKata]

So all those who "bought" the 90 year lease now need to change it to the legal 30 year lease? That's the way I read the last couple of paragraphs, but I wonder how many original developers and sellers will just make a new lease contract without consideration?

Not so sure about that from this ...

"The Phuket News’ legal correspondent, Jerrold Kippen, has revealed that not only has the structure been ruled invalid but the courts’ decision may mean that the original underlying 30-year lease, even if registered with the Land Office, is now void – it never existed, leaving the buyer with two handfuls of nothing."

Something I have been saying for years : 30 + 30 + 30 has no legal standing. This ruling is no real surprise to me, although I had thought the initial 30 year lease would be secure. But now even that looks very shakey.

[pizzachang]

Unless you are in a country that does not apply taxes to primary dwellings, you never truly "own" the land. Just try not paying your real-estate taxes and see what happens. So in reality, leasing a property for 30 years isn't much different than owning it in the sense of the usable life of a home. You can 'sell' your lease any time, for any reason(if you can find a buyer). There are likely many ways to protect your interests as there are types of binding contracts. My parents place in the States was 'paid for' many times over - in fact the taxes became higher than the yearly mortgage, the last few years they 'owned' that property.

[LivinginKata]

Unless you are in a country that does not apply taxes to primary dwellings, you never truly "own" the land. Just try not paying your real-estate taxes and see what happens. So in reality, leasing a property for 30 years isn't much different than owning it in the sense of the usable life of a home. You can 'sell' your lease any time, for any reason(if you can find a buyer). There are likely many ways to protect your interests as there are types of binding contracts. My parents place in the States was 'paid for' many times over - in fact the taxes became higher than the yearly mortgage, the last few years they 'owned' that property.

You can 'transfer' the lease subject to the written approval of the land owner (that's the way most lease agreements are constructed). Some land owner might not cooperate unless some fiscal lubrication.

[RigPig]

The good news, he said, is that secured leases can be restructured to provide actual long-term lease security legally and without any downside to the developer by securing the pre-paid renewal terms with a mortgage over the land involved.

So as I have said in previous threads, the ONLY way of having ANY security over your investment is to own the loan used to purchase it, whether it is from a Thai or a company. YOU CAN NEVER OWN THE LAND!!!

The mortgage could be over 90 years or whatever you structure it for.

But another ¨can of worms¨

[Balance]

Business for the lawyers must be down. I would give odds that the legal fees of getting a new "legal" lease will cost as much as the original one. So the terms of the original deal understood by all parties as legal apply to the "restructuring?"

After looking at land and buying a house when I moved here, renting was by far the best deal.

[wabothai]

I wished you "know best" guys stop calling each other stupid. It would be nice if you all together stand up toThai lawmakers maintaining that we cannot own anything. We all know the story after we have learned the hard way.

please be civilized and help each other.

[simon43]

What more could a buyer do?

Well, they could have asked here on this forum. Because many of us 'old-timers' have warned time and time again that a 30+ year lease is unenforceable in Thai Law. You don't need to be a qualified lawyer to understand that simple statement.

The reason why people have been conned by the lies of the lawyers and property developers is because they (the buyers) wanted to believe that 30+ year ownership or leasing was possible.

Are the lawyers/developers accountable for their deceptions? TiT. What's your guess?

[Traveller45]

A bit from the textbook:

The Court is perfectly right. It is an artifact: The fact that many many such "secured" leases were concluded does not change anything. This "nullity" is of public interest, absolute, that is, anybody can claim anytime that the contract is void, including State, both parties and literally almost every bystander. By contrast, some other "nullities" are relative, that is, only certain persons can claim it, such as, for example, a party that suffered some prejudice.

Nullities of this absolute sort do not acquire protection of "acquis", that is, the fact that parties enjoyed uninterrupted benefit of such a void contract for, perhaps, decades does not confer them any protection. Under Thai Law, ownership of land by foreigners was meant to be illegal. We may or may not like it, I don't understand it, frankly, but it is the Law. The Court requalified the lease as what it is really meant to be: A disguised purchase. A purchase of land is illegal: The contract falls. Being absolutely and entirely void from the beginning, the contract is meant to never have existed; THAT MEANS, in principle, all effects that it has produced between the parties must be deleted, moneys must be returned to the other party. Since "enjoyment" of the land cannot be returned, the amount paid as lease will be deemed to cover that enjoyment, in the normal case. The tenant will have to go, in theory, immediately, he occupies land owned by another without title, he is a squatter.

