Selling on a leased house

[samuigal]

Hi, I just came across this forum which I see seems to have a lot of property advice. We hope we can move soon to Pranburi, Hua Hin or Cha Am but we have come across a lot of difficulties and we are looking for help. Can anyone please advice us about our problem with respect to selling our house. We decided to retire to Thailand so we bought a pool villa in Koh Samui about 3 years ago under a 90 year lease agreement and before we bought it we took the advice of a lawyer who helped us with a title search and prepared our lease for us. Now we decided to sell our villa for 3 million baht less than what we bought it for and we have a potential buyer but our original lawyer has moved away from Samui and also the builder who built our house has gone back to his own country. We took our papers to the land office but we were told through our Thai interpreter we need to find the original land owner who signed our lease if we wish to create a new lease for our buyers. All we have is a Thai name on the lease but we don't even know who this person is let alone be able to contact her. We think she is a friend of the builders wife. My husband and I feel very foolish because it seems we may be stuck with this house without being able to sell it on. Can anyone tell me if they have had a similar problem or perhaps you know someone who has a same dilemma? We were assured when we bought our villa we would be able to sell on our house but now we have been told we can only sub let it for a remaining 27 years and after this time which will be 30 years we have the option to buy our house back again because we are now told the option to renew the lease after 30 years means we need to pay for the house all over again after 30 years. This came as quite a shock to us even though we realize we will probably be dead by then anyway but we would have liked to have passed on our asset to our children. Every day we hear new facts which makes our problems much more confusing. So far we have spent over 30,000 baht getting advice from 2 different lawyers who only tell us the same that we are in an impossible position unless we find our Thai land lord and they can't help us with this because of a privacy law. Our lease says we have the right to sublease our villa but we didn't know we would still need permission from the Thai land owner. Our lease is in English but now we are told the true lease is in Thai which is registered in the land office and the Thai version is not a true reflection of the English copy although our lawyer assured us it was when we originally bought the villa. It's a very messy situation that we have found ourselves in and any constructive advice would be very welcome. Just now we are thinking selling our villa is impossible so the best option we have is to rent it out and find another place to rent which is not ideal but may be our only option.

[TypicallyTropical]

Your original lawyer wasn't on your side, the lease should have said you have the right to "assign and transfer" the lease instead of "sublet" so you could actually sell the property. While I'm not familiar with the "leasehold" in Thailand, we do have lots of leasehold properties in Hawaii, and the leasehold is the same everywhere: your property is worth less and less every day until the last day of the lease, when it will worth nothing. At that time you can move the improvements (your house) to another piece of land since what you bought at the time was just the improvements, not the land. Sorry to hear of your troubles.

[samuigal]

I think we have resigned ourselves to accepting we can only stay or rent out our villa for a further 27 years at which point our lease will end and our children will find it impossible to renew. If we rent out our villa for 35,000 per month for the next 27 years we will get back what we originally paid for it.

[Beguine]

The advice you have received is correct. The Land Code only allows maximum of 30 year leases on residential property and that is all that can be registered on the back of the title deed. Of course there is nothing to prevent contracting parties from entering into an agreement to renew a 30 year lease for further periods of 30 years but a Thai court will only accept what is registered at the Land Dept as evidence. Therefore the options to renew the lease are only gentlemen's agreements that are in no way enforceable. Faced with the option of abiding by a 30 year old gentlemen's agreement to renew a lease free of charge or selling the property again at full price, it is a no brainer what most Thai property owners are going to do. If you want to transfer, sublet or pass on as an inheritance the property for the what is left of your 30 year lease it will most likely require the consent of the owner, even if the lease agreement says this is not necessary, because Land Dept officials usually require that. Unless the Thai owner is a reputable property developer with a continuing interest in selling lease hold properties to foreign buyers, he will probably not agree to consent to a transfer without a transfer fee. Why would he?

Basically selling property in Thailand to foreigners on a 90 year or 30+30+30 lease is a scam. Thailand has never had a concept of saleable leasehold properties, as in the UK which now has a substantial body of law to protect leaseholders. A 30 year lease here is more like a short term rental agreement between two parties. You even have to be careful that, if the property changes hands, the new owner might try to argue that he is not bound by the lease agreement entered into by the previous owner because he was not a contracting party. Much depends on interpretations by individual Land Dept offices that have a lot of independence and practice can vary a great deal from place to place. The Land Dept is extremely corrupt and the officers regularly ask openly for under the counter payments to reduce tax and other illegal services. You can imagine what chance foreigners on tourist visas have of arguing a case there against a Thai land owner. For those who have yet bought I believe that, either short term rentals or freehold condos are a much better way to go.

