Define 90 year lease agreement in Thailand

Author // Nadia Henderson (foreign legal consultant)

One controversial lease in the Thailand property development sector is the 30-year land lease agreement with 2 renewal options, defined as a 90-year Thai lease agreement, usually two 30 year renewals are prepaid for a minimal amount as part of the total lease or purchase price. Under such a lease agreement, the real lease is registered for 30 years, but the lessee pays a certain amount of money for two renewals.

There are 2 legal theories behind the 90-year lease.

1- The intention of the 90-year lease structure in Thailand is not to create a 90 year lease as this is not possible under Thai laws pertaining to hire of property. The aim in such lease the right of the leaseholder to transfer of the leased land to full ownership at the end of the lease term or during the period of lease and upon full payment of the lease and renewals. For example, assume the lessee pays a certain amount of money for the first 30 year lease period of time, and pays at that same time for 2 times 30 year renewals. The total price paid by the lessee equals the market value of the land and should give the foreigner (even though land ownership is prohibited) full rights to the land. Due to new 2008 land office ministerial regulations (because foreign cannot own land) such arrangments cannot be made in the lease registered with the Thailand Land Department any more, but are now made in a separate document not registered with the Land Department that describes the additional rights of the leaseholder and alterations to the original lease agreement. This structure has not been tested in a Court and is likely void, and the owner may regain possession and ownership at the end of the registered 30 year lease term.

2- Another theory follows the principles of supreme court judgments and aims to create an enforceable right of renewal and by this way aim to create a longer lease term. One aspect of this type of lease is the owner of the land becoming owner of the house upon expiration of the third lease term. As this is in conflict with the Civil and Commercial Code (and not in line with supreme court judgment) it is not enforceable as a contract.

These lease structures are exercised if the leasehold purchaser is a foreigner has paid the free market value of the leased land but due to foreign land ownership restrictions is not able to register ownership.

Tags: Real Estate Leases, Lease Agreements law Thailand, more about lease agreements in Thailand

samuiforsale update: legal aspects of hire of property laws and real estate lease in Thailand http://t.co/P6VQDnxY

by thailand law online

Properties for sale

Buying real estate in Thailand involves many legal issues and has several pitfalls. Obvious mistakes can be prevented by a quick and simple online review of the sale contratcs and documents related to the property (land title deed, housebook, building permit, previous sale agreement, sale or lease agreement) by a legal specialist.

Pricing from 4,800 THB. Contact us

Properties for lease

Buying a property under a leasehold structure requires just as much care and planning as buying a freehold property. What is the title of the property, access to the property, existing encumbrances, building zoning restrictions, etc.). The most inportant part of a leasehold purchase is the lease agreement, preferably combined with ownership over the building.

We draft professional land lease agreements for property in Thailand for 6,700 THB (including a property checklist).

This website is designed to be compatible with all modern browsers. Snoop Design

www.snoopdesign.com

Condos for sale

Foreigners may own condos freehold in Thailand. Whether buying a condominium 'off the plan' or a resale in an existing building, certain procedures must be followed. We can advice in detail on buying a condominium in Thailand from a foreigner's perspective.

Website by:

Define 90 year lease agreement in Thailand