In a shock decision by the Phuket Civil Court, backed by the Region 8 Appellate Court, it has been ruled that so-called “secured leases” offered by some real estate developers to allow foreigners to secure a cast-iron 90-year lease are not valid.

The case is now to go to the Supreme Court. If confirms the lower-court opinions, then not only will any renewal term of "secured" leases by foreigners be invalid, but also the current lease terms.

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.

Mr Kippen explained, "as a general rule foreigners cannot own land and apartment units, but it is possible for foreigners to lease them and that is the reason why these are commonly marketed to foreign buyers on a leasehold basis.

30 years maximum

"Under Thai law the maximum lease term is 30 years, which may be renewed upon expiration of that term," he continued. "The leases marketed to foreigners typically provide for an initial 30-year term plus two additional successive 30-year renewal terms."

However, Mr Kippen noted, "the renewal of a lease in Thailand is by no means assured even if it is provided for in the original lease agreement."

He explained that in order to overcome this issue the "secured" or "collective" lease was devised and marketed to foreigners. This is meant to ensure that the lease is renewed, twice, as originally agreed.

The way this "security" is supposedly provided is by the buyer not only entering into a lease agreement with the Thai company that owns the developer's land/apartment, but also entering into a share-sale-and-purchase agreement for shares that control the Thai company that owns the developer's land/apartment.

Now, however, two Thai courts have concluded that the "secured" lease is "void" as a matter of law. A contract that is found to be void is considered never to have existed.

"This would be the case regardless of whether such a lease was already registered," Mr Kippen said.

"Why? Because a finding that a lease is void means that it never legally existed and, therefore, as far as the law is concerned, a void lease cannot be, nor ever could have been, registered," he explained.

"Even if the legally void lease went through the Land Office formalities of registration, with registration fees paid, papers signed and stamped by the land officials, it simply does not change the legal non-existence of the void lease because, legally, nothing happened by such acts."

In the test case now headed for the Supreme Court, the buyers entered into the project's "secured" lease structure. Leases, in this case for apartments, were registered several years ago.

The lessees filed a civil case against the developer of the project in the Civil Court to protect their leasehold rights. Neither the buyers nor the developer argued that the leases were not valid. Quite the contrary: they both relied on provisions of the leases to support their respective arguments.


More: http://www.phuketgazette.net/property-l ... -you/27846

There's already a thread on this

"30 year lease anyone ?"

No thanks. I already have a pig in a poke.

This is just the beginning here of Thailand divesting itself of foreigners, and keeping their assets.

but but ,loads of experts and real estate agents on thai visa told me 30 or 90 year lease is all good......

Nothing in that article states that a 30 lease is illegal by its self.. It's only possibly illegal when you have the 90 year extension structure.

A registered 30 lease is still secure.

Nothing in that article states that a 30 lease is illegal by its self.. It's only possibly illegal when you have the 90 year extension structure.

A registered 30 lease is still secure.

What the court looked at is Intend. And the intend of those 30+30+30 years lease is to circumvine the law forbidding foreign land ownership, and thus, ruled void.

There is no mention that a 30-year lease allowed by law is void.

Nothing in that article states that a 30 lease is illegal by its self.. It's only possibly illegal when you have the 90 year extension structure.

A registered 30 lease is still secure.

Absolutely correct. Although I took the title to be a paradigm of the situation regarding the 30 years + lease pundits.

Jerry

but but ,loads of experts and real estate agents on thai visa told me 30 or 90 year lease is all good......

Yes, their silence is deafening. Isn't it.

Jerry

This is just the beginning here of Thailand divesting itself of foreigners, and keeping their assets.

Not foreigners who abide by the rules.

Jerry

Of late, even in the USA, a contract or lease is not valid if the writer of the contract decides he has better use of the property.

To "secure your lease in paradise" does not mean to ignore the 30-years-limit or other weaknesses of a property lease. Instead, it uses a sophisticated corporate structuring to embed the fragile lease into a supporting corporate corset. Properly structured, it is perfectly legal and tightens the property investment efficiently, while having no downsides for the developer. Source: http://linkd.in/1JKQ32W

This is just the beginning here of Thailand divesting itself of foreigners, and keeping their assets.

