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 LEASE LAWS IN THAILAND 

 Thepprasit Law & Accounting Office 

   (Disclaimer: Although the information in this report has been obtained from sources believed to be reliable, we do not guarantee its accuracy and such information may be incomplete or condensed.)

Since 24th January 2002 the government is looking into changing the leasing laws to increase foreign investment. This may mean leasing land held in Trust by the Land Dept guaranteeing the foreigner right to tenancy. Leases would be 99 year. The occupant would be able to sell the lease to another foreigner before it expired but if sold to a Thai then they would get the title as the Land Dept would give the title back to the original owners before the transaction proceeded. Whether this is a good idea is yet to be seen. Current requirements allow foreigners who bring in 40m baht to buy 1 Rai of land for residential purposes. They can lease 100 Rai for approx 50 years. Longer lease requires permission from the Land Dept.

Foreign businesses can feel relaxed now as the Act Governing the Lease of Immovable Property for Commercial & Industrial Purposes has increased from 30-50 years & allowed lease rights to be mortgaged as security. For investors this means: a longer lease can accommodate long term business planning & the right to mortgage the lease as security in order to receive finance. Financial institutions can benefit because they can take a lease right as security.

Regulations: 50 yrs now. Only applies to immovable property for commercial & industrial reasons. Only the owner can lease it. Lease must be in writing & registered.

 The Government Gazette Aug 2000: says the business must have one of the following. 


1). Commercial business with at least 20m baht in investment

2).Industrial businesses qualify for promotion under the Investment Promotion Act.

3).Other commercial or industrial businesses beneficial to the economy. property leased must be located in industrial are as set out in the City Planning Act or the Industrial Estate Authority of Thailand. Land Dept must approve leases over 100 rai. Foreign leases must comply as well with the Foreign Business Act. Leases can be renewed after 50 years for another 50 years. If the lessee dies the inheritor can take over. The lessee can sub lease or transfer lease rights, either wholly or in part, to a third party.

 MORTGAGE OF LEASE RIGHT: 

  Since a lease right can be mortgaged, if the debtor defaults on payments the lease may be seized & sold at a public auction. Mortgagee may claim:

1).The debtor has failed to pay interest for 5 years;

2).Mortgagor hasn't satisfied the court that the value of the property is greater than the amount due &

3).There's no other registered mortgages or preferential rights on the same property.

 TO LEASE A HOUSE & TO LEASE LAND 

  We firstly check the title Deed & check any liens on the said property. Then we take the lease to the Amphur together with the nor sor sam or Kanut and have it registered. It is then stamped & the land cannot then be sold unless the lease is cancelled. A lease without doing this is useless. The first lease should be done properly by a reliable lawyer.   Our lawyer takes the title deed to the Amphur and gets it legalized. The wife or owner should then sign another 30 year lease dated from the end of the first one. Most wives would agree to these procedures by explaining to them that if they died, they would not want their husbands thrown out! At the end of the thirty year lease, all you have to do is get a lawyer to take it to the Amphur again. It is really simple. A virtual 60 year lease should cover most peoples lifetime and the wife can leave the property in her will to the children and if you die the lease could be terminated and the property go to your children. You can also sell a lease.

  DOING IT YOURSELF: 

  You can register a 30 years lease at the land department yourself and amend it but most times you may be better to use a lawyer as the lease will be in Thai. Your name will appear in the title and no one can cancel your lease.

 LEASING AS AGAINST USING A COMPANY: 

  It depends on ones circumstances whether you should lease rather than form a Thai company to secure ownership. In some cases when married to a Thai, leasing is the better option or for pensioners or when in a relationship but if one decides they may start a business later or during, then a Company may be the way to go. Remember you can only own 39% land in Thailand regardless. A US Amity Treaty company gives not more clout---its 39% foreign ownership. But also remember if you start a company you must use the company for business not just as a convenience to own the property. Taxes will be levied and you will need audited yearly accounts. Condos are the only allowance for 100% ownership.

