Thread: Land Lease

One of my friends considers acquiring a 30 year lease for some newly developed land, but it's not even measured out with a title yet. Many pitfalls, I reckon.

Does anyone know of a law firm in Bangkok specialising in this stuff he could get in touch with when he'll come to Los end of the month?

Maybe those sunbelt guys. I would advise your friend to proceed very carefully as I'm sure you already have.

Originally Posted by Mr Earl

Maybe those sunbelt guys.

Amateurs - avoid them like the plague.

Originally Posted by stroller

One of my friends considers acquiring a 30 year lease for some newly developed land

That sounds a bit contradictory. I was under the impression that a developer could not build until the land had been sub divided. And that you cannot lease the land only the house that is on the land????????

arrange these into a sentance...stand, to, on, leg, not, a

You can lease the land, and it's a question of legal ins and outs, once some sort of title is held by the 'owner'.

Quote :

The simplest way to “own ” land in Thailand is to buy the land in the name of a Thai citizen and lease it back from them for 30 years with option to renew. By simplest, I mean cheapest and quickest. The Thai citizen has their name on the title deed for the land, which means THEY OWN THE LAND, NOT YOU. However, at the time of the purchase you enter into a separate agreement with the new land owner to lease back the land for 30 years with a pre-paid option to extend for another 30. (Some sources say two, 30 year extensions can be written into the contract for a total of 90 years).
Any leaseover 3 years must be registered at the Amphur and there will be a 1.5% fee for registration and stamp duty. Also the lease value will be considered taxable income of the Thai owner.
The leaseagreement can specify any terms you want such as the lease amount, what happens in the event of your death or the death of the real owner, what happens if you want to sell the property, etc. Your lawyer should also add that if the laws change to allow foreign ownership of land, the land titlewill be transferred to you.
If your relationship with the land owner becomes uncooperative, you may have problems with the lease extension. Thai courts have found lease extensionsto be a legally binding, contractual matter between the parties involved, but you may have to go to court to enforce the contract and Thai courts are not known for their sympathy towards farangs. The conditions of the lease extension, such as price, taxes, registrations fees etc, should be specified in the lease contract but the option to extend the lease cannot be registered at the land office.
The lease will survives the death of the land owner and transfer to their heirs, or transfer of the land ownership to another party, but you may find the new owners uncooperative and unwilling to extend the lease.
Your lease should allow for sub leasing. If in future, you want to sell, and you don’t have the support of the land owner, you can sell a sub lease on the land, plus the house. However, you will probably not get the same price as if it was freehold land and house.
If your Thai wifeis buying the land, you have to sign a document stating that the money did not come from abroad and that the property is the separate property of your wife and that you acknowledge that you have absolutely no rights or interest in the property. This is significant in case of divorce.

Originally Posted by RandomChances

and theres one below that I think.

There are a couple of lower land titles which essentially are no more than settlers right to use the land. Such land is registered in the users name at the district office and there is a yearly very small tax to be paid for the usage.

Land of that kind will eventually get a Chanot or Nor Sor Sam title as part of the continously ongoing change of all land into one title deed , the Chanot.
When that transformation takes part, it is very important that the user can show that he has taken care of and used the land and that he has paid the land tax yearly.

The settler is allowed to build himself a smaller house in order to live and maintain the land...

Strollers friend can not lease a land of this kind. First there is no current owner of the land, only a user with settlers right.
Secondly, lease or sale of land can only be rgistered at the Land Office and they do only handle Chanot or Nor Sor Sam titles.

Originally Posted by lom

There are a couple of lower land titles which essentially are no more than settlers right to use the land. Such land is registered in the users name at the district office and there is a yearly very small tax to be paid for the usage.

Thats right. I think you just more or less said what I did, but in a clearer, more understandable sort of way

Originally Posted by RandomChances

Originally Posted by Thetyim

but it's not even measured out with a title yet. Many pitfalls, I reckon.

Now I'm sober,

Sorry RC, but you're still not sober.
I never posted that.

