Moving To Hua Hin

[ladiesover50]

Hi We are two retiring ladies moving to Hua Hin next year and are in the process of buying a house there.

We are pretty upset at all we have just read ref the property market and the current uncertainty.

We have no relatives etc and have gone down the route of setting up a company.

This was recommend to us by the estate agent and developer. and laterly the lawyer. our company name is now registered.

We are under no illusions that we would ever own the land, but thought that this would be the safest route to stay in control of our own destiny, and help us enjoy a long and happy retirement out there.

Would you experienced people out there continue with our purchase, watch this space, or cut our losses and run?

Your opinions to two new kids(over50) on the block will be most welcome.

Thanks

[bcross2001]

Hi We are two retiring ladies moving to Hua Hin next year and are in the process of buying a house there.

We are pretty upset at all we have just read ref the property market and the current uncertainty.

We have no relatives etc and have gone down the route of setting up a company.

This was recommend to us by the estate agent and developer. and laterly the lawyer. our company name is now registered.

We are under no illusions that we would ever own the land, but thought that this would be the safest route to stay in control of our own destiny, and help us enjoy a long and happy retirement out there.

Would you experienced people out there continue with our purchase, watch this space, or cut our losses and run?

Your opinions to two new kids(over50) on the block will be most welcome.

Thanks

I don't know about you two but I would think if you leased it to yourself perpetually for 33yr leases you might be OK

[peterjackson]

Hey

I would run your scenario past the staff at Sunbelt Asia Group. They are sponsors of the forum and have always given me professional advice.

It appears from their fee structure, that they are reasonable, given their insight and expertise in this area.

I hope everything goes well with your purchase, but I would be wary of trusting people with a vested interest in selling the property.

Independent advice cannot do you any harm. Always better to be fully informed.

Kind regards

Peter

[udon]

Rent, not lease, nor buy(?) and keep your money out of Thailand, ie: anywhere but Thailand.

[ladiesover50]

Rent, not lease, nor buy(?) and keep your money out of Thailand, ie: anywhere but Thailand.

Thanks

Do you think we should jump on a plane to clarify everything, and get sorted out face to face, or is eveyone in hiding?

If so can anyone recommend a good & reasonablypriced guest house somewhere in the street near to the marriot hotel.

Thanks for all replies.....please keep them coming in, I can appreciate that this site is essential reading

[GuestHouse]

Its all about risk. Once youve started the purchase you have an unknown risk of continuing and a maximum known risk of pulling out.

The issues I would look at are:

If you withdraw from the purchase what is the maximum you stand to loose (money you have already paid out)?

Is any of that money recoverable (ie are there pull out clauses, is legal action going to recover money that you have deposited)?

If you continue what is your maximum loss (Deposit plus everything you pay to continue)?

Now can you stand those risks?

The bitter truth is it really is as simple as that.

If you are going over to sort this out then take a look at the local market, not just has any expat registered a home lately but also have any expats sold a home lately?

Also make a concious decision between the two of you not to agree to any more payments while you are in Thailand - Don't leave yourself open for the high pressure sales talk only to return home an realize you have again committed to something you did not want to continue with.

My view is that if your company registration is no longer feasible then unless you can afford to loose the money that you need to spend to complete your home in Thailand, don't continue with the purchase. - The only remaing options to the company registration you were promised are leaving the control in someone elses hands - basically giving someone else control of you house/investment.

Edited September 8, 2006 by GuestHouse

[tominchaam]

Hi We are two retiring ladies moving to Hua Hin next year and are in the process of buying a house there.

We are pretty upset at all we have just read ref the property market and the current uncertainty.

We have no relatives etc and have gone down the route of setting up a company.

This was recommend to us by the estate agent and developer. and laterly the lawyer. our company name is now registered.

We are under no illusions that we would ever own the land, but thought that this would be the safest route to stay in control of our own destiny, and help us enjoy a long and happy retirement out there.

Would you experienced people out there continue with our purchase, watch this space, or cut our losses and run?

Your opinions to two new kids(over50) on the block will be most welcome.

Thanks

Good to hear you want to get more information. A lot has changed during the last six months even if the law has not. But it is likely the law will be enforced in the future – it even started a few months back

The law is very clear and its intention is that foreigner can not own land unless they have invested 40 M bath. Therefore the company route is not what any reliable legal expert recommends at the moment (quite a change from just a year ago). Many estate agents and developers might tell you something else which has to do with their interest and not your.

The leasing system is now what is recommended even if it has its weaknesses. This is however not a bad system provided you can find a real Thai person or Thai company that is willing to invest in your land. I hereby mean they invest their money and it is not a loan from you and your friend. If you give a loan you might still break the laws intention as this has not yet been tested in Thai court. By using the leasing system you are the legal owner of your house and its belongings but not the land. At the same time you have not paid anything either for the land

The leasing can be registered at the Land Office for maximum 30 years. Any agreements to prolong it etc. are separate agreements not protected in the same way. But if everything is done by a good lawyer it should give pretty good protection also after the first 30 years have expired.

The problem in the future I think is not to find a reliable Thai landowner willing to invest but the return they want to have for the investments. Expect it to be at least 15% which is not bad for a small piece of land as you will not have to pay any yearly cost except the leasing fee. But expect the larger companies to request more and at the moment I think it is difficult to find any that has this product ready. Most probably the amount you pay to lease the land will be less then the yearly cost to run a company and this fee will stay the same for 30 years to come.

The advises you have got about getting in contact with Sunbelt is a very good advise!

[Mobi]

I really cannot recommend that you continue with your purchase through a company. In fact, depending quite where you are in the investment cycle, in my view you would be well advised to pull out and look for a medium term rental - maybe 2 - 3 years.

