Integrity Legal

12th November 2009

For many people living in Thailand, the prospect of owning property would be considered highly beneficial. Unfortunately, Thai law places great restrictions upon foreign nationals who wish to purchase property. That being said, no such restrictions are placed upon those who wish to lease Thai real estate.

In Thailand, the Civil and Commercial Code provides for leases of varying lengths of time. A lease’s enforceability is based, in part, upon the length of the lease. For example, a common misconception among many foreigners is based upon the idea that a lease can be unrecorded and enforceable for a period exceeding 3 years. However, this is not the case as parties to a Thai lease exceeding 3 years must record the instrument upon the Chanote (Title Deed) in order for a subsequent court to enforce the provisions agreed therein.

In Thailand, the longest lease that one can practically obtain has a duration of 30 years. A novel approach to acquiring what amounts to a longer lease would utilize multiple 30 year leases in which the date of lease commencement coincides with the end of the prior lease. For example, one could acquire a 30 year Thai lease that begins in 2010. Then acquire another 30 year lease to the same property, only this lease does not come into effect until the day after the prior 30 year lease is expired in 2040. As a result of these efforts, the leasee would effectively have a lease that runs for sixty years, but in reality, the applicable Thai laws have been adhered to because the 60 year lease period is the product of two legal leases each for no more than 30 years.

Although this type of legal configuration may be possible in theory, these types of staggered lease agreements, like any legal construct in Thailand, may not be practically feasible as the officers at the Thai land department may not accept the documentation and thereby could preclude this legal instrument from being recorded on the Chanote. Each Thai land office interprets the rules and laws differently. Therefore, retaining experienced counsel in the form of a Thai attorney to assist in recording leases and other property instruments may be beneficial to a foreigner in Thailand as the attorney could assist in facilitating the recordation of a rarely seen legal instrument.

Another issue that may be of interest to foreigners is the use of a Thai usufruct. A usufruct allows a foreigner to retain lifetime rights of use in the underlying Thailand property. Therefore, this type of instrument can act as a sort of “lifetime Thai lease,” as the beneficiary of the usufruct could use the Thai property until his or her death. It should also be noted that different rules apply to those looking to purchase a Thai condo because it may be possible for a Foreign national to purchase a Thai Condo in freehold.


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