THE LAND LEASE AGREEMENT- WHAT TO CHECK

The short version of a big topic

I went deep on leasehold in an earlier series, so here I will keep it to the headline checks. When you lease the land under your villa, make sure the agreement clearly gives you:

Freedom to use it: you can sell or assign the lease, and rent it out short or long term, without asking the landowner each time.

Inheritance: the lease should contain provisions allowing your heirs or estate to continue the lease rights if you die.

A real registered lease: a 30 year term Land Lease Agreement, registered at the Land Office, not just a private piece of paper, with the rent and any increases over the term clearly set out.

Registration before construction: where possible, ask whether the lease or sublease can be registered before construction starts. That gives the buyer stronger protection if something later goes wrong with the developer. Building permits are a separate issue under the construction agreement, which I will cover in the next post.

Landowner restraint: the landowner cannot do anything that interferes with your registered lease rights, including selling or mortgaging the land without preserving those rights.

Access: guaranteed legal access to a public road, plus the right to use the roads and common areas inside the project, with a promise they will not be repurposed.

The building at the end: during the lease you can own the villa, often with the building permit in your name. But the contract decides what happens at 30 years, and it often says the building simply becomes the landowner’s, with no payment to you and no right to remove it. Read that line slowly and negotiate it before you sign.

Taxes: who pays the annual land and building tax. In many lease arrangements that responsibility falls on the lessee.

A cure period: if either side breaks the contract, a set window, often 15 to 30 days, to put it right before the other side can cancel.

Language: the contract is in Thai and English, and the Thai version controls. Have your lawyer confirm the two actually match.

There is also one structure that catches people out. Very often the developer does not own the land either. The developer leases it from the landowner, and then subleases it to you, which makes you the sublessee. It is perfectly legal and very common, but it places one more agreement above your own, and that agreement rules everything.

If the head lease fails, your sublease may fail with it.

Your sublease can never give you more than the developer’s main lease gives them, and it cannot outlive that main lease. So in a sublease deal you have to read the main lease too, not only your own. Three things matter most:

• The main lease must allow subletting.

• The main lease must run as long as the full term you are promised.

• The developer should take on clear obligations to keep that main lease alive and protect you.

A 30 year sublease is worth very little if it sits on a head lease with fewer years left, or one whose clock started long before you signed.

That is why the land lease, in whatever form, is the foundation stone for everyone in the deal. For the full picture on leasehold rights, see my earlier series. This is just the quick checklist to keep beside you.

I am not a lawyer, so this is not legal advice. But these points are exactly where a cheap lease and a strong lease look different.

𝑻𝒉𝒆 𝒍𝒂𝒏𝒅 𝒊𝒔 𝒍𝒆𝒂𝒔𝒆𝒅. 𝑻𝒉𝒆 𝒉𝒐𝒎𝒆 𝒊𝒔 𝒚𝒐𝒖𝒓𝒔. 𝑻𝒉𝒆 𝒍𝒆𝒂𝒔𝒆 𝒅𝒆𝒄𝒊𝒅𝒆𝒔 𝒘𝒉𝒂𝒕 𝒕𝒉𝒐𝒔𝒆 𝒓𝒊𝒈𝒉𝒕𝒔 𝒂𝒓𝒆 𝒓𝒆𝒂𝒍𝒍𝒚 𝒘𝒐𝒓𝒕𝒉.

If you’re curious about what types of villas currently offer the strongest investment potential on the island, you can browse Jane’s latest Koh Samui property listings here.