Property leasing in Chiang Mai

[Travelighlty]

If someone were to buy a property in the Chiang Mai area with a lease agreement, having a Thai friend holding the lease, is there any standard used to apply for paying the lease holder who has made no financial investment into the property? Would it be based on the size of the property? The cost of the property? No house. Bare land. You would pay 100% of the land price to the property owner, then the friend would intervene to hold the lease. Or, considering they will own the property that is being leased to you with your money, how much should they pay you!?! (Like THAT's going to happen! 555) I have never heard this issue addressed.

Edited July 10, 2016 by Travelighlty

[Lowriesuzanne]

I did it. I pay the attorney $85,000 baht per year to "hold" my property. Remember all the friends of your Thai buddy will be advising your buddy to take over your property. Hence a yearly payment to keep everyone happy. Can't afford this? Don't buy land.

[MadMac]

Complete rubbish. You can have a lease, usufruct or superficies legally in your name. No need for a lawyer, friend, friends of friends or lawyers, or fake companies. On that leased land in whatever form you can build and own your property.

[Travelighlty]

Madmac,

A Thai can sell their property, and perhaps I've misunderstood, but they can not sell land directly to a foreigner. Ownership must stay with a Thai. And the foreigner only acquires the leased property. As you say, the foreigner holds a lease. And if it is not the seller, who comes to acquire the right to lease the property? Personally, I don't understand why the property owner would not want the added advantage of recovering an additional million or three as the lease holder, and at the end period, the land could be a nice present for a child or grand child, or add it to his estate if the owner doesn't outlast the leased period.

So, how do you not employ the services of an attorney to construct a lease that protects the foreigner? There's many a story where there is a lease in effect, yet the lease holder is out on the street. Even then, it's possible an attorney was involved. I understand the foreigner can own outright any buildings. Even there, stories go around where the foreigner is kept out of their own house.

Any tips on keeping clear of such pitfalls?

The question I'd really like answered is, how much is considered reasonable to pay the owner of the lease? Is it based on purchase price? Lot size? How does a lease get calculated for a determined yearly charge on the lease?

[Bill97]

You loan money to the lessor which he uses to buy the land.

Then he makes monthly payments on the loan to you and you make monthly rent payments to him which are equal to or a little larger than his payments to you. Monthly or quarterly or annually. Your loan to him is secured by the land deed which you hold.

Usurfruct the house.

[Travelighlty]

Bill97

I follow I "loan" money to the lessor to buy the land. In this case, a single payment of 100% which is given to the seller. I'm sorry, I don't follow the remaining description you are making regarding the need for any loan payments or rent. Am I correct in assuming the person who has signed with the seller, in addition to gaining full ownership of the land in thirty years is also entitled to payment for the lessee's use of the land? And so, in actuality, the lessee is buying land for the eventual ownership of the lessor?

In one of my previous responses I asked what a reasonable payment might be for the lessee to pay the lessor. Do you have any thoughts on what this payment might be?

[Bill97]

1. You will give some money to a Thai who will buy the land, right?

2. Then you will lease the land from him, right?

[Travelighlty]

I guess I was looking at it as paying for the land and the.new land owner having the property ownership and free title at the end of the lease period was the lease. My bad. Thanks for simplifying for me. The monthly, yearly, or total sum for the lease then is purely up to the lease owner and the person paying for the lease. Whatever the lease owner thinks they can get, right?

[Lowriesuzanne]

Lease = 30 years with renewal. You can sell your lease to another. The point of the yearly payment is to make the arrangement worthwhile for the Thai friend. Keep the land book and papers in your safe AS WELL AS THE LEASE agreement.

[alfieconn]

Travellighty, if your idea is that you give a reputable person the money to buy some land who in turn leases it to yourself so that you have control when the lease end's then forget it, so many things can happen between now and the end of the lease that would mean you no longer have control e.g. the leasor could die, he could sell the land, he could just say Good Bye !

[Travelighlty]

Alfieconn, no, that was not my idea. If other arrangements are not made, the property reverts back to the Thai and the foreigner has no claim to the property. That was what I was thinking.

