Phuket court rules 'secured' or 'collective' leases are void

[roath]

It is really quite simple. Foreigners can not buy, own, inherit or even take a mortgage on Thai Land. Any lawyer that offers any "structure" or otherwise is complicit to breaking the law. Nominee in any format or arrangement is also illegal.

There is also this strange phenomenon in Thailand where foreign buyers take their legal advice from a lawyer recommended by the vendor?

Of course there is always the 40 million baht option.

You are incorrect about being able to inherit land. You can but there are restrictions as you need to dispose of it within 6 months. Likewise you can take a mortgage but the Land Office may refuse to register it.

[roath]

Makes somehow sense that this secured 3x30 year leases are on shaky ground, but to say the registered first 30 years are illegal as well is just a patriotic BS interpretation. If it was registered by the Land Office it is legal, if the governement registered something illegal then they should be held responsible and provide a solution.

If the purpose behind the regisration was misdeclared or withheld then the registration wouldnt be effective and the Land Office wouldnt be at fault. This would be the same in any country. I am not standing up for Land Office though (at which I have experienced corruption first hand) but registration per se would not be the end of the matter if other issues are at play.

[Whyamiandwhatamidoinghere]

Did you really think you owned anything with all your posturing? Why in the hell would anyone buy property in Thailand when it is more than obvious that legally you can't. In the end you either going to get cheated by your young Thai wife and her boyfriend, who incidentally made no financial contribution to obtaining said property; or shafted by the courts who want to undo your getting around the loopholes.

[car720]

All very sad but what makes me laugh more than anything are all the people who come on here and tell us just how wonderful the Thais are.

A new regime and the first thing they do is check what they can grab from the falang.

We are despised by these people and smiled at all the while. The sign of a truly deadly enemy.

Wow!!

Rumpole of the Bailey.

My favourite show.

What a great play on words that writer has.

[MyFriend You]

The whole issue stinks of serious corruption. If indeed the land was sold to the buyer from a corporation, which should know Thai law and a profit was made then there should be compensation from the seller to the buyer that was duped. In most democracies there are numerous consumer protection laws that would make the seller responsible. But alas this is Thailand and probably little consumer protection. Hope the homeowners the best.

Buyer Beware comes to mind - It didn't happen to me, but I am sure it has happened to dozens, if not Hundreds of foreign property buyers - leasors - What I am not clear on "Is this only Phuket??" why wouldn't there a Federal or National Law concerning this?? Back in then eighties/nineties when the big push was "To Incorporate" yourself in Pattaya - to protect your ownership, it was illegal then and as we see, it is still illegal to form a company that produces nothing or employs no one. The Thai Bashers will have a field day with this - 'Corruption, Rip Off the Falung' etc etc etc. It is the order of the Court - you took a chance and lost - Ce La Vie, end of story - as a "Guest" in this country, you should always be on the look out for scams, gray areas etc etc - I would hire two Lawyers if I will ever buy property of any sort - one to draw up the Paperwork, and another to check on the first one to see its done right. Buyer Beware indeed, in the end, its your Money, what you do with it is your responsibility. I sympathize with all the ones caught up in this mess.

[MyFriend You]

The whole issue stinks of serious corruption. If indeed the land was sold to the buyer from a corporation, which should know Thai law and a profit was made then there should be compensation from the seller to the buyer that was duped. In most democracies there are numerous consumer protection laws that would make the seller responsible. But alas this is Thailand and probably little consumer protection. Hope the homeowners the best.

Buyer Beware comes to mind - It didn't happen to me, but I am sure it has happened to dozens, if not Hundreds of foreign property buyers - leasors - What I am not clear on "Is this only Phuket??" why wouldn't there a Federal or National Law concerning this?? Back in then eighties/nineties when the big push was "To Incorporate" yourself in Pattaya - to protect your ownership, it was illegal then and as we see, it is still illegal to form a company that produces nothing or employs no one. The Thai Bashers will have a field day with this - 'Corruption, Rip Off the Falung' etc etc etc. It is the order of the Court - you took a chance and lost - Ce La Vie, end of story - as a "Guest" in this country, you should always be on the look out for scams, gray areas etc etc - I would hire two Lawyers if I will ever buy property of any sort - one to draw up the Paperwork, and another to check on the first one to see its done right. Buyer Beware indeed, in the end, its your Money, what you do with it is your responsibility. I sympathize with all the ones caught up in this mess.

