Maintenance Agreements As Part Of A Thailand Real Estate Leasehold

MANAGEMENT AND MAINTENANCE AGREEMENTS AS PART OF A LEASEHOLD PURCHASE IN THAILAND

Real estate in Thailand is generally sold to foreigners under a lease agreement. This could be a land lease agreement or less recommended a land and house lease.

In the case of a residential housing or leasehold apartment project the sale structure in Thailand often includes additional contracts such as:

* rules and regulations of the project

* maintenance agreements

* management contracts

* rental pool agreement

Foreign property buyers in Thailand in their holiday euphoria often do not bother too much about the content of these additional agreements as they see it as subsidiary to their more important lease agreement governing the actual possession of the property. Generally this is true, however in Thailand maintenance and management agreements are part of the lease arrangement and a breach of the maintenance agreement by the lessee is a breach of the lease agreement.

Know that lease in Thailand is a rental contract and not a real property right or fixed asset attached to the property. Confusion by foreigners in Thailand often occur because leasehold is in many jurisdictions around the world a fixed real property right asset attached to the property governed by a separate section of the law (separate from normal hire of property laws). In Thailand lease is basically a rental contract governed by the section hire of property. Hire of property laws can be found between 'hire of services' and 'gifts' in the Thailand Civil and Commercial Code. The fact that lease under Thai law is a contract is one of the reasons why a real estate lease in Thailand is not by nature an inheritable right.

One of the main reasons maintenance and management agreements should be read very carefully is the fact that these are part of the leasehold and non compliance of these agreements is a breach of the lease contract and for the lessor landlord a legally valid reason to terminate the lease (rental) agreement. If the contract says (and this is a common clause) that the developer has the discretion to increase the management fees at any time he deems appropriate this means that the residents in the project have to pay increases despite the increase seems unreasonable. Leasehold resident have because of their legally weak position little leverage against a developer increasing these costs if the contract structure allows him to do so.

As there is no tenant protection under Thai law the legal position of the residents in a leasehold housing or leasehold apartment structure in Thailand is governed by private contracts. Some contract structures give to the developer more or less dictatorial rights, while some others projects are run under a more democratic structure benefiting the residents in the project.

The rule with every property project in Thailand is to double check the agreements as written Thai law does not offer any tenant or consumer protection for leasehold property purchasers in Thailand.

by: Nadia Henderson

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