Understanding Lease Agreements In Thailand
Due to the fact that foreign nationals are not allowed to acquire and own land in Thailand, a system has evolved wherein these foreigners, although not actually owning the land, are able to possess and take control of the land as if having ownership rights over it. The main difference is that the Title Deed can never be made in their name.
This system of possession and control is embodied in an agreement commonly known as a Thailand Lease Agreement. Although there are different forms of contracts which
may give a person similar rights, the peculiarity and simplicity of Lease Agreements and their preconditions gave it an edge over all other contracts vesting real rights over land.
So, what exactly is a Lease Agreement in Thailand? It is a contract whereby a person having real rights to lease the land enters into a contract with a person who wishes to possess and gain control over the said property. These are the parties to a Lease Agreement, they are called the lessor (tenant) and the lessee (landlord).
A Lease Agreement is limited to a specific period of time. Lease Agreements covering a period beyond 3 years, should be in writing and duly registered at the Land Department. The maximum number of years allowed by law is 30 years. Most include in the contract an option to renew for another 30 years.
The right to use and possess the land is given for a consideration, usually depending on the market value of the property. Contractual rights govern the relationship between the tenant and the landlord, so all terms and conditions must be clearly stipulated and agreed upon by both parties in the Thailand Lease Agreement.
This article was provided by Siam Legal, an international law firm with offices in Bangkok, Chiang Mai, Hua Hin, Pattaya, Phuket, and Samui.