Now, before you get jittery, it seems to me that, contrary to the nullity of the contract, the EVICTION is a relative action, that is, it belongs to the owner of the land. State cannot evict because State is not the owner. If landlord chooses not to evict, that is his choice. He has no obligation to do so.

Edited February 27, 2015 by Traveller45

[wabothai]

Thailand:

In your........... pride you maintain stubbornly that foreigners cannot own any real estate or businesses.

Do you have any notion of the fact that there is a big and powerful world (which most of us represent) out there of which you are 150% depending on.

Rather than making friends you keep on harassing the foreigners in many ways untill none are left.

Not even talking about the evil ladies allowed by Thai law to steal from foreigners.

Your neighbouring countries are gladly accepting us and will change laws to welcome us.

Do you really understand what it means to make friends?

And all of you have the need to tell me to leave if I don't like it, just ............

[Lone Ranger]

Doesanyone know if this ruling affects usutfruct agreement when buying a property?

[PeCeDe]

So all those who "bought" the 90 year lease now need to change it to the legal 30 year lease? That's the way I read the last couple of paragraphs, but I wonder how many original developers and sellers will just make a new lease contract without consideration?

That's not how I read it, but I'm not a Lawyer. What I understood from the article is that because the land lease is basically an instrument to circumvent the prevention of ownership of land by foreigners the entire lease is invalid. If that's the case and it's upheld by the Supreme court there will be big problems ahead.

[FiestyFarang]

Seems like there are some negative comments about Thailand on here. Why is that?

[FiestyFarang]

Well I've said it before ... You'd have to be a complete and utter moron to buy property in Thailand. Who in their right mind would think about handing over 51% of their assets to what is little more than a nation of thieves?

It's a shame the UK, US and EU countries don't apply the same rules to Thais but of course we understand the importance of foreign investment and we also know that they can't dig it up and take it with them.

The other issue has for many years been pricing; in most cases the property market especially in areas such as Phuket, are so over the top it beggars belief anyone would think they are buying a home / villa or apartment of good investment value.

I honestly cannot understand how anyone could be stupid enough to buy property in Thailand ... there again the Nigerian 419 Scam continues to catch the very stupid and greedy and I can only conclude that the expats who brought property in Thailand fall into both categories.

A nation of thieves...bit harse......

[mango66]

Quote

"“It is a simple and straightforward legal structure that provides security for the investor. A current ‘Secured’ Lease can be restructured into this better and genuinely secure alternative, before it is too late.

“As always,” he added, “you should engage competent legal and tax counsel in order to implement this mortgage-based security structure successfully.”"

end quote

Any chance the lawyers said that before?

Any chance the lawyers that did the original deal are liable?

Any chance if you did a new "genuinely secure alternative" and a future court rules it bogus the lawyer would be liable? Please find me a lawyer that puts the value of the deal in a bond payable to the customer if it all goes tits up.

ripp off the farong

ripp off the farong

ripp off the farong

[bangkoklawyer24]

DON'T WORRY - YOUR PROTECTED LEASE IS STILL SAVE AND VALID

"It may be true that Phuket courts reclassified a validly secured and duly registered lease into a void transfer of legal ownership. Reportedly this has been done without any reference to the anti-nominee rules of the foreigner laws (Land Code, Foreign Business Act), but just by interpreting the Civil and Commercial Code, which does not differentiate between Thai and foreign persons. The fictitious ownership transfer was not declared void, because the investor was a foreigner, but due to the reason this "ownership transfer by mistake" had not been registered as (hidden) sale. It is currently unclear whether the facts in such cases really justify such reclassification, which would be antipodal to civil law legislation and jurisdiction - and whether the courts arguments have been unbiased described reported. Sometimes the wish seems to be father to the thought. It should be clearly noted that it is the general concept of Thailand's lease legislation that any overstepping of legal limitations is carefully reduced by law to a size and scope which is still legal and valid. If a lease agreement is concluded for 31, 90 or 500 years, it would not be deemed to be void from the beginning. Under Section 540, second sentence CCC its enforceability is just limited to the first thirty years. And it will certainly not be reclassified as a (hidden) sale."

Source: http://linkd.in/1JKQ32W