Misquoting carries the death sentence on this forum

Quote :

Sor Kor 1

Sor Kor 1 is the form required to notify the governmentof a possessory claim to a piece of land. This was introduced in December 1954 and was used by the government to verify claims upon the land with the eventual issuance of Nor. Sor 3 or Nor. Sor. 3 Gor certification (see below)
The government plans to eliminate this title and upgrade all Sor Kor 1land to Nor Sor 3 , but TIT (This is Thailand), things take a long time!
Sor Kor 1 entitles the holder to occupy and farm the land. The land can not be sold; it may only be transferred to direct heirs of the person who holds it.
Sometimes you may find a really good deal on a beautiful piece of land that is Sor Kor 1. The owner will try to convince you that getting it upgraded to Nor Sor 3 is only days away. If you really must have it, be careful; you cannot legally buy it until the title is upgraded to Nor Sor 3! If you pay a deposit , have it backed up with the your name on another, more transferable land title like a Chanohtor Nor Sor 3, or put the deposit money in an escrow account, and be prepared for a long wait before you can legally buy it. Also, be careful if you are planning to start building on the land before the upgrade and purchase is complete, or you may end up making an involuntary house donation to the current owner. It is not legal to build on Sor Kor 1 land and you will not be able to apply for or get a building permit.
Only the long term land owner can apply to have the title upgraded. You cannot.
Por Bor Tor 6

Por. Bor. Tor 6is documentation that all land must have in order for a tax number to be issued and tax to be paid upon the benefits of the land. It does not in anyway infer title, ownership or possessory right of the land, only that it has been assessed as taxable.
Por Bor Tor 5

Por Bor Tor 5is agricultural land or forestry land not recognized as having ownership by the local land office. The local village headsman will be classed as the sole Administrator and he should know ownership by possessory rights title, and also the boundaries of the land. When sold, money changes hands with the knowledge of the village headsman. Strictly speaking no development can take place, but in many areas Guest Houses, Restaurants and homes have been built with full knowledge of local Planning officials. This is particularly common on islands such as Koh Chang. However there have also been cases where restaurants have been bulldozed.
Sor Por Kor 4-01

Sor. Por. Kor 4-01refers to land allotted by the Land Reform Committee. Land with this documentation cannot be bought or sold, and may only be transferred to the direct heirs of the person who holds it.
Sometimes a block of Sor Kor or Por Bor land may be attached to land with a transferable title, such as Nor Sor 3or Chanoht(described below). Some people buy such land parcels with the expectation of upgradingthe whole thing to a transferable title. I advise against building on the Sor Kor or Por Bor land because 1) you would have to do it without a permit, 2) you don’t own that land, 3) the upgrade may never happen.
Nor Sor 3 น. ส.๓.

Nor Sor 3 (Nor Sor saam) certifies that the land has been issued to the proprietor by the governmentand the land can be used for its benefits by the holder of this documentation. However, this is not a clear title, and is relevant only to the individual holding the land and the land use.
No parcel points are marked and it is issued upon a specific plot with no frame of reference to connecting plots. Problems can occur when attempting to verify the actual land area of such plots covered by this documentation. For this reason whenever purchasing Nor.Sor.3 land which lacks clearly defined physical boundaries (such as a river, road, etc) it is a wise precaution to ask the owner to stake out the boundaries and then ask neighboring land owners to confirm the vendors interpretation of the boundary. Don't rely solely on the drawing on the deed. Legal acts in connection to the land must be publicized for 30 days prior to their enactment.
In plain English, Nor Sor 3can be bought and sold, but the boundaries are only recorded in relation to the neighboring plots and survey errorsare common. If you are building on Nor Sor 3 land, I suggest you stay well within the boundaries so you are absolutely sure the house is actually on your land, not your next door neighbors.
Nor Sor 3 Ghaw. น. ส.๓. ก.