The current situation may sort itself out in time, but then again it may not. Just sit tight for year or two and see what develops.

If you're too far committed to pull out, then I would also recommend using Sunbelt to look at your situation and advise on options.

For you, the 30 year lease plus an option to renew may be the best course to take. Sunbelt can advise.

Good luck

[tominchaam]

Rent, not lease, nor buy(?) and keep your money out of Thailand, ie: anywhere but Thailand.

Thanks

Do you think we should jump on a plane to clarify everything, and get sorted out face to face, or is eveyone in hiding?

If so can anyone recommend a good & reasonablypriced guest house somewhere in the street near to the marriot hotel.

Thanks for all replies.....please keep them coming in, I can appreciate that this site is essential reading

My response to your second post is: Do not panic or overreact!

Most developers and real estate people in Hua Hin are good people. The fact that their legal knowledge might be low does not mean they want to create difficulties to their customers. On the contrary, I am of the opinion that they are looking for new “set ups” that will satisfy their customers.

My suggestion is still to contact Sunbelt – but do it by mail or phone. What is important to you is to first get an expert opinion about your situation. If you decide to come here before you know your “legal situation” you might only create more problems to yourself.

After you have this information it might very well be so that you, your legal expert and the seller can work out a new solution which satisfies both you and the seller.

By the way if you come here this time of the year you will find plenty of rooms at the guest houses just south of Marriot – just walk in as this is not a busy period.

[unforgiven]

Hi We are two retiring ladies moving to Hua Hin next year and are in the process of buying a house there.

We are pretty upset at all we have just read ref the property market and the current uncertainty.

We have no relatives etc and have gone down the route of setting up a company.

This was recommend to us by the estate agent and developer. and laterly the lawyer. our company name is now registered.

We are under no illusions that we would ever own the land, but thought that this would be the safest route to stay in control of our own destiny, and help us enjoy a long and happy retirement out there.

Would you experienced people out there continue with our purchase, watch this space, or cut our losses and run?

Your opinions to two new kids(over50) on the block will be most welcome.

Thanks

why don't you just long term rent and put your capital in a mutual fund???

[Khun Jean]

I would cancel the company, i hope it is a simple procedure. If you wait long it might take you a long time to get rid of it.

Renting/leasing is the only option here. And it is actually a good one.

Find a nice house, there are lots and lots of nice house for rent. If you really like it insist on a long rental contract and register it at the land office. No 3 years maximum crap should be accepted.

Don't underestimate the changes athat take place everywhere in Thailand. What looks nice now can be very different in the future.

In my limited time here i have seen a few places changed from idylic to terrible in a years time.

Also consider the building quality, when you rent it is not your concern. When you buy be prepared for a few problems along the way.

And keep money OUTSIDE of Thailand. Here everything deprecates. It is not worth it. When you buy a house, just write it off completely. After 20-30 years it is worth very little, if it can be sold at all, adn if it is still in a good condition. Only the land will be worth something, and that is the problem. The one thing that appreciates in Thailand you can't own. Typical.

[ladiesover50]

Hi We are two retiring ladies moving to Hua Hin next year and are in the process of buying a house there.

We are pretty upset at all we have just read ref the property market and the current uncertainty.

We have no relatives etc and have gone down the route of setting up a company.

This was recommend to us by the estate agent and developer. and laterly the lawyer. our company name is now registered.

We are under no illusions that we would ever own the land, but thought that this would be the safest route to stay in control of our own destiny, and help us enjoy a long and happy retirement out there.

Would you experienced people out there continue with our purchase, watch this space, or cut our losses and run?

Your opinions to two new kids(over50) on the block will be most welcome.

Thanks

why don't you just long term rent and put your capital in a mutual fund???

Well..... we have agreed to buy and are a little way through the process, as we said before we knew that the land would not be in our ownership, as such but didn't feel as vulnerable as leasing, plus hopefully our all round value would have maybe increased.a bit along the way.

Still at this stage we are keeping our options open, and will view them all on their merit.

Thanks again for throwing your hat into the ring......... its much appreciated

[ladiesover50]

I would cancel the company, i hope it is a simple procedure. If you wait long it might take you a long time to get rid of it.

Renting/leasing is the only option here. And it is actually a good one.

Find a nice house, there are lots and lots of nice house for rent. If you really like it insist on a long rental contract and register it at the land office. No 3 years maximum crap should be accepted.

Don't underestimate the changes athat take place everywhere in Thailand. What looks nice now can be very different in the future.

In my limited time here i have seen a few places changed from idylic to terrible in a years time.

Also consider the building quality, when you rent it is not your concern. When you buy be prepared for a few problems along the way.

And keep money OUTSIDE of Thailand. Here everything deprecates. It is not worth it. When you buy a house, just write it off completely. After 20-30 years it is worth very little, if it can be sold at all, adn if it is still in a good condition. Only the land will be worth something, and that is the problem. The one thing that appreciates in Thailand you can't own. Typical.

Thanks KhunJean..... lots of sound advice here, and duly absorbed......if you lease is it still registered with the land office? and how easy is it to extend for 30+30 years, is it then watertight?.... I would hate to get to eighty odd and need to be renegotiating extentions etc

Thanks again

[udon]

I would cancel the company, i hope it is a simple procedure. If you wait long it might take you a long time to get rid of it.

Renting/leasing is the only option here. And it is actually a good one.

Find a nice house, there are lots and lots of nice house for rent. If you really like it insist on a long rental contract and register it at the land office. No 3 years maximum crap should be accepted.

Hi Jean, could you relate your experience of longterm "rentals" registered at the land office?

I usually sign up year on year and get screwed with annual increases.

