Thai Real Estate Lease Leasehold and Rent laws

Lease Law

Legal subjects concerning rent, tenancy and leasehold or lease of real estate in Thailand (land, land and house, condo apartment). The legal rights of foreigners under the Civil and Commercial Code contracts rent of property, possession of a real estate property under a lease or rental agreement under Thai law.

Laws governing leasehold, lease and rentals of real estate and condos

Rent lease of immovable property laws

The legal agreement whereby rent is paid in order to use another man's real estate property (residential or commercial property) in Thailand is governed by the lease agreement between the parties and the Civil and Commercial Code. The laws governing hire of property in Thailand is applied in the same manner if the hirer is a Thai or foreign national. The primary source of laws governing hire of property is the Civil and Commercial Code. The general principles of lease (as a contract) is governed by Title VI Juristic Acts and Book II Obligations and more specifically the Chapter Hire of Property, but the Supreme Court of Thailand gives rules for the exact interpretation of words and sections of the Civil and Commercial Code and therefore lease in Thailand cannot be fully understood without also taking into account specific Supreme Court judgement. You can read the Civil Code but won't be able to fully understand it.

Lease contract and lease term

The term of the lease agreement cannot exceed 30 years

The term of a real estate lease in Thailand may be fixed or periodic. The maximum lease term in Thailand is 30 years (section 540Translation Civil and Commercial Code section 540: 'The duration of a hire of immovable property cannot exceed thirty years. If it is made for a longer period, such period shall be reduced to thirty years. The aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal'.). Any lease of immovable property for a longer period than 30 years in Thailand may only be made by renewal of the lease contract upon its expiration. Based on supreme court judgments it is possible to say that a valid and enforceable renewal can only be made within a period of 3 years prior to the expiration of the first lease term (not 30 years prior to expiration). If for example the lessor and lessee have executed 2 or more consecutive 30-year lease agreements it shall by law be deemed as 1 lease and reduced to 30 years.

Options in a lease contract

Transfer of ownership does not break the lease but could break certain contract rights in the lease agreement

Contract rights vs real lease rights

The content of a registered lease agreement in Thailand can be divided into rights given under hire of property laws and rights based on general contract law and the freedom of contract between the parties. The practical importance of the two relates to the future enforceability of contract promises and obligations in a contract, especially in case ownership of the property is transferred during the term of the lease. Elements in the lease agreement that are under the Civil and Commercial Code considered 'real lease rights' are enforceable against third parties and remain valid, also when the property woud be transferred. A promise based on general contact laws, say to do something in future (e.g. to renew a lease in 30 years time), may turn out unenforceable under Thai contract law.

Real lease rights and contractual obligations in lease agreements in Thailand

THAILAND LEASE AGREEMENT

A lease agreement in Thailand can contain clauses based on general freedom of contract between the parties and clauses based on specific hire of property laws. The importance of the distinction between the two lies in the future enforceability of contract obligations and true hire of property right (real lease rights). Real lease options and obligations are enforceable against all other persons and by law binding upon successors of the leased property (real lease rights follow the property along with the ownership), and once given the owner (lessor) can't take the option in the lease back and he cannot change his mind, in contrast to contract promises in the lease agreement and possible difficulties in future enforceability. Under Thai law and Supreme Court rulings the agreed term in the lease is considered a real right of the lessee, but an option to renew the lease is considered a contract option or contract obligation (not a real lease right) that needs to be enforced in the future.

Lease and inheritance

THAI PROPERTY LAWS DO NOT GIVE THE HEIRS OF THE LESSEE THE AUTOMATIC RIGHT TO TAKEOVER A LEASE BY SUCCESSION

A lease agreement (hire, rental) is under Thai law as a hire of property a personal right of the lessee. In the event of death of the lessee during the lease term the lease contract is terminated according to Thai contract laws and Supreme Court judgments. As opposed to for example a right of superficies (the right to use the land owned by another for the purpose of owning buildings and plantations), 'lease' in Thailand is actually a contract right and not a fixed asset or by law inheritable right. The right of possession of the property will not automatically transfer to the heirs of the lessee upon his death.

Rental laws and leasing a commercial shop or office

Commercial rentals

LAWS THAT DEAL WITH RENTAL OF RESIDENTIAL AND COMMERCIAL PROPERTIES IN THAILAND

Commercial rentals and residential rentals are governed by the Chapter Hire of Property in the Thailand Civil and Commercial Code. Rental of commercial properties exceeding 3 years must be registered with the Land Department and cannot exceed a period of 30 years. Only in specific commercial leases (for commerce and industry by foreigners) the Thai government issued a specific act for foreigners, but apply only if the foreigner meets the requirements (substantial investments) and complies with the restrictions (land size and location).