OH, in case anyone out there is wondering, I have been renting for the past 6 years, why would I buy something I can never own, and there was always a chance it could be taken away from me by some shyster deal?? As well as something I could never pass off to any of my family (non-Thai) even this old uneducated man is not that stupid, doesn't take a rocket scientist to figure out we are 2d class in this country, so if you can't beat them at their game - Don't Play.

[xylophone]

What more could a buyer do?

Well, they could have asked here on this forum. Because many of us 'old-timers' have warned time and time again that a 30+ year lease is unenforceable in Thai Law. You don't need to be a qualified lawyer to understand that simple statement.

The reason why people have been conned by the lies of the lawyers and property developers is because they (the buyers) wanted to believe that 30+ year ownership or leasing was possible.

Are the lawyers/developers accountable for their deceptions? TiT. What's your guess?

Or because the buyers believed what they were told by lawyers, developers and real estate agents. This especially if it is in the written word.

The 30+30+30 lease has been advocated on a few agents websites, as has the Thai Company ownership method, so when you have both the real estate agents and the lawyers in cohorts, what chance does the buyer have?

[bangkoklawyer24]

DON'T WORRY - YOUR PROTECTED LEASE IS STILL SAVE AND VALID

"It may be true that Phuket courts reclassified a validly secured and duly registered lease into a void transfer of legal ownership. Reportedly this has been done without any reference to the anti-nominee rules of the foreigner laws (Land Code, Foreign Business Act), but just by interpreting the Civil and Commercial Code, which does not differentiate between Thai and foreign persons. The fictitious ownership transfer was not declared void, because the investor was a foreigner, but due to the reason this "ownership transfer by mistake" had not been registered as (hidden) sale. It is currently unclear whether the facts in such cases really justify such reclassification, which would be antipodal to civil law legislation and jurisdiction - and whether the courts arguments have been unbiased described reported. Sometimes the wish seems to be father to the thought. It should be clearly noted that it is the general concept of Thailand's lease legislation that any overstepping of legal limitations is carefully reduced by law to a size and scope which is still legal and valid. If a lease agreement is concluded for 31, 90 or 500 years, it would not be deemed to be void from the beginning. Under Section 540, second sentence CCC its enforceability is just limited to the first thirty years. And it will certainly not be reclassified as a (hidden) sale."

Source: http://linkd.in/1JKQ32W

... AND IT IS NO CASE OF SECTION 155 CCC

It is a serious misinterpretation of Section 155 CCC to base a verdict on that piece of legislation. Section 155 CCC refers to circumstances, where the parties create only the wrong impression, a certain contract has been concluded, but in reality they do not agree on such contract. They do not want the contract to have any legal effect, just a apparent legal effect. [A typical example is the sale of estate by an over indebted debtor to his wife, so that the creditor gets discouraged to start legal actions against the apparent penniless debtor. For such scenario the law rules that the sale is void.] However, in our case the parties of the lease agreement did not at all want to create just the appearance of the lease. They wanted and still want a valid lease agreement. Therefore Section 155 CCC is simply not applicable to such case. Source: http://linkd.in/1JKQ32W

Apart from this hype, each and any agreement can be void if the terms of the contract are not seriously agreed. If the lease contains clauses which could obviously not be enforced under Thai laws (above all a duration of 90 years) then its validity might be denied due to lack of graveness. This is just a general legal concept which should not give reason to trumpet about a general crackdown on secured lease structures. To repair such objected investment structure, the lease agreements has to be adjusted, leaving the protection mechanism untouched.

[LivinginKata]

Or because the buyers believed what they were told by lawyers, developers and real estate agents. This especially if it is in the written word.

The 30+30+30 lease has been advocated on a few agents websites, as has the Thai Company ownership method, so when you have both the real estate agents and the lawyers in cohorts, what chance does the buyer have?

No doubt potential buyers wanted to believe the legal advice they were given by agents and legal people. But given a large expenditure on the line, those potential buyers only needed a short Google search to obtain enough information to place some doubt in their minds and ask their agents to do a bit more explaining.

[harryfrompattaya]

What great con the people that sold you the junk now get it back improved

The people that fall this is amazing and remember after them their are more people waiting to be conned

Next the lawyers that wrote the company contracts and the ones who sold it to the the company will take over the Company

This con is beautiful

And get this my Thai Lawyer is connected so smart and so honest and is a friend indeed

[xylophone]

Or because the buyers believed what they were told by lawyers, developers and real estate agents. This especially if it is in the written word.