TIA.

[astral]

I know I have said this before, but perhaps the two ladies have not read it.

Do not invest more money in Thailand, than you are prepared to walk away from.

In reality this applies to any overseas investment.

[Mobi]

I would cancel the company, i hope it is a simple procedure. If you wait long it might take you a long time to get rid of it.

Renting/leasing is the only option here. And it is actually a good one.

Find a nice house, there are lots and lots of nice house for rent. If you really like it insist on a long rental contract and register it at the land office. No 3 years maximum crap should be accepted.

Don't underestimate the changes athat take place everywhere in Thailand. What looks nice now can be very different in the future.

In my limited time here i have seen a few places changed from idylic to terrible in a years time.

Also consider the building quality, when you rent it is not your concern. When you buy be prepared for a few problems along the way.

And keep money OUTSIDE of Thailand. Here everything deprecates. It is not worth it. When you buy a house, just write it off completely. After 20-30 years it is worth very little, if it can be sold at all, adn if it is still in a good condition. Only the land will be worth something, and that is the problem. The one thing that appreciates in Thailand you can't own. Typical.

Thanks KhunJean..... lots of sound advice here, and duly absorbed......if you lease is it still registered with the land office? and how easy is it to extend for 30+30 years, is it then watertight?.... I would hate to get to eighty odd and need to be renegotiating extentions etc

Thanks again

I think Khun Jean was suggesting a genuine 3rd party rental - for maybe 5 - 10 years. Not renting something that you have built yourself. I was also suggesting you go the rental route. If you do your numbers, (capital invested in a fund vs annual rental costs) it may work out cheaper anyway, and you keep your money outside thailand. I suggested 3 years, only because the law may change somewhere dowen the line and you might want to re-consider buying your own place.

But I have to say that If I knew then what I know now I woudl never have embarked on the house buying/building route and would have just rented here - for the next 30 years if necessary. The hassles I'm having dismantling my current company structure and transferring my house to my wife are driving me ( and my wife) round the bend , and is becoming very expensive. I can't stress highly enough to avoid companies like the plague if you possibly can.

The 30 plus 30 leases have never been tested in the courts. No-one knows if they will stand up to scrutiny - but better than nothing if you go the lease back route. Lifetime usufructs are much better, but as with my own experiences, even they can go wrong.

[Dragonman]

I would cancel the company, i hope it is a simple procedure. If you wait long it might take you a long time to get rid of it.

Renting/leasing is the only option here. And it is actually a good one.

Find a nice house, there are lots and lots of nice house for rent. If you really like it insist on a long rental contract and register it at the land office. No 3 years maximum crap should be accepted.

Don't underestimate the changes athat take place everywhere in Thailand. What looks nice now can be very different in the future.

In my limited time here i have seen a few places changed from idylic to terrible in a years time.

Also consider the building quality, when you rent it is not your concern. When you buy be prepared for a few problems along the way.

And keep money OUTSIDE of Thailand. Here everything deprecates. It is not worth it. When you buy a house, just write it off completely. After 20-30 years it is worth very little, if it can be sold at all, adn if it is still in a good condition. Only the land will be worth something, and that is the problem. The one thing that appreciates in Thailand you can't own. Typical.

Thanks KhunJean..... lots of sound advice here, and duly absorbed......if you lease is it still registered with the land office? and how easy is it to extend for 30+30 years, is it then watertight?.... I would hate to get to eighty odd and need to be renegotiating extentions etc

Thanks again

The 30 plus 30 leases have never been tested in the courts. No-one knows if they will stand up to scrutiny - but better than nothing if you go the lease back route. Lifetime usufructs are much better, but as with my own experiences, even they can go wrong.

Not so Mobi, the 30 year option has been well and truly tested, both in Thailand and in most other Countries in the world, a number of times by me.

The whole choice of renewal is with the lessor, other than you can sue him for breach of contract ( this will of course not get you the house back)

It is in fact the "usufruct" principle that has not been tested in Thailand, and a future Supreme Court decision may make servitudes for farangs worthless, although more likely, as in some lower Court decisions, they will revert to a 30 year lease.

udon. Generally anything less than 3 years would be termed a "rental agreement" not a lease. Rental agreements have different clauses and are not covered by Statute. Normally they have "get out options" such as month's notice.

[Mobi]

I would cancel the company, i hope it is a simple procedure. If you wait long it might take you a long time to get rid of it.

Renting/leasing is the only option here. And it is actually a good one.

Find a nice house, there are lots and lots of nice house for rent. If you really like it insist on a long rental contract and register it at the land office. No 3 years maximum crap should be accepted.

Don't underestimate the changes athat take place everywhere in Thailand. What looks nice now can be very different in the future.

In my limited time here i have seen a few places changed from idylic to terrible in a years time.

Also consider the building quality, when you rent it is not your concern. When you buy be prepared for a few problems along the way.

And keep money OUTSIDE of Thailand. Here everything deprecates. It is not worth it. When you buy a house, just write it off completely. After 20-30 years it is worth very little, if it can be sold at all, adn if it is still in a good condition. Only the land will be worth something, and that is the problem. The one thing that appreciates in Thailand you can't own. Typical.

Thanks KhunJean..... lots of sound advice here, and duly absorbed......if you lease is it still registered with the land office? and how easy is it to extend for 30+30 years, is it then watertight?.... I would hate to get to eighty odd and need to be renegotiating extentions etc

Thanks again

The 30 plus 30 leases have never been tested in the courts. No-one knows if they will stand up to scrutiny - but better than nothing if you go the lease back route. Lifetime usufructs are much better, but as with my own experiences, even they can go wrong.

