90 year lease is just a con

Soi 88 · Novice Joined: 03 Apr 2009 Posts: 4

Normally I only log on to Hua Hin After Dark as a source of excellent information but I felt compelled to sign up and contribute to try to warn potential buyers about my house buying experience and the problems my husband and I have since encountered.

We bought our house about 3 years ago intending to live 6 months in Hua Hin and 6 months back home, however our financial circumstances have changed for the worse so we put our house up for sale. It was on the market for about 10 months and our personal financial situation steadily worsened so in order to get it sold we drastically reduced the asking price, selling it for much less than we bought it for. This tactic seemed to have worked because soon after we dropped the price we found a buyer, or so we thought!

We bought our house using what we thought was a 90 year lease, 30 years x 30 years x 30 years. We have now found out after a lot of hassle, visits to the land office and consultatations with a competent lawyer from Bangkok that this 30 year so-called extension contracts carry no legal weight whatsoever. That means we only have 27 years left from our original 30 years! What’s worse is, we need to get permission from our current landlady who is the real owner of the land. She has to cancel our existing lease and create a new one for our buyer to sign and reregister a new lease at the land office. Considering our landlady has been charged with paying for gunmen to gun down one of her tenants we hesitated to ask her to do this for us, but there is no point pursuing this any further now as our buyer has understandably been scared off!

You may be wondering why we didn’t consult a lawyer before buying our house? Well the answer to that is we did! Before we ‘bought’ our house we used a very prominent lawyer from Hua Hin who actually helped write up the lease papers! We even used a Real Estate agent who came highly recommened on this forum. How were we to know that our aimiacble agent was unqualified, had no previous real estate experience and was an ex used car salesman! Our developer turned out to be a thug and bully on the run from selling drugs in the UK and the lawyer we used supported the whole con very convincingly.

We will try to put this all down to bad experience and move on and we realise now we may never be able to sell our house as the details have now sunk in that we don’t actually own it and can only live there for another 27 years when our lease expires and please don’t insult our intelligence by stating we own the house, but not the land, because that’s not much good considering we can hardly move the bricks and mortar to another plot of land we rent can we! These real estate boys don’t half come out with absolute nonsense and we feel very foolish for falling for it all.

We would be interested to know if anyone else has had a similar experience trying to sell their house by selling on one of these fake 90 year leases? Our lawyer tells us selling property on the pretence of 90 year leases is illegal and we could win a case if we were to sue. The trouble is, court cases can take a long time in Thailand and who should we sue, the friendly agent who lied to us telling us it’s perfectly legal to have lease extensions, the developer’s wife or the bent lawyer?

To avoild further heartache we advise anyone considering buying a house by using a lease agreement to remember this:

1. A lease cannot exceed 30 years and is simply extinguished after 30 years without notice. Legal information like: 'the lease agreement can include two further 30-year renewals, which gives a 90 year lease, making it effectively ownership' is NOT correct and is generally unscrupulously suggested by people in the property trade, sales, building or legal offices.
2. A clause in the lease, 'it is hereby agreed that there shall be no further payments due for any renewals as the price shall cover the entire lease term however long it may be' is in a court legally meaningless.
3. The landowner of your house who has leased to you can sell the land whenever he or she likes.
4. In order to sell the house the landowner needs to cancel your lease and create a new one for the buyer. This means you need permission from your landlord to sell your house.

We also suggest you consult an impartial lawyer from Bangkok (not Hua Hin). Remember the foreign so-called lawyers from Hua Hin are not qualified to practice law in Thailand and are making a good living from the property market so it’s not in their interests to tell you the truth. Our Thai Bangkok lawyer has predicted there will be a huge amount of litigation in Hua Hin over the coming years when people realise they have been misrepresented and can’t sell their houses that they thought belonged to them.

Sorry if this has upset some people who have already bought their houses using a lease but you are bound to find out sooner rather than later when others try to sell their houses!

BaaBaa. · Posted: Fri Apr 03, 2009 8:42 pm Post subject:

The second two 30 year leases are basically a Gentlemen's agreement.

I bought, knowing full well that this was the situation.

I could now purchase the land in my sons name.

miked · Posted: Fri Apr 03, 2009 9:39 pm Post subject:

rent don't buy. if the day ever comes that i as a British national can buy land freehold in my name then i will.
i'm not interested in a lease, company formation or buying in my Thai wife's name.
we are shortly buying two properties in England. one in my name and the other in the name of my Thai wife. it's not a level playing field is it.???
miked

moja · Posted: Fri Apr 03, 2009 9:42 pm Post subject:

we too had a lease with this builder and his wife but thankfully we formed a Company 18 months ago and bought the lease from them, it was written into our lease that we could do this and legal or not they actually stood by their word.

For such a rich man, as he was so fond of telling everyone, one the first questiona was "is will they pay the amount mention in the lease"? Which of course we did.