The 30+30+30 lease has been advocated on a few agents websites, as has the Thai Company ownership method, so when you have both the real estate agents and the lawyers in cohorts, what chance does the buyer have?

No doubt potential buyers wanted to believe the legal advice they were given by agents and legal people. But given a large expenditure on the line, those potential buyers only needed a short Google search to obtain enough information to place some doubt in their minds and ask their agents to do a bit more explaining.

I can understand where you are coming from LIK, however if I think back to when I bought houses in two other countries in which I lived, I took the word of the real estate agent, his material which specifically stated the services they provided and the way to go about buying a house, and then I consulted a lawyer.

Once everything was confirmed as okay/legal, I went ahead.

I suspect other farangs followed the same process here, thinking that the "nice farang" with his written word, also published electronically, and backed up by the legal profession would be enough. Obviously not.

For the record and to back up your post, when I bought my first house here some 7+ years ago, I did extensive research and believe it or not every lawyer that I approached gave me the okay to purchase a house through the company method if I wanted to. I decided upon a 30 year lease as that would see me out, however sold about four years later and made a profit, I may add.

Even the website of a real estate farang who posts on here suggests that the 30+30+30 lease is doable, as is the Thai company ownership method.........so who do you trust?

[NamKangMan]

Or because the buyers believed what they were told by lawyers, developers and real estate agents. This especially if it is in the written word.

The 30+30+30 lease has been advocated on a few agents websites, as has the Thai Company ownership method, so when you have both the real estate agents and the lawyers in cohorts, what chance does the buyer have?

No doubt potential buyers wanted to believe the legal advice they were given by agents and legal people. But given a large expenditure on the line, those potential buyers only needed a short Google search to obtain enough information to place some doubt in their minds and ask their agents to do a bit more explaining.

"No doubt potential buyers wanted to believe the legal advice they were given by agents" - and that's just it. They were sold "the dream" of property ownership, but not actually sold the property.

For a farang, that's all property ownership will ever be here - a dream.

[KarenBravo]

I read it as the worse case is any 90 year lease that starts with the 30 year lease, the entire contract could be voided and even the initial 30 year lease could be void. This sounds possibly like the beginnings of a "nationalization" of Thai properties. See Venezuala and recent company and company asset siezures.

Nope....the law has always said this. Look at some of the property threads that are five, or six years old.

Posters clearly stated that not only was a 30+30+30 year lease not valid, but, it makes the original lease invalid.

At that time, it had never been tested in court. Now it has and suddenly all the Chicken Littles are coming out of the wood-work.

To all those people who say rent, not buy; those of us that bought land and/or houses years ago, have lived rent free for years and have seen capital gains of 500% and up, are laughing up our sleeves at your comments.

[Reigntax]

It depends on the contract because often a contract will have a clause that if one clause is found to be void then it does not invalidate the whole contract and other clauses. If this was in then maybe the buyers have a chance of restitution at appeal.

In common law jurisductions a voided contract in civil law puts the parties in the position they were ab initio i.e. before they entered into the contract. It is not clear from this article whether this applies in this case or whether the contract is treated as if it never existed at all i.e. there is and cannot be restution under thr contract on grounds of illegality althougj even then an innocent party is normally entitled to equitable relief such as misrepresentation. If lawyers were involved then technically they would be liable for negligence. Thats yhe theory (bearing in mind that Thai law is meant to be based on common law) but who knows how it would work out though in reality.

Or the illegal term or clause of the contract is deemed invalid, assumed removed and the contract is interpreted as if the invalid clause or term never existed.

To cancel a contract in full where both parties have agreed, the exchange has taken place and the contract registered by the relevant land title authority is absurd but somewhat typical of decisions made in Thai courts.

[KarenBravo]

The law makes perfect sense. If the contract is illegal, then the WHOLE contract must be made invalid.

As I've said before, this was all common knowledge for most expats.

[asean]

It is really quite simple. Foreigners can not buy, own, inherit or even take a mortgage on Thai Land. Any lawyer that offers any "structure" or otherwise is complicit to breaking the law. Nominee in any format or arrangement is also illegal.

There is also this strange phenomenon in Thailand where foreign buyers take their legal advice from a lawyer recommended by the vendor?