Nor Sor 3 Ghaw (often spelt Nor Sor 3 Kor or Nor Sor 3 Gor) has similar legal basis as Nor Sor 3, however, with this documentation the land area is defined with parcel points and is accurately mapped showing adjoining plots on a map using a standard scale of 1:5000.
Nor Sor 3 and Nor Sor 3 Ghaware legal certificates allowing the person named upon them the right to use the land, including building a house or running a business. This documentation may be used to confirm the rights of the land user in legal disputes with individuals or the government.
It is usually safe for farangs to buy Nor Sor 3Ghaw land. Nor Sor 3 Ghaw is a documented right of use, forever, and can be bought and sold and the boundaries are well defined. However, it is not a certificate of ownership; only Chanoht (below) specifies actual ownership.
Survey errors can apparently happen even in Nor Sor 3Ghaw land; it happened to me. The real estate company I bought the land from did there own survey and found the land was a little smaller than the Nor Sor 3 Ghawindicated. The seller did not want to sell land with uncertain boundaries so they applied for a new official survey. If a new survey is required, it will require notification of neighboring land owners.
Nor Sor 3 Ghaw may be sub-divided but sub-dividing or upgradingtitle to Chanohtrequires you to get permission from all the neighboring land owners. The land office will help you find them. They will have a sign a document agreeing to the current land boundariesand asking them to be present when the government surveyors come to survey the new boundaries. If your neighbors cannot be within for 30 days, there permission will assumed. If your neighbors do not agree to the land split, you can ask for a court order. Beware, many texts will incorrectly tell you that legal acts need not be publicized for Nor Sor 3 Ghaw land.
Nor Sor 4 Jor น. ส. ๔ จ. (Chanoht)

Nor Sor 4 Jor, or Chanoht(often spelt Chanoteor Chanoot) as it is more commonly called, is the preferred title dead for land purchase in Thailand.
A Chanoht is a certificate of land ownership. “Chanoht thee-din”, โฉนดที่ดิน, literally translates to “land title”. The title deed indicates the GPS-verified areaand boundaries to the land, although the GPS coordinated do not appear anywhere on the document! The owner named upon a title deed, may use the title as proof of ownership in all legal undertakings. Banks are usually willing to load money with a Chanoht as collateral.
Chanohtland can be sub-divided but more than nine sub-plots must follow the Land Allotment Law , Section 286 and sub-dividing requires you to get permission from all the neighboring land owners as described previously for Nor Sor 3.
Chanohtland will normally have a uniquely numbered governmentpegs (concrete posts) at the corner points and possibly other places as well. This will be drawn on the Chanoht document (see following picture). A government pegis a concrete post, about 10 cm in diameter, buried in the ground with the top poking out (if you are lucky!). Have the land owner show you the government posts, if they exist.
It is usually very safe for farangs to buy Chanohtland and you will often pay a small premium over Nor Sor 3 Ghaw because it is so desirable.

Originally Posted by Thetyim

Misquoting carries the death sentence on this forum

You'd better go back and check then. I'm sure I quoted stroller

Originally Posted by RandomChances

You'd better go back and check then. I'm sure I quoted stroller

Yes you quoted Stroller but credited it to me.
It is one of the forum quirks.
You can highlight a quote and then click quote in another post and it gets credited to the wrong person.

Originally Posted by Thetyim

Quote :

The simplest way to “own ” land in Thailand is to buy the land in the name of a Thai citizen and lease it back from them for 30 years with option to renew. By simplest, I mean cheapest and quickest. The Thai citizen has their name on the title deed for the land, which means THEY OWN THE LAND, NOT YOU. However, at the time of the purchase you enter into a separate agreement with the new land owner to lease back the land for 30 years with a pre-paid option to extend for another 30. (Some sources say two, 30 year extensions can be written into the contract for a total of 90 years).

Without doubt the easiest way, but also illegal. A Thai faces both civil and criminal sanctions if they purchase land as a "nominee" of a foreigner under the Land Code.

For that reason, it can be tough finding a Thai who is willing to do this, unless they are unaware of the potential sanctions against them.

^
Sorry William, but isn't the above what is reccomended mostly by Thai lawyers?

^ most methods of foreigner "owning" land in Thai entail some form of illegailty. In most cases, it is finding the lesser of all evils (if you really want to own the land).