Edited July 11, 2016 by Travelighlty

[Bill97]

I guess I was looking at it as paying for the land and the.new land owner having the property ownership and free title at the end of the lease period was the lease. My bad. Thanks for simplifying for me. The monthly, yearly, or total sum for the lease then is purely up to the lease owner and the person paying for the lease. Whatever the lease owner thinks they can get, right?

For the money you give the land buyer to buy the land, he signs a legal loan agreement stating a repayment schedule and giving you the land deed to hold as security.

Think about that and the other info in this thread a bit before more questions, it is all there.

[hml367]

Travelightly,

Look at this page https://www.samuiforsale.com/knowledge/overview-property-law-thailand.html#1 paying particular attention to sections 4 and 7.

There may be more information of interest to you also.

[Travelighlty]

Hml367

Thank you for the link.

I wish someone would come along and say what a reasonable and customary fee would be for the Thai who has purchased the land on the foreigners behalf. Of course, that begs the question whether there is such a standard.

Edited July 11, 2016 by Travelighlty

[Thailand]

I did it. I pay the attorney $85,000 baht per year to "hold" my property. Remember all the friends of your Thai buddy will be advising your buddy to take over your property. Hence a yearly payment to keep everyone happy. Can't afford this? Don't buy land.

American friends did exactly that but left the chanote with the lawyer for safe keeping who immediately used the chanote as security for a loan from a loan shark. Lawyer failed to pay up and the loan shark attempted to take possesion of the land and house valued at around 20 million baht.

Took nearly 3 years and mega money to simply get the house and land back, they were lucky!

[Bill97]

Hml367

Thank you for the link.

I wish someone would come along and say what a reasonable and customary fee would be for the Thai who has purchased the land on the foreigners behalf. Of course, that begs the question whether there is such a standard.

How about a one time fee for their efforts in the purchase and occasional payments when you need their help and it sounds like you will.

But the bottom line is they or their children will end up with the land and your house for free so they should not need much more than that if any.

You are looking too hard at the wrong part of the deal. Your main concern should be with all the ways to protect yourself from Unexpectantly loosing it all prematurely.

Edited July 11, 2016 by Bill97

[Travelighlty]

Bill97,

There's the rub. I have no idea of how much a one time fee, or occasional payments would be as a reasonable charge. Or even a monthly or yearly "lease" payment might amount to be. And from what I've read, I think on the Siam Legal site, at worse, at the end of the lease period, whoever owns the house would have to be paid a fair market evaluation on all buildings constructed on the land.

[KhonKaenKowboy]

I paid the lawyer/nominee about 10K going in, and about 10K when we sold. There was a will, a loan agreement, and a lease. The lease is recorded in your name on the Chinot. I kept the Chinot. There is a little trickery involved in getting the land office to accept a low rent...in our case 300K for 30 years was not OK...500K was...and you pay 1% of that up front. We sold in 2008, and I asked her about it again in 2010, and she had stopped doing it, due to scrutinization. I own a condo now, and do sleep better...the slamming doors aren't as bad as the barking dogs.

[Bill97]

Bill97,

There's the rub. I have no idea of how much a one time fee, or occasional payments would be as a reasonable charge. Or even a monthly or yearly "lease" payment might amount to be. And from what I've read, I think on the Siam Legal site, at worse, at the end of the lease period, whoever owns the house would have to be paid a fair market evaluation on all buildings constructed on the land.

So how much is a house worth if the land it is on has a different owner? Zero or scrap value which is almost zero. Can't imagine the land owner being forced by law to buy the house at the end.

You still miss the point many are trying to warn about and charge stubbornly ahead with your question about insignificant fees. A Thai friend would do it for nothing, some lawyers would want an arm and a leg and it certainly depends on the value of the property they will eventually own.

Good luck.

[Travelighlty]

ABill97,

I do appreciate your thoughts along with others input. What you are considering my "charging stubbornly ahead with questions about insignificant fees," hear me out. A person I considered a good Thai friend is saying they will buy the property on my behalf for 1 million Baht. Someone else mentioned here they were paying 85,000 Baht a year - 2,500,000 Baht over the lease. These don't appear to be insignificant numbers to me.