Of course there is always the 40 million baht option.

You are incorrect about being able to inherit land. You can but there are restrictions as you need to dispose of it within 6 months. Likewise you can take a mortgage but the Land Office may refuse to register it.

That's right you must dispose of any land you inherit. No a foreigner can not mortgage thai land. A Thai bank can.

[LivinginKata]

You are incorrect about being able to inherit land. You can but there are restrictions as you need to dispose of it within 6 months. Likewise you can take a mortgage but the Land Office may refuse to register it.

That's right you must dispose of any land you inherit. No a foreigner can not mortgage thai land. A Thai bank can.

My understanding is that a foreigner who inherits land, must sell to a valid buyer within one year, although some flexibility might be granted to accommodate buyer delays. But this is going off topic.

[maidee]

how to scam a foreigner in thailand

step 1: he lands at the airport

the rest is a free for all

[arunsakda]

Really a perfect situation for lessors. Depending on Supreme Court decision many with invalid leases would be in a vulnerable position having invested in building of a house. The landowner can now come back to exthort a new 30 year lease at unfair advantage.

Sign now, Farang, or get that that illegal structure off my land. (Bulldozer rumbling in background).

Thailand. Don't invest more than one can afford to lose.

[KarenBravo]

Now many with invalid leases will be in a vulnerable position having invested in the building of a house. The landowner can now come back to extort a new 30 year lease at unfair advantage. Sign now, Farang, or we demolish that illegal structure next week.

Thailand. Don't invest more than one can afford to lose.

Most of the people affected will have bought from developers.

Those that did it all themselves are usually a little bit more informed.

[arunsakda]

Same situation is it not? Pay or move your Farang McMansion off our land and get out.

There was a situation where Foreigners in Mexico got screwed out of land and lost everything. Certain homeowners ordered their own homes demolished so the landowner would not get the structures they had invested their life's savings in.

[stevenl]

Same situation is it not? Pay or move your Farang McMansion off our land and get out.

There was a situation where Foreigners in Mexico got screwed out of land and lost everything. Certain homeowners ordered their own homes demolished so the landowner would not get the structures they had invested their life's savings in.

No, not the same. I don't know of anybody who built or bought private for 30+30 or longer. Don't forget, 30 year leases are undisputed.

[Whyamiandwhatamidoinghere]

All very sad but what makes me laugh more than anything are all the people who come on here and tell us just how wonderful the Thais are.

A new regime and the first thing they do is check what they can grab from the falang.

We are despised by these people and smiled at all the while. The sign of a truly deadly enemy.

Wow!!

Rumpole of the Bailey.

My favourite show.

What a great play on words that writer has.

It's not the play on words that has the "WOW" factor. It's the unfortunate play on farangs who have mostly found something compelling and attractive about this odd paradise that they are willing to risk all to stay here. It is a one-sided love affair unless you are reinforcing it with dollars, pounds, euros or your favorite exchange currency. This is "The Land Of Thai" and there are laws to keep what you buy or lease always returning back into their possession. Why do you think cremation is used? Even you have perceived property here die and see how fast they cremate your ass and dump you into the sea or repatriate your dead ass back to your home country. Stop coming here and giving your hard earned money and life savings to people who have no freakin idea what hard work and financial planning it took for you to be able to be here. And please stop jump off stuff and hanging yourself. Wake up baby this is Oz!

[useronthenet]

Well I've said it before ... You'd have to be a complete and utter moron to buy property in Thailand. Who in their right mind would think about handing over 51% of their assets to what is little more than a nation of thieves?

It's a shame the UK, US and EU countries don't apply the same rules to Thais but of course we understand the importance of foreign investment and we also know that they can't dig it up and take it with them.

The other issue has for many years been pricing; in most cases the property market especially in areas such as Phuket, are so over the top it beggars belief anyone would think they are buying a home / villa or apartment of good investment value.

I honestly cannot understand how anyone could be stupid enough to buy property in Thailand ... there again the Nigerian 419 Scam continues to catch the very stupid and greedy and I can only conclude that the expats who brought property in Thailand fall into both categories.

The moral of this story ... don't buy property in Thailand unless you want to lose your money !

Foreigners are welcome to leave their money at the port of entry, it's a quicker solution !

[useronthenet]

Foreigners have no rights in Thailand, it's very clear. If you were looking for something else, then you are in the wrong country !