Not so Mobi, the 30 year option has been well and truly tested, both in Thailand and in most other Countries in the world, a number of times by me.

The whole choice of renewal is with the lessor, other than you can sue him for breach of contract ( this will of course not get you the house back)

It is in fact the "usufruct" principle that has not been tested in Thailand, and a future Supreme Court decision may make servitudes for farangs worthless, although more likely, as in some lower Court decisions, they will revert to a 30 year lease.

udon. Generally anything less than 3 years would be termed a "rental agreement" not a lease. Rental agreements have different clauses and are not covered by Statute. Normally they have "get out options" such as month's notice.

You know best Dragonman, but I thought that these 30 year leases to farangs hadn't been around long enough for anyone to have tested the "option to renew" clause? When and where was this tested in the courts?

I completely agree however, that you could oonly sue for breach of contract if you were thrown out. But as I said - in the absence of anyhting else it's better than nothing.

Interesting what you say about Usufracts - which is clearly at odds with Sunbelt's view. You may even have a point on 30 years Usufraucts - more later

But as far as legal help on these issues are concerned, Sunbelt are undoutedly the place to go.

[Dragonman]

I would cancel the company, i hope it is a simple procedure. If you wait long it might take you a long time to get rid of it.

Renting/leasing is the only option here. And it is actually a good one.

Find a nice house, there are lots and lots of nice house for rent. If you really like it insist on a long rental contract and register it at the land office. No 3 years maximum crap should be accepted.

Don't underestimate the changes athat take place everywhere in Thailand. What looks nice now can be very different in the future.

In my limited time here i have seen a few places changed from idylic to terrible in a years time.

Also consider the building quality, when you rent it is not your concern. When you buy be prepared for a few problems along the way.

And keep money OUTSIDE of Thailand. Here everything deprecates. It is not worth it. When you buy a house, just write it off completely. After 20-30 years it is worth very little, if it can be sold at all, adn if it is still in a good condition. Only the land will be worth something, and that is the problem. The one thing that appreciates in Thailand you can't own. Typical.

Thanks KhunJean..... lots of sound advice here, and duly absorbed......if you lease is it still registered with the land office? and how easy is it to extend for 30+30 years, is it then watertight?.... I would hate to get to eighty odd and need to be renegotiating extentions etc

Thanks again

The 30 plus 30 leases have never been tested in the courts. No-one knows if they will stand up to scrutiny - but better than nothing if you go the lease back route. Lifetime usufructs are much better, but as with my own experiences, even they can go wrong.

Not so Mobi, the 30 year option has been well and truly tested, both in Thailand and in most other Countries in the world, a number of times by me.

The whole choice of renewal is with the lessor, other than you can sue him for breach of contract ( this will of course not get you the house back)

It is in fact the "usufruct" principle that has not been tested in Thailand, and a future Supreme Court decision may make servitudes for farangs worthless, although more likely, as in some lower Court decisions, they will revert to a 30 year lease.

udon. Generally anything less than 3 years would be termed a "rental agreement" not a lease. Rental agreements have different clauses and are not covered by Statute. Normally they have "get out options" such as month's notice.

You know best Dragonman, but I thought that these 30 year leases to farangs hadn't been around long enough for anyone to have tested the "option to renew" clause? When and where was this tested in the courts?

I completely agree however, that you could oonly sue for breach of contract if you were thrown out. But as I said - in the absence of anyhting else it's better than nothing.

Interesting what you say about Usufracts - which is clearly at odds with Sunbelt's view. You may even have a point on 30 years Usufraucts - more later

But as far as legal help on these issues are concerned, Sunbelt are undoutedly the place to go.

Hi Mobi. Generally Lower Court Case Law in not readily available as Courts do not keep written transcripts for use by lawyers. A failing of the CIvil Code Structure where Judges are not led by precedent. However, word of mouth amongst lawyers is used together with the fact that "options" are not peculiar to Thailand, and certainly not to farangs. Whilst it maybe true that a farang case has not come to Court, options have been in existence in Thailand before I was born (and that's a long time ). Anyway, Sunbelt is well aware of constraints on options,as they have posted on other threads. I do not think we disagree.

It is purely on the safety of a lifetime usufruct that some lawyers differ. Sunbelt feels they are secure now. I would like to see a Supreme Court decision before I recommend. There is no harm playing safe, which from a legal standpoint I always advise. Obtain a 30 year lease now, and when usufructs are clarified for farangs, get a usufruct implemented. If the Supreme Court decides lifetime usufructs for foreigners are against the principle of the Land Code it could be voidable. ( India springs to mind) Too late to get a lease if your marriage is on the rocks.

[Sunbelt Asia]

Well they certainly don't register the usufructs up like cotton candy for a foreigner. On average it takes 3 hours to get register at the Land Dept and in some cases like yesterday, even one day was not enough. It is up to the discretion of the officer.

The Civil and Commercial Code has its own section on the usufruct.

CIVIL AND COMMERCIAL CODE OF THAILAND

TITLE VII: USUFRUCT

Section 1417

An immovable property may be subjected to a usufruct by virtue of which the usufructuary is entitled to the possession, use and enjoyment of the property.

He has the right of management of the property.

The usufruct of a forest, mine or quarry entitles the usufructuary to the exploitation of the forest, mine or quary.

Section 1418

A usufruct may be created either for a period of time or for the life of the usufructary.

If no time has been fixed, it is presumed that the usufruct is for the life of the usfructuary.

If it is created for a period of time, the provisions of Section 1403 paragraph 3 shall apply mutatis mutandis.

In any case the usufuct comes to an end on the death of the usufructuary.

Section 1419

If property is destroyed without compensation being paid, the owner is not bound to restore it; but, if he does so to any extent, the usufruct revives to that extent.

