Leasing Land - How's it done?

[rigpig.sparky]

johnleepbs,

Can you please e-mail an example of the 'Superficies" at kp0111@msn.com

Thanks a lot

Gee what a nightmare !!!
I own a Thai trading company, origianally set up as a real estate business (bad advise from a farang I used to think was a friend...another story). Now this company is a 2Mill B trading company, I didn't have to produce the money when I started it and I believe that has changed. However it has been set up with all the dodgyness of a Thai. So I opened this coffee shop (which the company does or will own as a business venture), my girl friend of 2 years is a Thai director, I believe she has no real control other than the signing of paperwork.... don't worry as soon as this solicitor, who is milking the auditing etc as stated in another post, has completed what is going on now I will be "running her off" and going somewhere more reputable and having everything checked out. The Real Estate thing doesn't really do anything and I have Thai employees I have never met and do pay taxes etc. As well as Thai shareholders who I believe have signed over all their proxy rights to me. However the coffee shop is an attempt to legitimize the company. It will have my girlfriend working in it and have Thai employees. My thoughts for the future was that the company could own a company that owns the land on which I could build my "dream" house, making it easy to sell at a later stage should the situation arise. The coffee shop has a computerized POS and accounting system in place and will produce an income or loss that will have a paper trail attached to it. Now like most Farang I want to own or control the land I build my house on. I have been divorced twice and basically walked away with nothing and this is my last crack at the cherry so to speak. My aim is to own a condo in Patong, my dream house and car and a motorbike (amongst a few other "toys"). I intend to marry this girl but if it hits the proverbial fan I want to know it is mine. If I croak it the solicitor can dish out the goods (I just lost a good friend on that One Two Gone accident in Phuket). Basically the kids in Aus get the insurance money and she will keep the property in Thailand. But if she decides to walk I want to know I am secure. I believe that they (Thai girls) can only get their hands on 50% of what was bought after the marriage. If she makes the shop work it's hers after paying back my initial outlay (to the company) and what she earns is hers. She is on a fairly good salary in the mean time and this gives her enough to send back to the family and spend pretty good on clothes etc. Not that I don't pay for most of that anyway. Oh another slightly off subject issue, a friend of mine who married a thai girl and has had to go back to work in the States (cost a heap) had her mother get "heart problems" Caught between a rock and a hard place if its legit what do you do let her die ??? May have been tempting... however more money. So for a miniscule amount I have taken out medical insurance for my girlfriends family...end of story, could be a wise investment, I think it was about 25000B or something (per Annum) for her Mother Father and sister and fairly good coverage from BUPA.
You hear so many stories over here I just want to CMA.
Anyway I will seek legal advise but does what I am proposing seem sound ? Does anyone see any pitfalls ?
Oh and with the leasing thing can't it be renewed with a vote after the 30 years has expired (written into the contract as an option) ?
Thanks in advance for any advice
Tony

[johnleepbs]

johnleepbs,

Can you please e-mail an example of the 'Superficies" at kp0111@msn.com

Thanks a lot

Ohhh..I just saw this. A PM would have got my attention better. Done. This works nicely and covers you forever, not just 30 years of you happen to be of a younger persuasion.

Regards,

John

[jazzman]

You may also like to look into the possibility of a usufruct. Similar to a superficies in a way, as you can get it for life. You can't bequeath it though. No special legal paperwork is required. Your name is entered on the chanote as haveing sole rights of use. The owner of the land has to sign papers stating that he/she is in total agreement with the arrangement. It's a standard proceedure at the land office.

[Traveler]

My wife owns a plot of land which we plan to develope as our home, my wife has agreed that the best way to deal with title and security for me is for me to take out a lease on the land.

Has anyone actually done this and if so what was the procedure.

We'll probably use a BKK law firm to advise and do the checking.

Most real estate agents and websites claim that you can lease land for a period of 30 years and prolong it two times, which will result in 3 times 30 years = 90 years.

Actually this is not correct. The law says, that you can lease land for ONE period of 30 years and prolong it ONCE for another 30 years. Any lease must be registered at the "grom tidin" (land office).

Nevertheless, any agreement or contract made on prolongations of the lease is worthless, as it's not binding. The contractors must also register the second term of the lease at the land office and if he/she refuses to do that and does not agree to a prolongation there is nothing you can do about it.

Some members recommended a lease combined with a credit. This may be appropriate if you are absolutely sure that you won't sell the house in the future. Depending on the details of the credit (time, interest rate, payments etc.) you may not be able to create pressure in case things don't work out as expected. You may also create taxable income.

