Long term lease for Land.

Many properties are offered on a long term or “never ending” lease by the current owner. You would agree on a price, payable at 1, 3 or 5 year intervals, or for the duration of the contract or any other interval. The terms of the lease are generally open to negotiation with the owner. If you are not paying the full lease amount up front, the contract should specify the periodic payment schedule, the amount payable and, if the amount is allowed to change, there should be a formula describing how the change is calculated, i.e. inflation rate plus 2% per year (for example).

This method has the advantage that you may not have to commit a large amount of money up front. Also, the transaction is relatively simple, however, any lease over three years must be registered with the Oar-Bor-Tor office (District Office) and tax must be paid on the lease amount. For protection, you should register the lease with the land office. The land must have a lease that allows leasing i.e. Nor Sor 3 or Chanoht.

This may be a good method if you do not want to commit too much money up front or if you prefer a lease to the company method but you do not want to buy the land in the name of a Thai person. You should be aware however, that this method may prevent you from being able to sell your property. You should have the option to sub lease the land and sell the house or rent the land or house out as described above.

There are also contracts offered by developers, lawyers and estate agents which state the owner of the Land is committed to renew the lease after the legal limit of 30 years under the same terms and conditions as the original lease. Before you sign up to such a lease, we strongly advise you get very good impartial advice from a qualified lawyer, in order to check the legality of such a lease, and also point out the possible pitfalls.

Before deciding on a lease option you should ask the following questions and be provided with answers or advice only from an impartial lawyer, (do not take answers or advice from the people selling you the lease).

1. If the lease is to be renewed in 30 years time, where will the landlord be? How will you find him?
2. What happens if the landlord sells the land to someone else, (are you absolutely sure your contract will prevent this?)
3. What happens if the landlord or you die? Will the lease be transferred to the heirs and will the heirs be obligated to the lease?
4. What happens if the landlord refuses to renew the lease?
5. what happens if you want to sell your house built on the land? Will the landlord sell or lease the land to the new buyer? how can you be sure about this?
6. What happens if the law changes to allow foreigners to buy land or have longer leases? Will you be allowed to change your lease or buy the land? Are you certain?
7.Beware of contracts that state the lease will be renewed "under the same terms and conditions of the original lease". Does that mean you have to pay for the lease a second time around? Are you sure?

Do not be alarmed with these questions. A good lawyer can help you to get the best lease contract and satisfy you most or all these concerns listed above are taken care of.