Property Leasehold in Thailand

Property Leasehold in Thailand. In Thailand, freehold land ownership by foreigners is generally prohibited under the Land Code B.E. 2497 (1954). As a result, leasehold interests have become a widely adopted alternative structure for foreign individuals and companies wishing to access real estate. Leasehold is not a workaround for ownership but rather a recognized legal right of use, governed by contract and statute.

This article analyzes the leasehold system in Thailand with emphasis on its legal foundation, registration requirements, practical limitations, and risk considerations—especially in the context of foreign involvement.

II. Legal Basis of Leasehold Rights

A. Civil and Commercial Code (CCC)

Lease agreements in Thailand are governed by Sections 537 to 571 of the Civil and Commercial Code, which define a lease (เช่า, chao) as a contractual agreement to grant possession and use of immovable property for a defined period and compensation.

A lease does not convey a real right in rem unless registered, and even then, its enforceability is subject to several statutory limitations.

B. Nature of the Lease Right

• A lease is a personal right (obligatory right) unless registered

• It grants exclusive possession but not ownership or a property interest

• The lessee may use and enjoy the property under the agreed terms but may not transfer or sublet without express consent

III. Maximum Lease Terms and Renewals

Key Legal Points:

• The initial lease term may not exceed 30 years (for most properties)

• Any “extension clause” in the lease agreement is not automatically enforceable; it requires registration of a new lease

• The second term is treated as a new contract, subject to Land Office discretion and the parties’ continued capacity

• There is no guarantee that renewal will be permitted or accepted for registration

IV. Lease Registration Requirements

For lease agreements exceeding 3 years, registration at the Land Office is mandatory under Section 538 CCC. Failure to register renders the lease unenforceable beyond three years, even if contractually stipulated otherwise.

Required Documents:

• Land Title Deed (Chanote)

• Lease Agreement (bilingual, if involving a foreign lessee)

• Thai ID or passport of both parties

• Corporate documents (if the lessee or lessor is a juristic person)

• Power of Attorney (if representation is involved)

• Spousal consent (if the land is marital property)

Registration Fee Structure:

The lease will be annotated on the back of the Chanote title deed, conferring a degree of third-party protection.

V. Foreign Participation in Leasehold

A. Leasehold as a Legal Mechanism for Foreigners

Because foreigners may not own land in Thailand (with limited exceptions under BOI or specific investment laws), leasing is the most common means to:

• Occupy land for residential purposes (e.g., leasing land to build a house)

• Use land for commercial activities (e.g., resorts, offices, factories)

• Secure long-term usage without attempting to circumvent ownership restrictions

B. Popular Structures

1. Foreign individual leases land from Thai owner (e.g., spouse or developer)

2. Foreign-owned Thai company leases property for operations

3. Lease combined with other real rights such as superficies (building ownership) or usufruct

Caution: Attempts to disguise leasehold as de facto ownership through nominee arrangements are legally risky and subject to investigation.

VI. Transfer, Sublease, and Inheritance

A. Transfer of Lease Rights

Lease rights may be transferred only with written consent of the lessor, unless otherwise agreed in the lease. Transfer must also be:

• Registered with the Land Office (if original lease is registered)

• Supported by a legally enforceable cause (e.g., sale of leasehold interest)

B. Subletting

Subleases are allowed if explicitly permitted by the lease agreement. Otherwise, the lessee must obtain the lessor’s consent.

C. Succession and Inheritance

Under Thai law, lease rights are not automatically inheritable. Unless otherwise stated and accepted during registration, the lease:

• Terminates upon the death of the lessee (Section 569 CCC)

• May be drafted as inheritable, but enforceability depends on Land Office approval and terms of the original lease

VII. Leasehold in Condominium Projects

Foreigners can lease condominium units, but certain caveats apply:

• Lease of a condo unit does not confer ownership

• Lease rights do not count toward the 49% foreign quota of the Condominium Act

• Developers sometimes offer 30 + 30 + 30 year leases, but only the first 30 years is registrable

“Triple 30” leases have no legal guarantee beyond the first 30-year period unless the second and third leases are executed and accepted at the time of registration.

VIII. Common Legal Issues and Risks

Legal disputes are generally handled in the Civil Court, and enforcement of lease rights may require injunctive or contractual relief if disrupted.

IX. Leasehold vs. Other Long-Term Use Rights

X. Conclusion

Leasehold arrangements in Thailand offer a legally recognized mechanism for land and property use, particularly for foreign individuals and entities. While leasehold provides practical access to real estate, it is contractual and time-limited, and its enforceability is heavily dependent on registration and proper legal drafting.

When structured carefully—with attention to term limits, inheritance, and registration—leasehold can be a viable solution. However, overpromised structures such as “90-year leases” or informal renewals without legal basis can leave the lessee exposed to significant legal risk.