Usually a company is used to own some land. Sure, it's not a perfect solution but the other ways I know off aren't perfect as well. One of the advantages of a company is the easy transfer in case you want or need to sell. Taxes are also lower, because not the high valued land and house change hands, but only the low valued shares.

Do your yearly tax clearance via a lawyer and you will be fine. I doubt that the government will go after those companies - especially if they only refer to small plots of land for housing purposes - as it would cause a lot of damage. And even if they would one day, still enough time to change to the lease/credit or any other solution.

[pklongball]

My wife owns a plot of land which we plan to develope as our home, my wife has agreed that the best way to deal with title and security for me is for me to take out a lease on the land.

Has anyone actually done this and if so what was the procedure.

We'll probably use a BKK law firm to advise and do the checking.

Don't lease the land or set up a company or any other such dodgy scheme.

Get a "superficies". This allows you to have control of the land and and all buildings on it, and lasts for the rest of your natural life (not just 30 years).

The land still belongs to your wife, but you have absolute control. I don't want to spell doom, but this also means if you separate you can decide who lives there, her or you. On your death the superficies expires and the land ( which, of course, belongs to her) reverts to her control.

On a brighter note, a back to back will giving her the house and its contents, and in her case leaving the land to whoever she chooses is a wise addition. The superfices would still be in force in your case. If she leaves it to you you have a short period in which to sell it (1 or 2 years, I cannot remember, because you are farang, or ownership reverts to the state (as I recall), so thats not a wise move; ensure she leaves it to a Thai National)

It's 100% legal, involves a competant lawyers fee and a very small fee at the local land registry. It is recorded on the land registry papers, and in case anybody doubts the legality of this, the land office officials are instructed to inform the lady concerned of the implications of what she is signing...and they do.

It was originally intended for things like rubber plantations etc, but is fine for houses too. I recently registered such an agreement at the land office in Udonthani, it takes about 2 hours there after passing through 3 sections of rubber stamping and counter signing... I have an example of the agreement I can upload (deleting the personal sections of course) in English. You need a Thai legalise version for the land office of course (my English version is competently translated, but I would not want to risk a translation back to Thai), hence the lawyer. It will need 2 witnesses, not family members.

Why everyone does not do this, instead of being sucked by fee seeking lawyer/accountants into the dodgy company route (which the Thais seem likely to outlaw) I am not sure.

Of course if you are 75+ a lease would be equally secure......

Hey,,,John refers to this "superficies" and posting a copy here,,,,,,,I don't see it anywhere and wonder if I missed a posting? Does anyone have a copy of this "superficies" in English?

Can someone post it or PM a copy to me please? I am going to use the lease for 30 years but if something is better I would like to know about it.

Thanks

PK

[jazzman]

This compay will give you the 100% correct information on all aspects of leasing land, buying it through a company, superficies, and usufruct.

Their basic advice is absolutely free and they won't charge you a specially 'hiked' farang fee when they act for you. PM me for details. In fact their fees are exceptionally reasonable. Native English and German speaking staff:

/edit 27 Jan 08 dozer/

Several members of this board, including myself, have used the company to their entire satisfaction.

[pklongball]

This compay will give you the 100% correct information on all aspects of leasing land, buying it through a company, superficies, and usufruct.

Their basic advice is free and they won't charge you a specially 'hiked' farang fee when they act for you. In fact their fees are exceptionally reasonable. Native English and German speaking staff:

/edit 27 Jan 08 dozer/

Several members of this board, including myself, have used the company to their entire satisfaction.

Thanks Jazzman ,,,,I will be in touch with them,,,,,,,,,,,,

[Attila]

Most real estate agents and websites claim that you can lease land for a period of 30 years and prolong it two times, which will result in 3 times 30 years = 90 years.

Actually this is not correct. The law says, that you can lease land for ONE period of 30 years and prolong it ONCE for another 30 years. Any lease must be registered at the "grom tidin" (land office).

Nevertheless, any agreement or contract made on prolongations of the lease is worthless, as it's not binding. The contractors must also register the second term of the lease at the land office and if he/she refuses to do that and does not agree to a prolongation there is nothing you can do about it.

That is not entirely correct. You could sue the owner, and if your leasing contract is worded well you'd most probably win. However if the land is sold in the meantime and the owner spent the money this victory will not help you much. And even if it is not sold, if the owner refuses to sign the new lease at the land office, you have a long nightmare coming. Another point is that in 30 years a lot can happen, and if the land owner dies, his / her heirs have to respect the registered 30 years, but nothing further.

Usually a company is used to own some land. Sure, it's not a perfect solution but the other ways I know off aren't perfect as well. One of the advantages of a company is the easy transfer in case you want or need to sell. Taxes are also lower, because not the high valued land and house change hands, but only the low valued shares.