[Arcan]

I can easily understand your situation. What seems obvious is that thousands of foreign housebyers are in the same situation. The problems seems to be wellknown and we have more or less had the same experince. I am not an expert, and you have allready got some advices. I am quite sure you will get a lot more, some of them confusing and contradictionary. Most likely, they have å root in the law. Studying of law takes years in all countries, Thailand no exception. Therefore you have to keep on and try to gather so many as you can of the pieces in the puzzle: To learn about the law concerning bying and selling property in Thailand.
As I said I am an amateur, but have worked with the issue for more then two years including studying internet and also together with lawyers.

I therefore will be careful to give advice since the details in your case is lacking. As far as I understand you have bought the house and it is registrated in your name. Houses can be owned by foreigners in Thailand. Property not, therefore the leasehold. Leasehold can legaly be registrated for 30 years. If you have an agreement with the lessor/landowner to renew this for another 30 years, it still can be a legal document¨. The problem is that this document is working as long as you and the lessor is alive. Can not be passed over to the heirs. I use this as an example that your case can both be far better end worser depending of the real situation (documents etc). If you own the house, you own it. If you not get a renewel of the lease, the landowner can take over the house at the end. However he has to pay after an avaluation. The rise in value of the plot should be the benefit of yours. I do not know how this rule works in practice.

A lawfirm had several articles in Bangkok Post last year about this issue:

http://www.chavalitfinchlaw.com/publica ... tions.html

You can also get very useful information about the law itself at

http://www.samuiforsale.com/

I really hope this will help you a bit. Please be free to contact me if I can be to any help

[margaretcarnes]

The advice you have received is correct. The Land Code only allows maximum of 30 year leases on residential property and that is all that can be registered on the back of the title deed. Of course there is nothing to prevent contracting parties from entering into an agreement to renew a 30 year lease for further periods of 30 years but a Thai court will only accept what is registered at the Land Dept as evidence. Therefore the options to renew the lease are only gentlemen's agreements that are in no way enforceable. Faced with the option of abiding by a 30 year old gentlemen's agreement to renew a lease free of charge or selling the property again at full price, it is a no brainer what most Thai property owners are going to do. If you want to transfer, sublet or pass on as an inheritance the property for the what is left of your 30 year lease it will most likely require the consent of the owner, even if the lease agreement says this is not necessary, because Land Dept officials usually require that. Unless the Thai owner is a reputable property developer with a continuing interest in selling lease hold properties to foreign buyers, he will probably not agree to consent to a transfer without a transfer fee. Why would he?

Basically selling property in Thailand to foreigners on a 90 year or 30+30+30 lease is a scam. Thailand has never had a concept of saleable leasehold properties, as in the UK which now has a substantial body of law to protect leaseholders. A 30 year lease here is more like a short term rental agreement between two parties. You even have to be careful that, if the property changes hands, the new owner might try to argue that he is not bound by the lease agreement entered into by the previous owner because he was not a contracting party. Much depends on interpretations by individual Land Dept offices that have a lot of independence and practice can vary a great deal from place to place. The Land Dept is extremely corrupt and the officers regularly ask openly for under the counter payments to reduce tax and other illegal services. You can imagine what chance foreigners on tourist visas have of arguing a case there against a Thai land owner. For those who have yet bought I believe that, either short term rentals or freehold condos are a much better way to go.

That is the best summary of the situation - as I understand it - that I have ever seen. The sad thing is that buyers are still being caught out or mislead by unscrupulous lawyers and/or vendors. And as in any country, ignorance of the law is no defence.
In Thailand the process of buying a leasehold is even more fraught, simply because most buyers cannot translate written Thai. We all take lawyers on trust to a large extent, wherever we live, and we all have faith in the rule of law. In Thailand that simply doesn't work, and as farang we have little or no recourse in the Justice system.
I have every sympathy with the OP, but have to agree that renting is always the safest option.