I leased a town house about four years ago for 30 years, the limit according to Thai law. However, my understanding of the agreement is that it included an option to roll the lease over for two more periods of 30 years each. Is this legitimate? Is there an additional cost incurred?
Captain Bligh, San Diego, CA.
Many people sign this kind of lease and, so far, I know of no problems. However, enforcement of such a lease on the heirs of the landlord is potentially a problematic issue. If the landlord is corporate, then this question does not arise. But if the landlord is an individual, it might. There has as yet been no test case to see how a well-structured lease with renewal options would stand up in court. Two points to note: 1. The payments for the two renewals should be deemed a deposit against future payment of rent, and the agreement should include penalties and interest repayments for any default in the granting of the renewal. 2. The title deeds should usually be held by the tenant as security against performance under both the contract and the renewal addendum. It is almost certain that a civil claim for renewal can be enforced over the estate of the landlord (if he were to die) even if the enforcement of the renewal of the lease itself against the heirs might be suspect. It is certainly prudent for a long-lease tenant to keep track of the landlord’s whereabouts and general state of health.
William Pinsent, Director, Phuket Land.