Agreed, if your plan is not to keep the land but to sell it again sooner or later then a company will make it more easy to sell and to transfer it to a new farang-owner.

Do your yearly tax clearance via a lawyer and you will be fine. I doubt that the government will go after those companies - especially if they only refer to small plots of land for housing purposes - as it would cause a lot of damage. And even if they would one day, still enough time to change to the lease/credit or any other solution.

Agreed again. It is very important to have the accounting and tax declarations done correctly, but if you do so you will be fine, indeed, and it is not even expensive. But beware, there are sharks out there charging you a fortune despite being unable (and probably also unwilling) to ensure correct handling of tax and accounting.

[idcpeter]

You should get a superficies and not a leasing! I have already done it for a plot here in Chiang Mai. The superficies give you more rights then a leasing! But you have to use a good lawyer to got it done and registered with the land registration office.

I can recommend a good lawyer here in Chiang Mai. Vimami is not the right law company. The owner is swiss, but he don't have a law degree from Thailand or anywhere. He use also Thai lawyer! A foreigner can't get an Thai lawyer registration. Its against the Thai law! Don't believe the lawyer!

[Attila]

You should get a superficies and not a leasing! I have already done it for a plot here in Chiang Mai. The superficies give you more rights then a leasing!

"superficies" is one way to go, especially if you do not plan to sell the property again. However why settle with "superficies" and not go for a full "usufruct"?

Leasing has its place, mainly because the contract does not end when you decide to leave this world. A capable lawyer might even be able to combine leasing and usufruct, take the best of both worlds!

But you have to use a good lawyer to got it done and registered with the land registration office.

It is always always good to have a good lawyer, and you should have one however technically it is not required to have one.

I can recommend a good lawyer here in Chiang Mai. Vimami is not the right law company.

Which company would you recommend? Isn't there a thread about recommended lawyers here somewhere - post it there please!

Now why would Vimami be "not the right law company"? Not that I would disagree, but can you elaborate? (I heard already quite a few stories that strongly recommended against using Vimami, so I'm curious to hear what they have done again ... please PM me if you would not want to post it publicly.)

The owner is swiss, but he don't have a law degree from Thailand or anywhere.

Is he saying he has one?

He use also Thai lawyer! A foreigner can't get an Thai lawyer registration. Its against the Thai law! Don't believe the lawyer!

Correct.

[Attila]

I just realized that in January 2006 I recommended a lawyer and accounting company here. I thought I would have edited that post long ago, but apparently I did not. Well, now it is done If anybody remembers, then better forget that name quickly, but if anyone has followed my recommendation, then I apologize. Run away or accept to pay too much. Stay there at your own peril. You have been warned.

In the meantime I learned a lot. I have seen that the company way of owning land is alive and working, even working quite well, and in many situations the most trouble free way you can get. This is true especially if you think about selling the house / land again sooner or later.

Otherwise there are the tools usufruct, leasing and mortgage. All have their advantages and disadvantages. If you want more security, combine 2 out of the three.

But then again, if it is likely that you sell soon, the company way makes that quite easy.

In any case, be careful with the selection of your lawyers / accountants. Bigger companies with many offices all over Thailand are not necessarily better, I have seen there often quite uninterested staff, and received a lot of wrong advice.

Last but not least the difference in costs for setting up and running a company to own your land can be enormous. A bigger company I used to work with offered me reasonably low rates, but then this was added, and than that, and here some more and there some extra. Mostly without good explanation

Smaller companies I have seen offering an all inclusive annual rate. No surprises.

[Nawty]

We might be buying some land this weekend, if so, we are putting it in the wifey's name as we have done before. But this time we are getting a loan and lease or usufruct drawn up. I am still not savvy with the usufruct route so will find out more before going down that or the lease route.

Reason we are doing this one a little different is a test run for future ideas, but also we may keep this block, or if offered some ridiculous price for it in near future, then maybe sell it.

But lawyer offered some interesting advice on company setup, so will be patient a little bit.

[apetley]

Hi, I recently heard of 'sit tee gep gin'.
It is similar to a usufruct as I understand it.
I checked out at the local Amphur and they confirmed it gives a lifetime use of land for someone in return for looking after the land.
Maybe a useful and certainly extremely cheap way for a farang to get control of the land.

[jazzman]

It is a usufruct. But it's only for life if it include chivit.

Jazzman has one.

[thomas.fontaine]

Jazzman is a wise man and I always follow his advise. I will have my usufruct done for 16,000 bahts by a lawyer based in Isaan. I don't even have to go there, all by e.mail and regular mail of course for the signature.