Not foreigners who abide by the rules.

Jerry

There are always two parties signing a contract,not foreigners alone.

Furthermore we have freedom of contract.

30 years or 90 years no difference it stays a lease.

There are always two parties signing a contract,not foreigners alone.

Furthermore we have freedom of contract.

30 years or 90 years no difference it stays a lease.

There are always two parties signing a contract,not foreigners alone.

Furthermore we have freedom of contract.

30 years or 90 years no difference it stays a lease.

No, that's absolutely not true. Sounds like you've had things explained to you by a shady lawyer. Any contract is only as good as its legal enforceability.

Yes, two parties can agree to whatever they want in a contract. But if said contract isn't enforceable under Thai law (because in this case 30 years is the legal maximum) then the contract is worthless.

You can't ask a court to enforce an illegal agreement.

A 90 year lease is clearly illegal. And an agreement to re-contract after 30 years is obviously against the spirit of the law because it effectively constitutes a lease agreement that exceeds 30 years. It's always been obvious that any judge would toss it out -- and now we have proof that that's the case.

Only the initial 30 year lease gets registered at the land office. Everything else is a fantasy.

It is certainly a good advice to register your lease in paradise. However, a 30-years property lease agreement which has never been registered at the land office, remains valid for the whole duration of 30 years. If it is not registered, this does not mean it is invalid. During the first three years both parties can enforce their contractual rights without any limitation. For the remaining 27 years the lessor remains responsible to grant the use right in the property to the lessee. The lessee remains responsible to pay lease rents as agreed in the contract. If both rights are not enforceable under Thai laws does not mean they are not existing. This makes an important difference for the questions (i) whether the lessor has to refund pre paid rent amounts if he defaults under his obligations and (ii) whether the lessee has an enforceable right against the lessor to properly register the lease agreement at the land office, potentially enforced under Section 213 of the CCC by requesting the court for a ‘compulsory performance’ of such registration obligation. Source: http://linkd.in/1C2FUFc

Here's my situation. Retired with a thai girlfriend. Been together 1 1/2 years Thailand but together 6 years. Going to buy a home in LopBuri. Will pay total so no mortgage. I know I won't own the home so will be getting 30 year lease. Should things turn sour down the road, is there any way I'll get screwed on that 30 year lease? Not looking for a 30+30 deal. Just the standard 30 year lease. Really appreciate any help. Thanks

In a shock decision by the Phuket Civil Court

What was so shocking ?

This is not new, anything over 30 years has never been valid in Thailand

Is someone going to start a thread to tell us that it is mandatory to wear a helmet when operating a motorcycle next ?

Do a search here at TV, just using the search term "30 year lease" and read the 10+ pages on the subject

Here's my situation. Retired with a thai girlfriend. Been together 1 1/2 years Thailand but together 6 years. Going to buy a home in LopBuri. Will pay total so no mortgage. I know I won't own the home so will be getting 30 year lease. Should things turn sour down the road, is there any way I'll get screwed on that 30 year lease? Not looking for a 30+30 deal. Just the standard 30 year lease. Really appreciate any help. Thanks

The Phuket judgements have never been properly and honestly reported. That decision based on other particularities and is greatly misunderstood. However, you will be just a tenant without any negotiation power vis-a-vis the lady, after you have pre-paid for the whole term. There are many ways for her to kick you out if you are no longer cooperative. Your situation will be much different from a "leasehold" as you may know it from the U.K.

"With the Chanote in her hand, she waves you good bye".

Here's my situation. Retired with a thai girlfriend. Been together 1 1/2 years Thailand but together 6 years. Going to buy a home in LopBuri. Will pay total so no mortgage. I know I won't own the home so will be getting 30 year lease. Should things turn sour down the road, is there any way I'll get screwed on that 30 year lease? Not looking for a 30+30 deal. Just the standard 30 year lease. Really appreciate any help. Thanks

Consider getting a mortgage on the property and having it listed on the chanote. The property is in her name, but she owes you the declared purchase price.

She can't sell it unless she pays you first.

It doesn't stop her kicking you out - to have any chance of avoiding that you need a usufruct as well.