Why
is land leasing preferred by some people in place
of forming a company to acquire land?
Land leases in Thailand require only a one-time
registration with the Land Department. After the
registration, a foreigner's lease rights are legally
recognized by Thailand land lease law and minimal
legal maintenance is needed after the land lease
execution.
Using
a long-term lease, rather than a limited company
to purchase land means that a foreigners interest
is protected in his or her own right. There is no
need for the various administrative requirements
of registering and maintaining a limited company.
Further, the foreigners interest is 100% in the
lease, rather than 49% or less, as with a company.
What
are some of the disadvantages of land leases?
Many foreigners safeguard their interests using
a well-crafted land lease and option agreement to
extend the lease with the landowner. Unfortunately,
such an agreement is not a guarantee against the
breach of contract by a difficult landowner who
may refuse to sign any registration for a lease
renewal. Also, if the land is sold to a third party
or if the landlord dies and the land passes on to
his or her heirs, the agreement may be difficult
to enforce. There are other disadvantages such as
a lower resale value than with freehold ownership
and the possibility of lease violation lawsuits
by the landowner.
There
are pros and cons in every approach used to buy
land or purchase property in Thailand. Whether you
choose company formation or seek a lease arrangement
to buy land or purchase property, it is important
to seek qualified legal advice from reliable lawyers
who have experience with Thailand land law as it
relates to non-Thais.