 LEASING VIA A LOAN TO YOUR COMPANY: 

  This is an excellent way to lease if you have a company. An owner takes a lease out on a particular piece of land he wants to own with his own money? he loans his company money to buy the land and the lease in effect is owned by the company via the buyer. This then becomes an asset of the company and can be depreciated from his or her share registration & paid back at the buyer's pleasure.

  On March 3rd 2000 the Thai Foreign Business Act of 1999 took effect. (FBA). This replaced the old Act of 1972. 

  For a company you need 7 partners but you can according to the investment control 100% via B.O.I. (Board of Investment). However a normal 2m baht Thai Company foreigners can have 6 foreign shareholders & 1 Thai but the Thai holds 51% shares. We can however safeguard your interests but always its best to have 2 or even 3 Thai owners. What one does not know until they decide to form one is that certain businesses are closed to foreigners BUT THIS IS OF NO CONCERN IF ONE JUST WANTS A COMPANY FOR THE PURPOSES OF BUYING A HOUSE AND LAND. We can help you form the company and take care of all steps for you plus search the Title Deeds & any other request like making sure their is no lien on the property. We also check the Courts for you in case the seller has a not so good record.

 THAI'S MARRIED TO FOREIGNERS - 

 The Thai wife or Husband may hold up to 1 Rai of land - this is not a law but it is accepted by the government, the deeds to the property will be held by the "Land department".

BOI allows foreign companies to own land, usually factories. Don't forget the Treaty of Amity, which virtually gives Americans the right to own 100% of a company doing business in Thailand. The Japanese use nominees a lot. There are people that buy in someone else's name and put a mortgage on the property for the purchase price to protect their interest. There are also concurrent land leases that can be set up, as there is no restriction on foreigners owning buildings (40% of a condo complex) and lastly there's those who trust their wife or friend & use their name. Laws are worthless without enforcement, & Thailand practices "selective" enforcement. Foreigners can buy property in Thailand & please use a lawyer as sometimes Title Deeds are false, or the building you buy is not on the deed or the land has encroached on other land.

Most farangs use their Thai wife and give property rights to them. But if not married to a Thai lady then you can have a 30 year rental. Rental total fee equals the purchasing price. At expiry date, a second 30 year rental period is granted at zero-cost to the rentee that being you. The rental-contract is written in English and acknowledged by a lawyer. This deal is a person-to-person basis. Problems may arise at expiry date between heirs of both parties.

1).Be careful. Check utilities as sometimes there's no phone lines & never believe it until you have written proof of phone lines are going in.

2). Learn which areas flood and which don't. A developer will not tell you. Don?t listen to pub talk. Rent before buying if you have time or ask the neighbors.

3).A land lease NOT filed with the land department (and 1% fee paid) is only valid for 3 years regardless of the term of the lease. All lease for a period over 3 years MUST be registered at the Land Office and written in Thai. You have also to pay fees calculated on the TOTAL amount of rent agreed upon and for the full period (e.g.  rent 1000 baht x 12 months x 30years = 360.000 baht)

Those who want to sign a lease-contract and don't want to register it, should know that such a contract is automatically void at the death of one of the signatory (this means that such a contract is NOT transmissible without prior agreement of the other party.)

While a contract registered at the land office is transmissible & if one signatory dies, & the contract is not cancelled, the heirs of the estate have to respect it. This is Ok if the lease is transferable and every time a transfer is made, the Land Office must be notified.

If no record of your lease with the developer, then any private agreement between the 2 parties will not be legally binding. If the developer wants to play you out, he can. The Land Office uses only one language - Thai. Even your name in the contract has to be in Thai. The "fee" is actually government tax & you pay the Land Office equivalent to a little under 5% purchase price. A developer may want a "deposit" equivalent to 1 year's maintenance fees. They say you recover this amount from the person who buys the property from me. But ask your Thai neighbors if they pay it as you will find they don?t- its rubbish. Confusing-------- that's why you need a law office.

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Property Lease laws for Thailand,