A Lease Agreement in Thailand governs any type of property rent or lease activity in the country. Be it a Thai National or a Foreigner, in both cases, the chances of mistakes are high. The main reason for this is that it is not possible for everyone to know about the legal aspects.
Although, if known, Thai laws do not cover any type of complexity, elsewise, it can be very critical. Therefore, before we discuss the most common mistakes made by people during the leasing or purchasing of any property in Thailand, we have a suggestion. Hire a reliable Property Law Firm to take care of the legalities in the process.
Common Mistakes made in Lease Agreement in Thailand
The leasable property must have a liability and debt-free and lawful title deed. Along with the possessory land rights, land under a mortgage or property transferred under a right of redemption by the prior owner should not affect the legality and enforceability of the lease agreement. A misunderstanding of Thailand’s lease or tenancy rules frequently results in the following mistakes:
- Expecting that everything in the lease agreement is enforceable is a great mistake. Registration of the property with the Land Office never makes this possible. Although, exceptions are there for some specific void clauses. But, the Land Office never determine the validity and enforceability of the terms and conditions in the private lease agreement.
- The Land Department does not register lease agreements that are longer than three years. Therefore, they are not enforceable legally for the period exceeding 3 years.
- The private lease agreement between the parties is not annexed to the conventional short form land office lease paperwork.
- The long-term lease is for land and house, where land and house can be separate. Moreover, this gives the lessee a stronger position avoiding the annual housing and land tax.
- The land lacks a correct title deed, is unsuitable for construction. It can also have other legal issues or constraints. Therefore, to avoid this due diligence is necessary before signing a leasing agreement.
- The lease agreement with bad structure terminates upon the lessee’s death.
- The lease agreement is made between spouses without taking into account marital property rules. This overrules agreements made during the marriage creating a void lease agreement.
You can avoid a majority of issues with good planning, property due diligence, and legal counsel and help. Moreover, you must do all this prior to signing any lease agreement or paying a tenancy contract deposit.
What to Check Before going for a Lease Agreement in Thailand?
When investing in a Development in Thailand under Planning, keep the following in mind:
- Is this a private development or a project has government approval?
- Does the subdivisions in the primary property has a separate title deed?
- Is the developer following all development restrictions and gotten the necessary permits?
- Do the construction holds permit?
- Is there a housing development licence for the developer? (necessary for projects exceeding 9 plots).
- Is a report on the approval of an environmental impact assessment (necessary for licencing of larger projects).
- The sales mechanisms and agreements govern the sale of the project.
- What is the registered share capital of the developer’s company and since how long is he/she constructing properties in Thailand?
- Is it possible for the buyer to hire an independent building surveyor to inspect the final product?
- How many residences are under construction in the project, and will new buildings obscure the view?
- Will the developer take care of registering the house in the foreigner’s name with the appropriate government agencies? Will he/she provide the house registration booklet or Tabian Baan?
- Should the developer link the land to public utilities and file for separate metre installations in the buyer’s name? Or would he supply utilities through his management company?
- What services will you receive? What will the project’s monthly or annual maintenance and service cost be? Which method will be used to calculate this? The developer’s excessive maintenance and service fees are prevalent criticism.
- Who will be liable for any transfer or registration fees? The sale contracts in an housing development project must have approval of the housing development committee. Additionally, it must provide the bare minimum of consumer protection.
The Bottomline
These were a few of the most important points which you must keep in mind before drafting or signing a lease agreement. As a foreigner, you may face greater challenges than a Thai citizen in this context. Therefore, we suggest you consult for reliable legal counsel before proceeding with your Land Lease or Acquisition matters. Mail us at [email protected] for all-round assistance and guidance on Land and Property legal matters.