If any compensation is paid, the owner or the usufructary must restore the property so far as it is possible to do so, having regard to the amount of the compensation received, and the usufruct revives to that extent; but, if restoration is impossible, the usufruct comes to an end and the compensation must be divided between the owner and the usufructary in proportion to the damages suffered by the respectively.

The same rules apply mutatis mutandis in the case of expropriation as well as in the case of partial destruction of the property or of partial impossibility to restore the property.

Section 1420

When the usufruct comes to an end, the usufructuary must return the property to the owner.

The usufructuary is liable for the destruction or depreciation in value of the property, unless he proves that the damage was not the cause of his own fault.

He must replace anything which he has wrongfully consumed.

He is not bound to give compensation for depreciation in value caused by reasonable use.

Section 1421

The usufructary must, in the exercise of his rights, take as much care of the property as a person of ordinary prudence would take of his own property.

Section 1422

Unless otherwise provided in the act creating the usufruct, the usufructary may transfer the exercise of his right to a third person. In such case, the owner of the property may sue the transferee directly.

Section 1423

The owner may object to any unlawful or unreasonable use of the property.

If the owner proves that his rights are in peril, he may demand security from the usufructary; except in the case of a donor who has reserved to himself the usufruct of the property given.

If the usufructary fails to give security within a reasonable time fixed for the purpose, or if, in spite of the owner’s objection, he continues to make use of the property unlawfully or unreasonably, the Court may appoint a Receiver to manage the property in his stead. Upon security being given, the Court may release the Receiver so appointed.

Section 1424

The usufructary is bound to keep the substance of the property unaltered, and is responsible for ordinary maintenace and petty repairs.

If important repairs or measures are necessary for the preservation of the property, the usufructuary must forthwith inform the owner thereof and permit them to be carried out. In case of default by the owner, the usufructuary may have the work carried out at the owner’s expense.

Section 1425

All extraordinary expenses must be borne by the owner, but in order to meet these or expenses coming under the foregoing section he may realize part of the property unless the usufructuary is willing to advance the necessary funds without charging interest.

Section 1426

The usufructary shall, for the duration of the usufruct, bear expenses for the management of the property, pay taxes and duties, and be responsible for interest payable on debts charged upon it.

Section 1427

If required by the owner, the usufructuary is bound to insure the property against loss for the benefit of the owner; and if the property is already insured, he is bound to renew such insurance when due.

He must pay the premiums of the insurance for the duration of his usufruct.

Section 1428

No action by the owner against the usufructuary or his transferee in connection with the usufruct or vice versa may be entered later than 1 year after the usufruct comes to an end; but in any action by the owner who could not have known of the end of the usufruct, the prescription of 1 year shall run from the time when he knew or ought to have know of it.

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This attachment was posted before. Here is a copy of a chanote with a lifetime usufruct issued by the Land Office for a foreigner.

Every solution has strengths and weaknesses.

Here in fact is what Dragonman stated earlier on a 30 year lease with options.

I'm afraid Thai law does not allow guaranteed renewals of 30 year leases. This is the maximum amount allowed. However what you have is a 30 year lease with an "option agreement" for a further 30 years. The option agreement is in fact a personal contract and does not have the legal standing of a lease. In other words it's better than nothing as long as you don't put too much faith in it, as they are easier to break than eggs with a sledgehammer.

We agree on this point. You could sue on a personal basis if you had a breach on the option. But the minute the Land owner sells to another party, the option is meaningless to keep your house after 30 years. You only are guaranteed 30 years.

A registered 30 year lease is protection of your secured rights for 30 years. The foreigner should in our opinion register the house in his own name as well. The Land owner( Thai wife) can file a will giving rights to her husband and the husband can file a will leaving the house to his wife after he dies.

In our opinion, however, when married to a Thai, a usufruct is the best option over a thirty year lease. The usufructuary is entitled to use and enjoy the property and the Land Office will register the usufruct for a foreigner for life. An usufruct is similar but not identical to a lease in so far as it permits the usufructor to exploit the natural resources of the land. Also if it has been leased to a third party, the rights do not end on the death of the usufructary. An usufruct also can include the right to lease the property or to transfer the rights to a third party without the necessity to secure the permission of the owner. ( if its longer than 3 years the owner of the land needs to bring the deed to the Land Dept, in order for you register the lease)

Except in the case if you have a right winger Land officer who is anti-farang and will make his own rules, Thai laws are the same as for foreigners unless they state different in the code.

A usufruct has less tax charged than a thirty year lease and in our opinion the usufruct is for life if the land office will allow it to be registered and not only for 30 years. You also in most cases can get the right with no benefit required to the Land owner. If the foreigner owns the house outright it is the best combination.

If the Supreme Court decides lifetime usufructs for foreigners are against the principle of the Land Code it could be voidable.

If you were a Supreme court Judge where in the Land Code, would you make your case it was against the principle?

Land Code

www.sunbeltasiagroup.com

[Khun Jean]

I think Khun Jean was suggesting a genuine 3rd party rental - for maybe 5 - 10 years. Not renting something that you have built yourself. I was also suggesting you go the rental route. If you do your numbers, (capital invested in a fund vs annual rental costs) it may work out cheaper anyway, and you keep your money outside thailand. I suggested 3 years, only because the law may change somewhere dowen the line and you might want to re-consider buying your own place.

The 30 plus 30 leases have never been tested in the courts. No-one knows if they will stand up to scrutiny - but better than nothing if you go the lease back route. Lifetime usufructs are much better, but as with my own experiences, even they can go wrong.

