Leasehold Agreement

It is essentially a long-term lease in which the lessor rents a property to another for a long period of time (maximum 30 years). Indeed, in Thailand, a long-term lease is often used to own a property for a long period of time, given the possibility for foreigners to own a property. For this reason, this leasehold contract is advantageous for foreigners who wish to have a property for a maximum period of 30 years, renewable once. In conclusion, the rental contract allows to palliate this difficulty and to obtain a right of use of a real estate, whatever its nature, for a foreigner in Thailand.

A Thai long term lease is only a rental agreement, and tenant protection is weak and fragile in Thailand. Therefore, the contractual clauses of your leasehold contract must protect you. That’s why our lease agreement offers you full legal protection in case of default by the other party or an unforeseen event. Most importantly, you will have broad protection in case of issues such as:

In conclusion, if you want to rent long term in Thailand, the establishment of a contract is essential and mandatory for legal protection in case of default of the parties. Any lease of more than three years must be established in writing.

The 30-year renewal is considered a personal contractual promise between the parties to the lease agreement to give or do something within 30 years. The maximum term of the lease must not exceed 30 years to include a renewal clause that allows for one renewal. The Thai lease renewal agreement will need to be re-registered with the local land office in Thailand. It should be noted that the option to extend or renew for 30 year periods is not guaranteed. Any real estate lease contract over 30 years in Thailand can only be enforced by extending the contract after the 30 years.

Lease contracts longer than three years must be registered with the Land Office within three years of signing and starting the lease. Therefore, the leasehold agreement will not be enforceable if it is not registered and will be unenforceable against third parties. For example, if the tenant does not register within the agreed upon time period, the tenant loses the right to bring the lease dispute to court. When the lease is registered, the title deed (chanot) contains the name of the tenant and the details of the lease. The leasehold agreement is then attached to the property deed and kept in the land registry office. Finally, the mention of the name of the tenant on the title deed strengthens the rights of the tenant against third parties.

The lease registration tax is 1.1% of the rental value, including the lease registration tax collected by the land registry at a rate of 1% of the total rent for the entire term of the lease and 0.1% of the total rent for the entire term of the lease for stamp duty.

Under Thai law, the tenant’s heirs do not automatically have the right to inherit the lease upon their death. A lease is a contract and a personal right of the tenant, not an asset. Therefore, at the end of the lease period, the contract is terminated. Therefore, the leasehold agreement must contain specific clauses granting the right of succession to the lessee’s heirs. The transfer of the lease to the tenant’s heirs requires registration. In the event of the premature death of the tenant, his or her heirs have the right to claim this benefit directly from the original landlord if the lease agreement contains an inheritance clause. Otherwise, the heirs may find themselves without inheritance tax.

Make sure you have a written lease agreement to address late rent payments. Our lease agreement includes a clear and consistent rent collection policy. Your rent collection policy should specify the amount of rent due when it is due, including late fees and other penalties. If you accept a late payment once without charging a late fee, your tenants will have no incentive to pay on time. If the rent is not paid, the landlord can terminate the agreement within a reasonable period of time after a formal notice.

The renewal of the lease at the end of the 30-year period is not a right granted but a mere contractual promise between the parties to the contract. In other words, there is no automatic right to renewal, and the parties must take active steps to renew the lease near the end of the initial term. Renewal will depend on the careful drafting of the intent under Thai law. The lessee’s heirs are not automatically entitled to inherit the rights of the long-term lease upon their death. Therefore, at the end of the lease period, the contract is terminated. Renewal periods after the initial term should not exceed 30 to 50 years. Nevertheless, the renewal of the lease is a contractual option or obligation (not an actual right in the lease) that must be performed in the future.