Our Lease Part 2

Property ownership and Leasehold

Appointment 3 was made, solicitor was under no illusions that we would not be leaving without a 30 year lease. We also spoke to the big boss in the area about if there were any shortcuts in the process? A couple of calls later, he told us to go to ‘desk 5′ and speak to Ms. Xyz (sorry I forget the name),’ slip her 1000 AED and all would be sorted out. Hmmm hmm …OK… Let’s see. We followed the instructions and all seemed to be going to plan when….

… We were all (me too) called to see the senior Officer in connection with the lease request. The same comments were passed about cutting down on leases, credit to PJ she was fighting the cause, the solicitor was useless TBH. We were then asked to wait outside while she consulted… (Lord knows who)

I started to get that feeling… You know the one, where you just know what’s about to happen….After 10 minutes, solicitor and PJ were called, almost immediately they came back and said, it could be made to happen if a small err… ‘Payment’ was made to y’know…help things along.

How much? Says I

5000 THB came the reply.

That’s where I made my biiiiiig mistake.

No…I did not argue. I did not refuse. I said yes ok… But… I said it too quickly!

Back they went with the good news. Oops back they came, in 60 seconds, it was not 5000, now it was… 30,000!

Damn! But… I had to have it, so I had to agree.

30k for 30 years… Still not too bad but there it was… My first experience of back-handing a deal through.

Money was paid, and lease was then duly acknowledged and added to the Chanote. We also got the chief officer to agree to assist us in the future, should we need it. More on that later.

So, one bri… Payment made, one lease secured.

Onward, ever onward…

Our Lease Part 1

Property ownership and Leasehold

So…after we had concluded the land purchase, I needed to get a lease in place, which would give me control (well, as much control as Thai law allows) over what we were going to do with the land.

I hear some saying ‘oooh – how romantic’’ and I in turn can point to rose-tinted specs on men who thought love would last for ever only to discover later that it doesn’t.

So…a lease was needed, and not just any lease. Specifically, the 30-year lease. This of course involved drafting up the lease itself, getting it translated and submitting it into records at the land office.

To be fair, my Wife (bless her), was on-board with the lease concept. Of course I was. We (I) drafted what I wanted, and we got it translated. Out next port of call was the land office near to Chachenseao. We employed the services of a solicitor to do the deed, thus having someone of legal standing on hand in case there were any last-minute questions, and also allowing me to stay ‘ in the shadows’ and not draw attention to myself too much.

Thus it was that the lease was submitted to the front desk.

Immediately …there was an issue.

The land office wanted to know where she had got the money to purchase all this land. Of course we had rehearsed that question but they needed evidence, some we had some we did not. End result was… No lease just a follow-up appointment.

Some scrabbling round back home came up with enough funding evidence to show it had been possible to buy the land.

So back we went for trip 2 complete with solicitor (again) and enough money to pay for whatever it took. Again, I kept out of the way.  Some discussions took place, lengthy discussions, and after, they came to tell me the (bad) news…. Such leases were not available! The military jun…. The prime minister had decreed that such leases gave ‘’too much power to Farangs’’. Of course I pushed them to renegotiate. In the end, it was the solicitor only, and finally, he came out with papers to sign with witnesses, and “all was ok”

We had been on this mission nearly all day, I was tired so it was not until we were driving back to BKK that I looked at that ‘lease’.

Man, I blew up immediately. The lease was not 30 years. It was a 3 year local lease, no real worth, did not even need the solicitor, the land office, etc. and certainly not what I wanted. I told him clearly he would not be getting paid for this…excuse and it was a long drive back to Bangkok in silence. I was fuming.

Later, PJ discussed what had happened. There WAS pressure in the land office to deter long leases for foreigners, but it was not impossible. He had thought something better than nothing so had not been forceful AND he thought he was helping the Thai (PJ) not sign away too much to the farang! Hmmmmmm, you can guess how she took to all that.

The Lease

Property ownership and Leasehold

To maintain control of land that is not yours, you need to get a leasehold arrangement. This is not some informal document (well, it can be but it’s worthless in the eyes of a Thai court if things go wrong) but a formal recognition of the leaseholder actually noted officially on the land documents. The lease is of 2 types, relevant to property.

You can form a lease of maximum 3 years very easily, but who would want to? 3 years – just enough to build ‘your’ house and then when it comes to the lease renewal after 36 months, you are at the mercy of the land owner. He might renew it, at the same rate for another 3 years, or he might put the lease up 10 fold. Or he might refuse to renew. All your hard work sat on someone else’s land. A very difficult and avoidable situation.

No… the lease you want is the one that lasts 30 years. This needs to be approved at the land office and assuming your lease is approved, you details are added onto to land ownership document, in our case – the Chanote.

The lease itself has to be ‘believable’ in order to be approved – what do I mean by that? Commercially reasonable. All the elements in place. This is to stop foreign buyers using a Thai ‘proxy’ to ‘buy’ the land with on the face of it no benefit to the nominal Thai owner. So a 30-year lease application where to owner gets 1000THB / year and there is no clear details for who the lease is being taken up by is likely to be rejected. In our case, my wife will get 1,800,000 THB rental over the life of the lease. My details were clear and supported by documents proving who I am. The wording of the lease, e.g. what to do if the house is to be sold later on, etc. has to be fair and reasonable. Even with what we thought was everything in place, the land office did not approve it until the second day, but approve it they did.