Being not the sharpest knife in the drawer, I want to gather as much info as I can, along with others experiences, so I can at least ask somewhat informed questions. This is a learning curve for me.

Again, I appreciate your time and input on my questions. Thank you.

[KhonKaenKowboy]

BTW, the loan agreement and lease would pre-empt them from borrowing against it. I asked her the scenario..what if you got cancer and had huge medical bills you couldn't pay....the answer was that they wouldn't be looking to get in line on a Chinot with a 30 year lease and a loan agreement. A sale doesn't cancel a lease.

[Travelighlty]

Bill97

This was sent to me.

https://www.samuiforsale.com/knowledge/overview-property-law-thailand.html#1

You are right about the house reverting to the landowner at the end of the lease agreement.

[Travelighlty]

Bill97

This was sent to me.

https://www.samuiforsale.com/knowledge/overview-property-law-thailand.html#1

You are right about the house reverting to the landowner at the end of the lease agreement.

[Travelighlty]

KhonKaenKowboy

Thanks for your input.

[bitcoinforever]

this is what you do , let the thai friend go to the bank get a loan buy the land then lease you the land for the mortgage payments. that keeps him honest at the end of the lease he gest the land and any inprovements, best deal for him and for you

[GOLDBUGGY]

Madmac,

A Thai can sell their property, and perhaps I've misunderstood, but they can not sell land directly to a foreigner. Ownership must stay with a Thai. And the foreigner only acquires the leased property. As you say, the foreigner holds a lease. And if it is not the seller, who comes to acquire the right to lease the property? Personally, I don't understand why the property owner would not want the added advantage of recovering an additional million or three as the lease holder, and at the end period, the land could be a nice present for a child or grand child, or add it to his estate if the owner doesn't outlast the leased period.

So, how do you not employ the services of an attorney to construct a lease that protects the foreigner? There's many a story where there is a lease in effect, yet the lease holder is out on the street. Even then, it's possible an attorney was involved. I understand the foreigner can own outright any buildings. Even there, stories go around where the foreigner is kept out of their own house.

Any tips on keeping clear of such pitfalls?

The question I'd really like answered is, how much is considered reasonable to pay the owner of the lease? Is it based on purchase price? Lot size? How does a lease get calculated for a determined yearly charge on the lease?

Of course you can lease land and property like you lease a condo and on a yearly basis. I suppose in the same way which is based on the property value. But when you are considering a Long Term Lease or Usufruct this is far different.

The difference being that this land is registered at the Land Office as a Lien (if it is done correctly). Just like a 1st Mortgage is from a bank. So this prevents the owner from selling this property as long as the Usufruct or Loan is still in place and in effect. Even if the property owner dies and this property changes hands, these liens remain on the property until they expire, or you expire.

Of course you can make any deal you want and pay yearly. The problem arises if you add significant value to the property, like a new house, as then you are not protected. You are also not protected from rental increase either. You generally buy the property with someone you trust with your life, then lease it from them for life.

[Bill97]

ABill97,

I do appreciate your thoughts along with others input. What you are considering my "charging stubbornly ahead with questions about insignificant fees," hear me out. A person I considered a good Thai friend is saying they will buy the property on my behalf for 1 million Baht. Someone else mentioned here they were paying 85,000 Baht a year - 2,500,000 Baht over the lease. These don't appear to be insignificant numbers to me.

Being not the sharpest knife in the drawer, I want to gather as much info as I can, along with others experiences, so I can at least ask somewhat informed questions. This is a learning curve for me.

Again, I appreciate your time and input on my questions. Thank you.

The numbers you quote are significant and totally unrealistically high.

Your Thai friend is not your friend.

Get it through your head, you are giving them a large gift 30 years in the future and there are Thais who understand that and would not try to rip you off in the meantime. But you need a tight legal arrangement like anywhere.

You probably should take a year or two to sort it since you tend to grab and attach to bad information.