When the landlord or the owner of a property or land decides to lease the property to another person for a certain time period, then a legal agreement is required to be formed and this agreement is known as the lease agreement. The person who takes the property for lease is also termed as the leaseholder or tenant and he/she pays a certain amount to the landlord for using the property for the agreed time period. The Civil and Commercial Code provisions govern the leasehold activities in Thailand. In order to make a lease agreement valid and applicable as per Thai law, the Civil and Commercial Code has prescribed certain requirements in this regard. The code says that all the lease agreements that have term more than three years must be in writing and also registered in front of a responsible officer with the Land Office.
People who are not the resident of Thailand cannot get direct interest over land and therefore, land leasing is a better option for them. However, the rights of a direct owner of land are always bigger than a lessee, but lessees also enjoy certain rights to secure their interest. The real rights of the property have been used in combination with the system of leasehold in order to deal with the insufficiency to protect the interest of tenant. Again, it is easy for the foreigners to enter into Thai leases in comparison to that of setting a company in Thailand for getting a Thai usufruct or superficies or ownership of land. Though the lease agreements in Thailand are simple, but still there several legal formalities that need to be followed to enjoy the long term rights of a Thai property.
The maximum period of leasehold arrangement in Thailand is restricted to thirty years. However, if the parties wish to renew the lease agreement, it can be done, but presumably for another thirty years term. This renewal of the lease must be re registered at the Thai local land office to make it effective. Therefore, it cannot be ascertained that the renewal is the extension of the old contract. Everything is to be conducted in a fresh manner like a new lease agreement.
The most common aspect in this type of agreement is the existence of the landlord after the period of thirty years. In many cases, it was found that at the end of the lease period, the owner of the land has already died and in that situation, it becomes quite problematic to establish the rights and other issues related with the lease agreement. Therefore, it is better to make the contract with a company and not an individual as the company will probably exist after the thirty years period.
If you are looking out to make a lease agreement and want to know the legal formalities, then you can contact our law firm. Our Thai lawyers will guide you with every nuance regarding the lease agreement in Thailand.