Define sub-lease contract in Thailand and assignment

Author // Nadia Henderson (foreign legal consultant)

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A sublease agreement in Thailand is the rental agreement in which the lessee in a lease rents all or part of his leased property to another person. In the new rental contract the lessee becomes the sub-lessor and the new tenant the sub-lessee or sub-tenant. In Thailand an assignment of a lease is when the remaining term of a lease agreement in transferred to a new lessee. In this case the complete lease is assigned and the new lessee becomes liable to the lessor, the Thai owner of the property.

In the event of sub lease the original lessee in the lease agreement remains liable to the lessor. Sublease or sub-rent is a contract between the lessee and someone who rents the property from the lessee. In case of sub-rent the lease contract remains binding upon the original lessee. In case of sub lease the lessee in the lease agreement has to execute and a new rental agreement with the sub-lessee.

Section 544 Civil and Commercial Code: 'Unless otherwise provided by the contract of hire, a hirer cannot sublet or transfer his rights in the whole or part of the property hired to a third person'.

The right to transfer lease agreement in Thailand must be included in the contract between the lessee and lessor. Thai law requires that the right to sublet or assignment is agreed in the written lease agreement. If this is not included in the lease agreement the lessee is not allowed to sub-rent or assign his lease right under Thai law.

For example, in case the lessee leases undeveloped land and the parties have not agreed in the contract to lease the land that the lessee would be allowed to sub-lease the land. In this case the lessee is not allowed to sub-rent the land as this is not agreed in the lease, but when the lessee builds a house on the land he is allowed to rent out the house. This is according to the Thailand Supreme Court not a sub lease of the land and the lessee is not in breach of his contractual lease obligations (Scj. 2237/1981). Should the lease contract have stated that the lessee is not allowed to let someone else use the land, then in the same situation, it will be seen as breach of the lease contract (Scj. 6843/ 1998). The wording in the contract to lease is important and a lease should be drafted by an experienced lawyer with up to date knowledge of lease contracts and Thai lease laws.

In case of an assignment of the lease agreement the transferee lessee takes the place of the original lessee. The rights under the lease agreement will transfer subject to the lease. The assignment must be in writing (Section 306 Civil and Commercial Code). Assignment of the lease is subject to permission of the owner and lessor of the property. An assignment of the lease agreement creates a new agreement between the lessor (owner of the property) and new lessee. The contractual relation between th original lessee and lessor ends with the assignment of the lease.

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Define sub-lease contract in Thailand and assignment