In no way related to the previous paragraph…

A word about ‘tea money’, back-handers, something to help the process, speed up the process…call it what you will. I am not saying anything like that happened to us but… this is one situation where it is ‘possible’ that such a suggestion might be made ‘if you want this lease to get approved’’. Is it right? Not really. Does it happen? Yup… at least…it can. Be aware of this in your budgeting!!

Why is land ownership restricted to Thai nationals?

Property ownership and Leasehold

One of the things that needs to be considered when building a house in Thailand is the subject of ownership. A foreigner can own a car, a condominium or apartment… a house even. What he cannot own is the land underneath it. That has to be owned by a Thai national or a company.

This might be a very important situation for some considering a house build project in Thailand. There are ways to mitigate for this and I will expand on this below.

The situation may seem ‘unfair’ but it is necessary, and not just in Thailand. With differing economies, lifestyles, salaries and wealth between nations, if the restriction was not in place a situation could arise where another country or even a number of individuals, could come in and literally ‘buy’ Thailand. Such a situation could be disastrous for the country, with land prices rocketed out of reach of the Thai people, vast areas of the country under foreign control, animosity and conflict leading to unrest.

By limiting ownership to nationals only, all of the downside is removed, apart from, of course, the foreign purchaser not actually owning the land.

In our case the solution was simple – my wife bought the land, and I put the house on it. It was lucky she had family money to make the purchase, or else I might have been forced to help her out with that purchase, if you know what I mean…

There are ways to ‘own’ the land though. One way is to form a ‘limited company’ to hold the land. 51% of the company must owned by Thai nationals, but silent Thai partners who pass back their voting rights get round the laws of Thailand. Note: ‘’get round’’.  This is a fix to circumvent the law. Sooner or later this loophole will be closed so probably best to not rely on this way long term.

Another way is to invest. Invest a minimum 20 million Baht to be accurate, as of 2020. Do that and the investor can purchase 1 rai of land and own it.

Land Measurements

Property ownership and Leasehold

Thailand uses its own set of measurements of area and here is a table of those areas, with the equivalent metric measurements for comparison:

1 Talang Wah  1 square Wah4m2
1 Ngan  100 Talang Wah 400m2
1 Rai  4 Ngan1600m2
1 acre is approximately 2.5 Rai

In the picture above, the red outlined plot near the road is approximately 1 Rai, and the larger outlined plot below is over 2.5 Rai. The 1 Rai plot is where the Thai House will be built.

Types of land

Property ownership and Leasehold

What do you mean…types of land? Land is land, right? Wrong!In the same way land in the West is classified for differing uses, in Thailand is not essentially classified for use but it is controlled by different types of land ownership

Here are some of the land ownership types

Sor Kor Nung

This is the lowest form of land ownership classification and should be avoided if problems down the line are to be prevented. The SK1 is a simple notice of possession and comes with few rights. It mainly allows the SK1 holder to be on the land – to use and ‘occupy’ it. The document classification is quite loose and informal. For instance, simply passing the SK1 to another person ‘transfers’ the entitlement. No rights can be registered, no lease can be applied and no mortgage held against them. Generally this type of land is for farming only. The Sor Kor 1 cannot be held by a foreigner. It is worth noting that no new SK1 titles have been issued since the early 70’s and while upgrade of the lands status is possible, it can only take place with approval from the court.

Nor Sor Song

The NS2 takes the form of a letter of consent to occupy and use the land but for a temporary, and defined period. The letter is issued by the land department. The letter holder needs to start the land occupation within 6 months, and complete & vacate the land within 3 years of the receipt of the letter of consent. No transfer or sale of this land is possible except by inheritance.

Nor Sor Saam

This type of deed recognises who has the legal possession and rights over the land. However, the land has not been measured accurately and surveyed, like land under the Chanote deed, and has no unique marker posts to define it. This can lead to boundary disputes. Usually, land sold under this type of lease is subject to a 30-day notice period where anyone believing the boundary to be inaccurate or who contests the ownership itself, can come forward

Nor Sor Saam (3) Gor

This type of title confirms that the land has been upgraded and surveyed accurately using aerial survey, and setting out the boundaries of the land has taken place. It can be sub-divided

Nor Sor Saam (3) Khor

The NS3K has no restrictions on its use, and it can be sub-divided. It is also surveyed but no tied-in markers are placed. The NS3K is issued by the local land office.

Nor Sor Si (4) Jor

This is the big one, the strongest of the land title deeds, often referred to simply as the Chanote.

The NS4J is the one you want over your land. It is a certificate of true ownership on that land, and is the only one carrying true title deed status. Land covered by the NS4J have been accurately located by survey and the co-ordinates logged in a central database. The land is given a unique reference number, and the boundary corners are marked out by government officials from the land registry department with fixed marker posts, often referred to as Chanote markers.

Locating the Chanote marker

Land under the Chanote can be sub-divided. It is on this Chanote that the leasehold details are recorded by the land office.