Yes Mobi, that is what i meant. It is not only fully legal, but also enforcable. Until now that is the only thing available without jumping through many hoops.

A landowner doesn't have to register a lease when it is 3 years or shorter. When you plan on being smewhere for a longer time never accept it. Get it registered. Without registering you have less protection. And it is only because the landowner doesn't want to pay tax. Offer a little more or even pay rent in advance to make the deal sweeter for the landowner. The little bit extra won't kill you and you are so much more protected.

Another point i would like to make is that while it is a nice feeling to own a place, you also have to consider that you probably change your mind about the best place to spend your retirement.

If you are around 50 years old, look back at where you lived in the last 30 years. Was that also in 1 place, or did you move several times.

Nobody knows how the future will change a place. One thing i have seen is that places tend not to get better, but get worse, some even in 1 or 2 years time. If you buy something you are 'stuck' with it. First it is illegal to own the land, so you still have to use a lease or a usefruct. The house would not be a problem. That can be 100% owned.

Now imagine you are 15 years further down the line. You are around 65, you are bored with the place and want to sell. At that moment you have a lease still valid for 15 years. And a house build with questionable materials that probably need a lot of repairs to be able to sell it.

Putting this on the market, an old house on a 15 year lease. I'd say you never sell it unless you ask peanuts for it. Estimate that you bought and leased everything for around 2-3 million, 15 years later it is worth almost nothing. The land however would be worth a lot more, but not in your advantage.

Two scenarios:

scenario 1: You still love the place after 15 years.You live another 15 years happily and then get kicked out on the street leaving you with nothing.

scenario 2: You don't like the place anymore and want to move. You can't sell it, you live 15 years in misery and then get kicked out on the street leaving you with nothing.

Oke there is a scenario 3: You still love the place and when the 30 years lease is finished the landlord will give you the extension.

If you paid 1 million for the first 30 years expect to pay 10 million for the next 30 years.

Something that is overlooked with all these 30+ leases, think about it. Land is probably 10 times more expensive, even if you write in the initial contract he has to lease it to you for 1 baht is not going to help. His choice would then be to not extend it, and if that is difficult, he just gives it to his son.

You don't have the money for the extension, or you feel it is to much, sorry.

You see even when everything goes well and the extension is given to you, you are in deep doodoo.

In short, rent! (Especially if you don't have a Thai spouse).

Section 1418

A usufruct may be created either for a period of time or for the life of the usufructary.

In Thailand this is the one you should be scared of.

And it this case. The OPs don't have Thai spouses. Finding a Thai who will accept a 'usefruct' for an acceptable price is close to impossible. The Thai person would prefer the 30 year lease.

Edited September 9, 2006 by Khun Jean

[udon]

KJean....... Best post I have seen on the subject so far.

Nice one.

[Dragonman]

Well they certainly don't register the usufructs up like cotton candy for a foreigner. On average it takes 3 hours to get register at the Land Dept and in some cases like yesterday, even one day was not enough. It is up to the discretion of the officer.

The Civil and Commercial Code has its own section on the usufruct.

CIVIL AND COMMERCIAL CODE OF THAILAND

TITLE VII: USUFRUCT

Section 1417

An immovable property may be subjected to a usufruct by virtue of which the usufructuary is entitled to the possession, use and enjoyment of the property.

He has the right of management of the property.

The usufruct of a forest, mine or quarry entitles the usufructuary to the exploitation of the forest, mine or quary.

Section 1418

A usufruct may be created either for a period of time or for the life of the usufructary.

If no time has been fixed, it is presumed that the usufruct is for the life of the usfructuary.

If it is created for a period of time, the provisions of Section 1403 paragraph 3 shall apply mutatis mutandis.

In any case the usufuct comes to an end on the death of the usufructuary.

Section 1419

If property is destroyed without compensation being paid, the owner is not bound to restore it; but, if he does so to any extent, the usufruct revives to that extent.

If any compensation is paid, the owner or the usufructary must restore the property so far as it is possible to do so, having regard to the amount of the compensation received, and the usufruct revives to that extent; but, if restoration is impossible, the usufruct comes to an end and the compensation must be divided between the owner and the usufructary in proportion to the damages suffered by the respectively.

The same rules apply mutatis mutandis in the case of expropriation as well as in the case of partial destruction of the property or of partial impossibility to restore the property.

Section 1420

When the usufruct comes to an end, the usufructuary must return the property to the owner.

The usufructuary is liable for the destruction or depreciation in value of the property, unless he proves that the damage was not the cause of his own fault.

He must replace anything which he has wrongfully consumed.

He is not bound to give compensation for depreciation in value caused by reasonable use.

Section 1421

The usufructary must, in the exercise of his rights, take as much care of the property as a person of ordinary prudence would take of his own property.

Section 1422

Unless otherwise provided in the act creating the usufruct, the usufructary may transfer the exercise of his right to a third person. In such case, the owner of the property may sue the transferee directly.

Section 1423

The owner may object to any unlawful or unreasonable use of the property.

If the owner proves that his rights are in peril, he may demand security from the usufructary; except in the case of a donor who has reserved to himself the usufruct of the property given.

If the usufructary fails to give security within a reasonable time fixed for the purpose, or if, in spite of the owner’s objection, he continues to make use of the property unlawfully or unreasonably, the Court may appoint a Receiver to manage the property in his stead. Upon security being given, the Court may release the Receiver so appointed.

Section 1424

The usufructary is bound to keep the substance of the property unaltered, and is responsible for ordinary maintenace and petty repairs.

If important repairs or measures are necessary for the preservation of the property, the usufructuary must forthwith inform the owner thereof and permit them to be carried out. In case of default by the owner, the usufructuary may have the work carried out at the owner’s expense.

