A large number of foreigners work and live in Thailand. Many of them use lands on the lease. They are always concerned about the possible change in their position as a tenant, the end of the lease and the contract. Many building developers rent houses to individuals only on the continuation of the established period.
A good number of tenants want to extend the contract or renew it for a new period before it ends. But, they fail badly in their effort because of the nescience of the existing rules and regulations. As per decisions of the civil and appellate courts of Phuket, secured tenancy” is excluded from the land use legislation. It allows some developers to provide a 90-year lease contract to foreign customers. So, do you want to know what should be done to extend the current land lease in Thailand? If yes, then read out the below-mentioned tips attentively:
1. Consider the Lease Option
In Thailand, a long-term lease is signed for 30 years with a guarantee of signing two new contracts for the next 30 years. The lease agreement allows you to protect the interests of the lessee who actually becomes the owner of the land. In case of renewal of the contract after 90 years for another owner (children, relatives), the lease term (90 years) is renewed. All taxes on the registration of a new lease is assigned to the tenant. The will of the lessor is also transferred to the heir of the landowner.
2. Sign A New Contract for Lease Extension
In order to extend the lease rights by signing a new contract, you need a set 3 conditions-
- The agreement should not contain a condition on the cancellation of the pre-emptive right to lease land for a new term,
- The tenant must conscientiously perform the duties assigned to him/her during the contract period,
- The tenant must inform the landlord about his/her desire to prolong the lease relations within the time limit established by the agreement. If there is no such time frame, he/she should inform the landlord approximately 1-2 months in advance.
If the owner is a private individual, it is necessary to agree on the conditions for concluding a new contract with him/her. If the site belongs to the municipality or the state, it is essential to pass the bidding procedure.
The landlord must issue notifications in writing before the end of the previous contract and ask the tenant to reply the notification as soon as possible. Always keep in mind that Prolongation does not mean maintaining the terms of the old agreement. Rent, time, sublet option can be changed in the new agreement. If the landlord is a municipality or a government agency, you need to register the contract to avoid legal problems.
3. Submit the Photocopy of All Documents
You need to submit all necessary documents to the relevant agency for the extension of the lease agreement. Some documents are:
- Receipt of the state fee,
- At least two copies of the contract,
- Cadastral passport of the leased territory,
- If the party is a legal entity, then copies of its constituent documents are needed,
- If the documents are submitted by proxy, the original documents of the power of attorney is needed and
- If the plot is owned by the spouses – the spouse’s notarial consent is required for leasing the plot.
4. Make A Supplementary Agreement
In order to avoid any misunderstanding with the landlord, you must make an additional agreement for the prolongation of the lease. Just write to the landlord with an offer to extend the lease by signing an additional agreement. You can discuss new terms and conditions in the agreement, encumbrance of property rights, etc, in detail and make a correction in previously made agreement if required.
It is recommended that you should make an agreement with the landlord in consultation with a professional lawyer or law agency and get the accord register as per the norms prescribed by the Thai Government or its agency. This will help you to avoid needless conflicts with the landlord and legalize your accord in an easy way.
5. Automatic Renewal of Your Land Lease
Once you complete the above-mentioned formalities, you don’t need to go anywhere or complete any other task. Just continue to use the site and make money on the same terms. Automatic renewal registration is not required and your contract is renewed automatically. If you are not happy with the agreement, you can terminate the relationship by simply notifying the landlord about it 3 months in advance.
The prolongation of the lease is not an unconditional right of the lessee. The landlord may refuse to renew the deal if he changes his mind about renting out the land. But if he still surrenders the plot to someone within a year after the end of the lease, the previous tenant can file a lawsuit to transfer the rights and obligations of the new tenant to himself. This also applies to municipal lands, which the authority disposes at auction. Prolongation helps to bring stability to the relationship between the owner of the land and the tenant.
By following the above-mentioned tips and tricks, you can easily extend the land lease up to maximum 90 years. Just work in consultation with experienced property lawyers to complete all formalities easily for a lease extension.
This post is written by RE/MAX CondoDee guest, David Lane. He was born and raised in Thailand. He is working as a Realtor for Thailand Property. David is praised most often by clients for his enthusiasm, patient approach and unwavering loyalty. Apart from this, David loves to do fly fishing, sporting clays and play golf.