It may be the case that a lawyer in Thailand would recommend any of these, for 2 reasons:

1. IME, law firms in Thailand are not insured for any professional negligence. As such, suing a Thai lawyer for bum advice is extremely limited (and hardly ever done); and

2. IME, a number of law firms in Thailand simply do not know. The reason why this is the case is bacause we have no professional code of conduct or standards in Thailand the same as one would expect from the West.

Not that I am biased or anything like that, but I have to say that I would treat advice given to me by a Thai lawyer with extreme caution unless I knew the person giving the advice well, or I knew the subject at-hand and the lawyer was merely confirming my understanding.

But, I must stress, that is my personal opinion.

Thanks folks, some useful stuff.

But I am really enquiring for a friend who would appreciate a contact for a lawyer with a background in this field.

Sorry Stroller but your friend doesn't need a lawyer, it's just a waste of money. No honest lawyer should touch a case like this.

He'd better go and ask the government department which is responsible for national parks and environmental protected land for a lease contract.
They are the owner of all land that has not yet been transformed into proper title deed.

And I'm sure you know what their answer will be.. And the answer is free there..

We used Tilleke & Gibbins, prominent law firm in Thailand with offices in Hanoi arguably the most respected law firm in Thailand - But they are not cheap.

^ the operative word there is "arguably". Read Asia Pacific Legal 500 and they're not even tier 3 ranked in Thailand.

And comparable to the likes of Clifford Chance, Allen & Overy, Linklaters, Norton Rose, Sherman & Sterling, Johnson Stokes & Master, Baker & McKenzie, et. al, they're very affordable.

Oh, I might add that one thing that is not "arguable" about T&G is the fact that they are Thailand's oldest "international" law firm

Originally Posted by William

Originally Posted by Thetyim

Quote :

The simplest way to “own ” land in Thailand is to buy the land in the name of a Thai citizen and lease it back from them for 30 years with option to renew. By simplest, I mean cheapest and quickest. The Thai citizen has their name on the title deed for the land, which means THEY OWN THE LAND, NOT YOU. However, at the time of the purchase you enter into a separate agreement with the new land owner to lease back the land for 30 years with a pre-paid option to extend for another 30. (Some sources say two, 30 year extensions can be written into the contract for a total of 90 years).

Without doubt the easiest way, but also illegal. A Thai faces both civil and criminal sanctions if they purchase land as a "nominee" of a foreigner under the Land Code.

For that reason, it can be tough finding a Thai who is willing to do this, unless they are unaware of the potential sanctions against them.

The right for foreigners to lease land is laid out in Thailand's civil and commercial code .

Leasing is by far the safest option to choose, way safer than the company route.

Your nominee argument is quite flawed given that ownership remains with Thai national so the foreigner does not own the land.
The government is well aware that the foreigner has paid for the land, they are not daft. They want the full ticket price for land and they dont want to give ownership. Leasing allows this scenario to occur everyday. The farang involved just has to sign a document to say that he has no claim to the land and that no foreign money is used for the purchase.....the goverment are well aware where the money comes from!

If you can reference one case where a Thai national has been criminalised for doing this that would be good.

Also forget about 90 year leases, the best you will get is 60 years as per section 540 of C. and C. Code

Originally Posted by Old Codger

The right for foreigners to lease land is laid out in Thailand's civil and commercial code .

No it's not. S. 537 makes no mention to foreigners, nor to land in particular. What is set out is the right to a hire of property, which may include land. It also applies to anyone - foreigner or Thai alike.

Originally Posted by Old Codger

Leasing is by far the safest option to choose, way safer than the company route.

I personally have never advocated otherwise.

Originally Posted by Old Codger

Your nominee argument is quite flawed given that ownership remains with Thai national so the foreigner does not own the land.

Given what's going on in Thailand at the moment, this is indeed a bold statement to make. The fact is, under the Land Code it is a criminal penalty for a Thai to be the nominee of a foreigner. If the Thai cannot show source of funds, they'll very likely be classed a nominee - under current Land Department practice.