They did try to up the anti but our solicitor was having none of that.

The alternative is to find a Thai willing to buy your house and then they can take over the lease/land etc without a problem.

From what I have read elsewhere this lady is easy to find

I wish you both well

Lev · Posted: Fri Apr 03, 2009 9:58 pm Post subject: Re: 90 year lease is just a con

BaaBaa. · Posted: Fri Apr 03, 2009 10:14 pm Post subject:

I didn't read the OP fully, I didn't buy from said developer.

I personally couldn't be happier with my purchase. Shocked

splitlid · Guru Joined: 09 Jun 2006 Posts: 542

yes you are absolutely right soi 88.
the land dept are now not accepting any lease agreement with such clause.
i think your best bet is to form a company and get the owner to sign the land over to 'your' company, or as said, get a thai to 'buy' the land and lease again from them.

the current situation you are in may make it a little harder but a real lawyer will be able to help even thought it may cost you a few dollar

good luck Very Happy

and sorry to hear about your precidament
_________________
"Never compromise your principals because every compromise to a client represents the quality of your next client"

miked · Posted: Fri Apr 03, 2009 11:27 pm Post subject:

the non operating company owning a lease is a loophole in the law. at any time the government can terminate this loophole. a real estate agent or developer will not point this out, why would they.???
ask yourself this question. in your own country would you buy a property on a 30 year lease.??
miked

johnnyk · Ace Joined: 02 Sep 2005 Posts: 1412

Sorry to hear this soi 88 but things can often be negotiated in LoS. Some developers allow renewals of the leases every 5 years or so. You may want to look into this. Or form a company and try to buy the land or try to negotiate a usufruct (lots of info on this on other boards).

I had the option of a 30-yr lease and after thinking about it chose not to go down that road. I saw too many unfavourables:
1) 30-yrs recognized by the Land Office, no more, and their opinion carries weight to say the least. Certainly more weight than any developer's sweet nothings in my ear.
2) Its essentially a private agreement and not binding on heirs or successors (new owners) at the end of it.
3) Its a diminishing asset.

I took the company road which isn't perfect but if structured properly you keep control of the company and despite what many say, it is legal. Just be sure the company shows activity.

Chok dee
_________________
Where there's smoke there's mirrors.

johnnyk · Ace Joined: 02 Sep 2005 Posts: 1412

faq2mfh · Member Joined: 10 Nov 2008 Posts: 78 Location: Singapore

Miked hit the nail on the head, twice… But whole thing sickens me to no end… The victim ends up the being blamed for the problem. You should have done this… You should have checked that…

Farang · Guru Joined: 09 Jan 2003 Posts: 847

As far as I am concerned any party even mentioning 30 + 30 + 30 year lease is utterly unreliable.
I would never deal with any party portraying the 90-year lease as an option. I'd just walk away.

No explication can whitewash this swindle. It is just a swindle, plain and simple.

And yes, johnnyk is absolutely right. The company option works well if done right.
_________________
Never argue with an idiot. They will only pull you down to their level, then beat you with experience. - Brad Slipiec

STEVE G · Posted: Sat Apr 04, 2009 10:51 am Post subject:

This sad episode illustrates what I always thought was the big problem with this lease option; how many of these companies are going to survive 30 years for you to renew it?
I do feel sorry for the people in this unfortunate predicament, but the perils of buying property in Thailand using legal loopholes has been highlighted endlessly on this site by impartial posters.
As has been pointed out above, if you can actually find the owner of the land the best option would be to sell to a Thai who doesn't need a lease.

miked · Posted: Sat Apr 04, 2009 11:40 am Post subject:

faq2mfh wrote
Miked hit the nail on the head, twice… But whole thing sickens me to no end… The victim ends up the being blamed for the problem. You should have done this… You should have checked that

i,m pleased that i.m not alone on this.
the government are looking at none trading companies. what,s next.?? companies that are trading?. a turnover of 5 million baht before that company can purchase property?. we have no idea what the government will do but the odds will be against foreign nationals.
you cannot own land here in your own name. various options that you have to acquire land are open to debate. imo you are playing with fire and you could well loose your investment.
one last point regarding a trading company. in order to buy a house this way you have to file a tax return and pay tax.? so your paying tax on money that you haven't earned and you also have to pay for an accountant to file your tax return.? doesn't seem very fair does it.?
miked

sargeant · Legend Joined: 19 Sep 2006 Posts: 2468 Location: Hua Hin

For my 2,000 post i am extremely saddened to say "toldyou" many if not most of my very early posts on this forum were about exactely what has happened to the OP and the potential problems of the company route i made it crystal clear i had no vested interest whatsoever and was purely looking out for the unwary buyers
as I say saddened certainly surprised NOT for a nanosecond
_________________
A Greatfull Guest of Thailand