Section 1425

All extraordinary expenses must be borne by the owner, but in order to meet these or expenses coming under the foregoing section he may realize part of the property unless the usufructuary is willing to advance the necessary funds without charging interest.

Section 1426

The usufructary shall, for the duration of the usufruct, bear expenses for the management of the property, pay taxes and duties, and be responsible for interest payable on debts charged upon it.

Section 1427

If required by the owner, the usufructuary is bound to insure the property against loss for the benefit of the owner; and if the property is already insured, he is bound to renew such insurance when due.

He must pay the premiums of the insurance for the duration of his usufruct.

Section 1428

No action by the owner against the usufructuary or his transferee in connection with the usufruct or vice versa may be entered later than 1 year after the usufruct comes to an end; but in any action by the owner who could not have known of the end of the usufruct, the prescription of 1 year shall run from the time when he knew or ought to have know of it.

---------------------------------------------------------------------------------------------------

This attachment was posted before. Here is a copy of a chanote with a lifetime usufruct issued by the Land Office for a foreigner.

Every solution has strengths and weaknesses.

Here in fact is what Dragonman stated earlier on a 30 year lease with options.

I'm afraid Thai law does not allow guaranteed renewals of 30 year leases. This is the maximum amount allowed. However what you have is a 30 year lease with an "option agreement" for a further 30 years. The option agreement is in fact a personal contract and does not have the legal standing of a lease. In other words it's better than nothing as long as you don't put too much faith in it, as they are easier to break than eggs with a sledgehammer.

We agree on this point. You could sue on a personal basis if you had a breach on the option. But the minute the Land owner sells to another party, the option is meaningless to keep your house after 30 years. You only are guaranteed 30 years.

A registered 30 year lease is protection of your secured rights for 30 years. The foreigner should in our opinion register the house in his own name as well. The Land owner( Thai wife) can file a will giving rights to her husband and the husband can file a will leaving the house to his wife after he dies.

In our opinion, however, when married to a Thai, a usufruct is the best option over a thirty year lease. The usufructuary is entitled to use and enjoy the property and the Land Office will register the usufruct for a foreigner for life. An usufruct is similar but not identical to a lease in so far as it permits the usufructor to exploit the natural resources of the land. Also if it has been leased to a third party, the rights do not end on the death of the usufructary. An usufruct also can include the right to lease the property or to transfer the rights to a third party without the necessity to secure the permission of the owner. ( if its longer than 3 years the owner of the land needs to bring the deed to the Land Dept, in order for you register the lease)

Except in the case if you have a right winger Land officer who is anti-farang and will make his own rules, Thai laws are the same as for foreigners unless they state different in the code.

A usufruct has less tax charged than a thirty year lease and in our opinion the usufruct is for life if the land office will allow it to be registered and not only for 30 years. You also in most cases can get the right with no benefit required to the Land owner. If the foreigner owns the house outright it is the best combination.

If the Supreme Court decides lifetime usufructs for foreigners are against the principle of the Land Code it could be voidable.

If you were a Supreme court Judge where in the Land Code, would you make your case it was against the principle?

Land Code

www.sunbeltasiagroup.com

With regard to your final paragraph I believe Section73, 2nd para: Section74 and Section 96 are pertinent.

My case would be that due to the possible long term nature of a lifetime usufruct it may be considered under Property Law to be little short of freehold ownership. Hence the funds to acquire the property and then have possible 80 year plus "ownership", gratis, was due to the "owner" purchasing on behalf of the foreigner.

If this were not the case who in their right mind would provide a lifetime usufruct to someone for free! Such cases where nominees are not involved must be rare indeed. If of course the wife, or other owner, was property owner without receiving cash to purchase from the foreigner it would be a legitimate usufruct. Then they would be free to give their house and land away for their own lifetime. Know of any? I'm looking for a farang who will give me a lifetime usufruct on their property for free. Still looking after 30 years in Property Law and Development, and yet there are lots of thais willing to do it.

[Dragonman]

but I thought that these 30 year leases to farangs hadn't been around long enough for anyone to have tested the "option to renew" clause? When and where was this tested in the courts?

Mobi.Courtesy of samuiforsale.com. Case Law

Supreme Court Judgement 6763/1998.

" In case the lessor promises in the lease agreement to extend or renew the lease term, but has sold the leased land before the lessee was entitled to accept, the "contractual rights" are not binding upon the new owner and only lease rights that are "real rights" will transfer to the new owner."

With regard to bringing Court Action for breach of contract, you will of course have to provide evidence that that you have lost financially. If the renewal was for nil amount, and you did not pay for the option, "unjust enrichment" will not be proven. If you said you did not pay for the option and the lease renewal was gratis, I'm afraid you would be laughed out of Court.

[Sunbelt Asia]

If this were not the case who in their right mind would provide a lifetime usufruct to someone for free! Such cases where nominees are not involved must be rare indeed. If of course the wife, or other owner, was property owner without receiving cash to purchase from the foreigner it would be a legitimate usufruct. Then they would be free to give their house and land away for their own lifetime. Know of any? I'm looking for a farang who will give me a lifetime usufruct on their property for free. Still looking after 30 years in Property Law and Development, and yet there are lots of thais willing to do it.

The usufruct cannot be registered for free unless a Thai spouse is involved. Even if you could find a Thai that will let you do it for free( other than a wife) the Land Dept will not register the servitude. In those cases a clear benefit must be charged and the Thai government charges 1.5% on that amount (unlike 1.25% on a 30 year lease as the usufruct can be lifetime) Otherwise the Land Dept kicks it out as a sham in the first place.

