PHUKET: It’s a goal for many people to become a landlord. They purchase property for the purpose of renting it out for passive income. The property owner interviews prospective tenants and ensures that they sign a lease agreement and put down a deposit. However, all of this does not prevent bad tenants from revealing themselves after they have moved into the property.
There are several possibilities. The tenant may stop paying the rent. The tenant may not maintain the property. Or the tenant may violate the terms of the lease, such as allowing multiple families to move in or allowing pets to live in the home. In such cases, what is a landlord to do?
The first thing the landlord needs to do is to review the lease agreement. The lease agreement generally contains the terms by which the tenant agreed to abide. A properly prepared lease should contain the grounds for termination of the lease and the notice requirements for eviction, if the tenant does not respond to the notice.
It is also important to review the length of the lease agreement. If the end of the lease term is near, it might be easier to just send a notice to the tenant that the lease is not going to be renewed and the tenant will be required to leave the premises at the end of the contract.
There are many foreign nationals who lease property on a 30-year lease. One of the important elements of a 30-year lease is that it must be filed with the local land office. Under Section 528 of the Thai Civil and Commercial Code, if the lease agreement is not in writing, signed and registered with a ‘competent official’, then it is not valid for more than three years or the life of the parties.
After the end of the lease period, the lease agreement is generally extended for an indefinite period. This allows any of the parties to provide notice of termination of the lease with a minimum of one rent term or maximum of two months notice. If the tenant refuses to leave the property, the landlord can file a lawsuit against him.
If the landlord is able to establish in court that the tenant violated the terms of the lease agreement and that the landlord abided by the legal requirements for eviction, the court will rule in favor of the landlord, unless there are extenuating circumstances. If the tenant refuses to abide by the order of the court, the landlord can request an enforcement of the judgment.
The landlord can then request that police remove the tenant from the premises. They can also terminate electrical and water services to the property. It is important to note that the landlord cannot enter the property, remove the tenant’s belongings and change the locks on the door, unless it is allowed within the lease agreement, or with a court order. During the entire legal process, the landlord can file a claim for the rental costs and opportunity cost as a result of the tenant refusing to leave the premises.
Leasing property is a popular way to obtain passive income or to pay for mortgaged property. However, as with any type of income-generating business, there are risks. For landlords, there is the possibility of renting to tenants who do not maintain the property, violate the rules of the lease agreement or stop paying the rent.
The legal process for evicting tenants is painstaking and can take many months. It is important to scrutinize potential tenants and check their rental history and current financial status prior to entering into a long-term lease agreement.
Additional reporting by Yutthachai Sangsirisap.
Robert R. Virasin is a licenced U.S. Attorney and managing director of Virasin & Partners. Mr. Yutthachai Sangsirisap is a licensed Thai Attorney at Virasin & Partners. They can be reached at [email protected] or at www.virasin.com.
— Robert Virasin