How do 3 x 3 x 3yr business leases work in Thailand?

[ubonr1971]

The wife and I are at least 1 to 2 yrs off from opening our own dental clinic. However, we are now investigating places to live and think that we will lease a building / shop to start with- once we have decided on where we want to live.

 

We found empty land located in a nice part of a small city. There's another popular clinic 50m up the road and a few other businesses. We contacted the owner and of course he asked my wife's occupation. He said that he can lease the land to us for 2000 baht a day on a 3x3x3 lease. We would have to build a clinic at our own expense and he said the rent would not start until the build is finished. He then said we would be required to leave the dwelling to him at the end of the lease.

 

We are obviously going to seek legal advice about all this in due course. But if you have information to share on the legalities of leasing land and / or buildings could you post it here?

 

Is it legally enforceable to have a clause in the contract saying that he can't put the rent up during the 9 years? (if he agrees to this?). Can we have a clause to vacate after just 3 yrs if need be?

 

Does the lease have to be registered at the land office? If the lease is water tight are we protected 100% by the terms or can the landlord do what he wants as this is amazing Thailand?

 

Thanks in advance for your comments.

 

 

[deepcell]

If i understood well, you have to build up the clinic, pay about 60K /mo and after 9 years you walk away empty hands and give the build for the landlord.. I would never do such a thing.

Best advice: walk away from this lease, just rent a place (usually 1 year contract) and start your business there, if things go wrong your losses will be minimum.

 

 

[ubonr1971]

25 minutes ago, deepcell said:

If i understood well, you have to build up the clinic, pay about 60K /mo and after 9 years you walk away empty hands and give the build for the landlord.. I would never do such a thing.

Best advice: walk away from this lease, just rent a place (usually 1 year contract) and start your business there, if things go wrong your losses will be minimum.

 

 

I have to agree with you. As I said above, we are a long way off from doing any deal. I would never sign a contract like the one I described.

 

Its a good talking point though and I hope that other members on this forum can share their knowledge / experience.

 

cheers

[jippytum]

10 minutes ago, ubonr1971 said:

I have to agree with you. As I said above, we are a long way off from doing any deal. I would never sign a contract like the one I described.

 

Its a good talking point though and I hope that other members on this forum can share their knowledge / experience.

 

cheers

The figures do not add up .The major profit from your hard work is going to the Thai landlord .Why not pay rent on a completed shop house and equip it yourself .If the business fails or at the end of your lease or if you wish to relocate you can remove your fittings.

Please note 3x3 leases are not enforceable after the first term except by further agreement from the Thai Person after the first three years .Another problem if the Thai owner is deceased your agreement will also have to be agreed after the current term with the deceased owners next of kin.

[khunPer]

There is not any legal 3x3x3 year rent in Thailand – it's either up to 3 years, with no registration, but the Lease Agreement; or longer, up to 30-years (30+30 years is not legal), with the Lease Agreement registered on the Land Title Deed at the Land Office. When the latter method is used, a small tax for the full leasing sum shall be paid (use to be 1 percent).

 

Unregistered lease agreements for longer periods than 3-years are legally void.

 

I would not build any construction on a leased plot of land without a Land Office-registered agreement.

 

It's important the owner grant a written permission to build on the land, as you will need that document when seeking building permission at the Tessa Ban (District Office). You'll probably need a lawyer to assist you.

 

Wish you good luck, with your project...

[Scouse123]

Just do not even consider this nonsense at all.

 

It looks like they think you are ' green as apples ' and know nothing about business. 2,000 baht a day is plenty of money if you are upcountry, (I presume that is where you are to be offered the land to build on), and then the cheek to say you build the project and then walk away. Shop-houses, albeit single storey in good locations in our locality are 5,000/7,000 a month.

 

We are in a small town upcountry that has developed fast and I know the new 7-11 has taken on a large piece of land opposite the hospital on a 10 year lease deal, and they are not paying anywhere near 2,000 baht a day. I think it was 20,000/ 25,000 a month for the duration, however, it was vacant land and a great location, and 7-11 build to certain specifications. It was also quite a big lump of land. I was told this by the shop keeper next door who was very interested to know the ins and outs of what 7-11 were doing, as he operates a mom and pop store adjacent.