If the renewal was for nil amount, and you did not pay for the option, "unjust enrichment" will not be proven. If you said you did not pay for the option and the lease renewal was gratis, I'm afraid you would be laughed out of Court.

Agreed on any renewal of the 30 years.

www.sunbeltasiagroup.com

[Dragonman]

If this were not the case who in their right mind would provide a lifetime usufruct to someone for free! Such cases where nominees are not involved must be rare indeed. If of course the wife, or other owner, was property owner without receiving cash to purchase from the foreigner it would be a legitimate usufruct. Then they would be free to give their house and land away for their own lifetime. Know of any? I'm looking for a farang who will give me a lifetime usufruct on their property for free. Still looking after 30 years in Property Law and Development, and yet there are lots of thais willing to do it.

The usufruct cannot be registered for free unless a Thai spouse is involved. Even if you could find a Thai that will let you do it for free( other than a wife) the Land Dept will not register the servitude. In those cases a clear benefit must be charged and the Thai government charges 1.5% on that amount (unlike 1.25% on a 30 year lease as the usufruct can be lifetime) Otherwise the Land Dept kicks it out as a sham in the first place.

If the renewal was for nil amount, and you did not pay for the option, "unjust enrichment" will not be proven. If you said you did not pay for the option and the lease renewal was gratis, I'm afraid you would be laughed out of Court.

Agreed on any renewal of the 30 years.

www.sunbeltasiagroup.com

Whilst not a great lover of servitudes, I have stressed before to the Land Department (without answers or success ) why they do this difference between wives and "anybody" else. I see nothing in Servitude Law, here or elsewhere in the world. All I get is "those are the rules". Rules outside the Law? There should be no difference. Have you been any more successful as to where this "rule" came from.

[ladiesover50]

If this were not the case who in their right mind would provide a lifetime usufruct to someone for free! Such cases where nominees are not involved must be rare indeed. If of course the wife, or other owner, was property owner without receiving cash to purchase from the foreigner it would be a legitimate usufruct. Then they would be free to give their house and land away for their own lifetime. Know of any? I'm looking for a farang who will give me a lifetime usufruct on their property for free. Still looking after 30 years in Property Law and Development, and yet there are lots of thais willing to do it.

The usufruct cannot be registered for free unless a Thai spouse is involved. Even if you could find a Thai that will let you do it for free( other than a wife) the Land Dept will not register the servitude. In those cases a clear benefit must be charged and the Thai government charges 1.5% on that amount (unlike 1.25% on a 30 year lease as the usufruct can be lifetime) Otherwise the Land Dept kicks it out as a sham in the first place.

If the renewal was for nil amount, and you did not pay for the option, "unjust enrichment" will not be proven. If you said you did not pay for the option and the lease renewal was gratis, I'm afraid you would be laughed out of Court.

www.sunbeltasiagroup.com

Whilst not a great lover of servitudes, I have stressed before to the Land Department (without answers or success ) why they do this difference between wives and "anybody" else. I see nothing in Servitude Law, here or elsewhere in the world. All I get is "those are the rules". Rules outside the Law? There should be no difference. Have you been any more successful as to where this "rule" came from.

Agreed on any renewal of the 30 years.

Hello everyone

Well what an education this has been for us. The information that has been posted by all of you is taking a little time to sink in, but has stimulated lots of discussion at this end. This is the first time we have used the site......and we are sure it won't be the last.

Thanks to all of you for your interest and advice. It is very much appreciated.

[Sunbelt Asia]

Whilst not a great lover of servitudes, I have stressed before to the Land Department (without answers or success ) why they do this difference between wives and "anybody" else. I see nothing in Servitude Law, here or elsewhere in the world. All I get is "those are the rules". Rules outside the Law? There should be no difference. Have you been any more successful as to where this "rule" came from.

The rule comes from the officers head. He has the discretion on his viewpoint. Most officers go with the view that a wife does not need to charge a husband to allow him to stay on the land. ( Although we just had one the other day that wanted some benefit charged per month)

When you ask for support from the Land Dept. to straighten out a right-winger coming up with his own"rule" they state that is up to the officer discretion. No matter what the written laws are, its up to their discretion to follow them or interpret them as they feel. Welcome to Paradise.

That is why I said, its not like they hand these lifetime usufructs out like cotton candy. Sometimes you have to be scratching your head when you hear the "officers rule." Then its pointing out the law but of course it comes back to the "officers rule." who is in his own little Kingdom inside a Kingdom.

You ready to be a legal consultant in Thailand, Dragonman? Just think how much fun you will have.

www.sunbeltasiagroup.com

[astral]

The rule comes from the officers head. He has the discretion on his viewpoint. Most officers go with the view that a wife does not need to charge a husband to allow him to stay on the land. ( Although we just had one the other day that wanted some benefit charged per month)

When you ask for support from the Land Dept. to straighten out a right-winger coming up with his own"rule" they state that is up to the officer discretion. No matter what the written laws are, its up to their discretion to follow them or interpret them as they feel. Welcome to Paradise.

Surely any contract needs "consideration" in order to be valid??

Even if it is a nominal amount - a peppercorn rent.

[Dragonman]

The rule comes from the officers head. He has the discretion on his viewpoint. Most officers go with the view that a wife does not need to charge a husband to allow him to stay on the land. ( Although we just had one the other day that wanted some benefit charged per month)

When you ask for support from the Land Dept. to straighten out a right-winger coming up with his own"rule" they state that is up to the officer discretion. No matter what the written laws are, its up to their discretion to follow them or interpret them as they feel. Welcome to Paradise.

Surely any contract needs "consideration" in order to be valid??

Even if it is a nominal amount - a peppercorn rent.

Consideration under thai law not required. A Common Law concept.