One option of enjoying the benefits of property ownership in Thailand is a long term lease. Thai Long term leases offer the straightforwardness often lacking in other areas of Thai Real Estate law. Many foreigners in Thailand choose Thai leases because it is easy to understand compared to setting up a Thai Company for the purpose of land ownership or obtaining a Thai usufruct or superficies. Although Thai leases are straightforward, they still have legal formalities that must be adhered to under Thai law in order to properly enjoy the right of long term use of the underlying Thai property.
A common misconception regarding the legalities of a Long Term Thai Lease, is that one can essentially obtain a 99 year lease as in a common law or developed country. This is simply not the case. Under Thai Real Estate Law a lease is only allowed on property for a period not exceeding 30 years. Many people claim that a Thai lease can be had which has an automatic renewal every 30 years up to three times. This is simply not the case.
Any Thai lease executed on property in Thailand that exceeds three years must be registered with the land office and attached to a Thai Chanote (Title Deed in Thailand). Also, no lease of property in Thailand may be of a longer period than 30 years (one could have a Thai lease of longer duration, but a Thai court will only enforce it for a maximum duration of 30 years). It is possible to have a renewal clause in the Thai lease whereby one has the ability to renew the lease (presumably for another 30 years). However, in order to properly perfect the Thai lease renewal one would need to re-register it at the local land office in Thailand.
A Thai lease of a Thai usufruct is allowed in Thailand and this system would allow its holder to maintain a lease even after the death of the original Thai usufruct holder. However, a Thai lease such as this would once again necessitate proper registration with the local Thai land office.
Thai leases that are properly formalized in Thailand can be very advantageous for the foreigner buyer looking to purchase Thai property rights in Real Estate in Thailand. However A lease is not legally binding between married people or up to 1 year after the legal termination of a marriage.
LEASE - Things you may not know about leases between husband and wife :
A registered lease can not be canceled by the land owner unless the owner is married to the lease holder.
Section 1469 of the Thailand Civil and Commercial Code - Any agreement concluded between husband and wife during marriage may be avoided by either of them at any time during marriage or within one year from the day of dissolution of marriage; provided that the right of third persons acting in good faith is not affected thereby.
Author: Pavlos Paul Georgakis
Managing Director / CEO of P.G. Thai Enterprises Co., Ltd (Thailand)
P.G. Thai Real Estates in Thailand