 

If you are chasing good clientele for a dentists, you need to be in business areas like Bangkok or tourist areas with affluent Thais and expats for your target clientele like Phuket, Chiang Mai etc

 

In the big cities and resorts you will find plenty of opportunities to take on a suitable shop house with an upstairs where you can even live above, or rent it off, and downstairs kit out a dental clinic in a single or double shop house. A Western dentist will build up their custom by getting a good name, and not be reliant on prime location, so sure, you can get a good deal if you look around no matter where you go in Thailand for your kind of business.

 

Thais will be happy to rent long term for decent businesses that are steady and reliable. Always, always, consult a bona fide lawyer before entering a deal and never accept that old line,  ' we are all friends and a handshake will do ! '

Edited April 14, 2017 by Scouse123

[deepcell]

5 hours ago, ubonr1971 said:

I have to agree with you. As I said above, we are a long way off from doing any deal. I would never sign a contract like the one I described.

 

Its a good talking point though and I hope that other members on this forum can share their knowledge / experience.

 

cheers

I said that, because we are in a similar situation, I want to build a small hangar/warehouse to use as a deposit and also process some fruits (dry and pack) in a piece of farm land and the landowner offered me a lease similar of yours! I didn't laughed to his face, but I said hell no and walked far away.

If you can not own or register a lease with the land office, then do not build up anything there!

 

 

[ubonr1971]

12 hours ago, Scouse123 said:

Just do not even consider this nonsense at all.

 

It looks like they think you are ' green as apples ' and know nothing about business. 2,000 baht a day is plenty of money if you are upcountry, (I presume that is where you are to be offered the land to build on), and then the cheek to say you build the project and then walk away. Shop-houses, albeit single storey in good locations in our locality are 5,000/7,000 a month.

 

We are in a small town upcountry that has developed fast and I know the new 7-11 has taken on a large piece of land opposite the hospital on a 10 year lease deal, and they are not paying anywhere near 2,000 baht a day. I think it was 20,000/ 25,000 a month for the duration, however, it was vacant land and a great location, and 7-11 build to certain specifications. It was also quite a big lump of land. I was told this by the shop keeper next door who was very interested to know the ins and outs of what 7-11 were doing, as he operates a mom and pop store adjacent.

 

If you are chasing good clientele for a dentists, you need to be in business areas like Bangkok or tourist areas with affluent Thais and expats for your target clientele like Phuket, Chiang Mai etc

 

In the big cities and resorts you will find plenty of opportunities to take on a suitable shop house with an upstairs where you can even live above, or rent it off, and downstairs kit out a dental clinic in a single or double shop house. A Western dentist will build up their custom by getting a good name, and not be reliant on prime location, so sure, you can get a good deal if you look around no matter where you go in Thailand for your kind of business.

 

Thais will be happy to rent long term for decent businesses that are steady and reliable. Always, always, consult a bona fide lawyer before entering a deal and never accept that old line,  ' we are all friends and a handshake will do ! '

The deal I talked about above is not upcountry. The guy was basing his price on my wife's occupation obviously.   2000 baht a day for a dental clinic is not big money to be honest. We know a lot about the business (of dental clinics) and acknowledge that not all clinics are successful. It mostly depends on 3 things: 1. The talent of the dentist. 2. The personality of the dentist. 3. The location and parking options of the clinic. From our analysis of all the clinics where we live the 3rd issue is one of the most important things but is closely followed by the other 2.

 

We live in a city that is not any of the ones you describe above and we have several friends making huge money from Thai customers. We are certainly not reliant on farang customers or tourist areas.

 

Your idea is good about renting a premises where we can also live. If we take on a short term contract and the landlord gets greedy I suppose we can move all the equipment and re-locate. Taking all things into consideration, I think its better to buy but of course I can't do it in my name .....

 

cheers

[timewilltell]

The owner is trying to con you. If you ate investing money in a building you need a registered lease for as long as possible to reduce the write down on leaving and provide security of tenure. Such a landlord will take the opportunity for profit and expect everythingbhis own way. Walk away.

[ubonr1971]

thanks for all the comments.

 

cheers