[hawker9000]

I'm not sure I understand why ownership of individual residential property (only), puts such a big dent in the protectionist fortress preventing foreigners from buying up the entire country... Let them buy & own with appropriate limits & restrictions on use.

Naah. They'd only do that long enough to lure in the gringo suckers, and then take it all away again.

[roath]

It is really quite simple. Foreigners can not buy, own, inherit or even take a mortgage on Thai Land. Any lawyer that offers any "structure" or otherwise is complicit to breaking the law. Nominee in any format or arrangement is also illegal.

There is also this strange phenomenon in Thailand where foreign buyers take their legal advice from a lawyer recommended by the vendor?

Of course there is always the 40 million baht option.

You are incorrect about being able to inherit land. You can but there are restrictions as you need to dispose of it within 6 months. Likewise you can take a mortgage but the Land Office may refuse to register it.

That's right you must dispose of any land you inherit. No a foreigner can not mortgage thai land. A Thai bank can.

Anyone can register a mortgage. Mortgages are not restricted to banks. A mortgage is simply a secured loan over real property (i.e. property which is registered).

[roath]

Quote

"“It is a simple and straightforward legal structure that provides security for the investor. A current ‘Secured’ Lease can be restructured into this better and genuinely secure alternative, before it is too late.

“As always,” he added, “you should engage competent legal and tax counsel in order to implement this mortgage-based security structure successfully.”"

end quote

Any chance the lawyers said that before?

Any chance the lawyers that did the original deal are liable?

Any chance if you did a new "genuinely secure alternative" and a future court rules it bogus the lawyer would be liable? Please find me a lawyer that puts the value of the deal in a bond payable to the customer if it all goes tits up.

I am so sick of this nonsense living here.

Vietnam is looking good.

Vietnam has it's issues not unlike Thailand and corruption is almost as bad!

Corruption is actually much worse in Vietnam which is a one party Communist state so doesnt even have thr pretense of rule of law

[roath]

It depends on the contract because often a contract will have a clause that if one clause is found to be void then it does not invalidate the whole contract and other clauses. If this was in then maybe the buyers have a chance of restitution at appeal.

In common law jurisductions a voided contract in civil law puts the parties in the position they were ab initio i.e. before they entered into the contract. It is not clear from this article whether this applies in this case or whether the contract is treated as if it never existed at all i.e. there is and cannot be restution under thr contract on grounds of illegality althougj even then an innocent party is normally entitled to equitable relief such as misrepresentation. If lawyers were involved then technically they would be liable for negligence. Thats yhe theory (bearing in mind that Thai law is meant to be based on common law) but who knows how it would work out though in reality.

Or the illegal term or clause of the contract is deemed invalid, assumed removed and the contract is interpreted as if the invalid clause or term never existed.

To cancel a contract in full where both parties have agreed, the exchange has taken place and the contract registered by the relevant land title authority is absurd but somewhat typical of decisions made in Thai courts.

The contract requires a clause to such effect otherwise it is an "entire contract" so could only be saved by a court inserting such a clause or by granting equitable relief. All modern contracts drafted by professionals have a severability clause for this reason. However finding someone "professional" here is quite difficult and thats the real crux of thr matter

[alant]

Well I've said it before ... You'd have to be a complete and utter moron to buy property in Thailand. Who in their right mind would think about handing over 51% of their assets to what is little more than a nation of thieves?

It's a shame the UK, US and EU countries don't apply the same rules to Thais but of course we understand the importance of foreign investment and we also know that they can't dig it up and take it with them.

The other issue has for many years been pricing; in most cases the property market especially in areas such as Phuket, are so over the top it beggars belief anyone would think they are buying a home / villa or apartment of good investment value.

I honestly cannot understand how anyone could be stupid enough to buy property in Thailand ... there again the Nigerian 419 Scam continues to catch the very stupid and greedy and I can only conclude that the expats who brought property in Thailand fall into both categories.

Well it seems I qualify for moron status, a complete and utter one to boot.

As a moron I don't know how you manage to live without handing one of your key assets, your cash to live somewhere.

And maybe making my wife happy and knowing she will have the property when I go is enough for me. Of course I could rent, then if we had a bit of a spat I could just up and leave, handing over cash with owning 0% to what you call a nation of thieves.

Nope, I am happy, my family is happy I don't count everything in monetary terms.

I guess that makes me stupid and greedy, a complete and utter moron in fact.