Originally Posted by Old Codger

The government is well aware that the foreigner has paid for the land, they are not daft. They want the full ticket price for land and they dont want to give ownership.

Again, bold - but then...

Originally Posted by Old Codger

Leasing allows this scenario to occur everyday. The farang involved just has to sign a document to say that he has no claim to the land and that no foreign money is used for the purchase.....the goverment are well aware where the money comes from!

Unless a foreigner is married, no they do not. A married foreinger has to sign an affidavit to say the land is not his purely so that the land does not constitue part of the marital estate. If you rent the land from a third party, you do not need to do this.

Originally Posted by Old Codger

If you can reference one case where a Thai national has been criminalised for doing this that would be good.

Until about 4 weeks ago, while I might have said there was a risk, I would have thought it slim. The fact remains, under the Land Code a Thai acting as a nominee of a foreigner - either directly as the owner of the land or indirectly as a major shareholder of a company that owns land - is subject to criminal and civil sanctions. Today I would say these are very real threats, especially given what is currently going on in Samui and elsewhere.

Originally Posted by Old Codger

Also forget about 90 year leases, the best you will get is 60 years as per section 540 of C. and C. Code

Paragrpah 2 of S. 540 of the CCC does give an option to renew. However, the Thai Supreme Court has held that this option is a personal obligation. Thus, if I agree to give you an option and (a) I die; (b) I sell the land; or (c) I transfer the land to a third party, then you cannot enforce the right against the new owner and the lease will terminate at the period of 30 years. Thus, if you do agree to do this, don't pay 60 years worth of renting upfront.

Originally Posted by William

Originally Posted by Old Codger

The right for foreigners to lease land is laid out in Thailand's civil and commercial code .

No it's not. S. 537 makes no mention to foreigners, nor to land in particular. What is set out is the right to a hire of property, which may include land. It also applies to anyone - foreigner or Thai alike.

Originally Posted by Old Codger

Leasing is by far the safest option to choose, way safer than the company route.

I personally have never advocated otherwise.

Originally Posted by Old Codger

Your nominee argument is quite flawed given that ownership remains with Thai national so the foreigner does not own the land.

Given what's going on in Thailand at the moment, this is indeed a bold statement to make. The fact is, under the Land Code it is a criminal penalty for a Thai to be the nominee of a foreigner. If the Thai cannot show source of funds, they'll very likely be classed a nominee - under current Land Department practice.

Originally Posted by Old Codger

The government is well aware that the foreigner has paid for the land, they are not daft. They want the full ticket price for land and they dont want to give ownership.

Again, bold - but then...

Originally Posted by Old Codger

Leasing allows this scenario to occur everyday. The farang involved just has to sign a document to say that he has no claim to the land and that no foreign money is used for the purchase.....the goverment are well aware where the money comes from!

Unless a foreigner is married, no they do not. A married foreinger has to sign an affidavit to say the land is not his purely so that the land does not constitue part of the marital estate. If you rent the land from a third party, you do not need to do this.

Originally Posted by Old Codger

If you can reference one case where a Thai national has been criminalised for doing this that would be good.

Until about 4 weeks ago, while I might have said there was a risk, I would have thought it slim. The fact remains, under the Land Code a Thai acting as a nominee of a foreigner - either directly as the owner of the land or indirectly as a major shareholder of a company that owns land - is subject to criminal and civil sanctions. Today I would say these are very real threats, especially given what is currently going on in Samui and elsewhere.

Originally Posted by Old Codger

Also forget about 90 year leases, the best you will get is 60 years as per section 540 of C. and C. Code

Paragrpah 2 of S. 540 of the CCC does give an option to renew. However, the Thai Supreme Court has held that this option is a personal obligation. Thus, if I agree to give you an option and (a) I die; (b) I sell the land; or (c) I transfer the land to a third party, then you cannot enforce the right against the new owner and the lease will terminate at the period of 30 years. Thus, if you do agree to do this, don't pay 60 years worth of renting upfront.

Well that's fokin shut me up!!

So what your really saying is, rent your land, house, car, girlfriend etc etc???