The use of the word �perpetual� has caused some enquiries in recent weeks.

A lease to a foreigner in relation to land is restricted to a maximum term of 30 years. Section 540 of the Civil and Commercial Code, which relates to the hire of immovable property states that �the duration of a hire of immovable property cannot exceed thirty years. If it is made for a longer period, it is to be reduced to thirty years�. The important proviso that foreigners often make enquiries about is �the aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal�.

This is where the concept of �30 plus 30 plus 30� years in marketing materials relating to leasehold structures and included in leasehold contracts comes from. Commercial property is a different concept, but this article focuses on residential property.

What happens at the end of the lease is determined by the lessee and the lessor. If the lessor is a company, and the lessee has some kind of input into the decision making of that company (but not direct control) then the lessee will have some determination over the transfer of the lease right and the renewal of the term which is a contractual right and therefore personal between the parties to the lease.

Any expression or use of the word �perpetual� would not appear to fit into this category bearing in mind the very clear law above. Something that is �equivalent to perpetual� or procures a right which in nature but not by operation of law results in perpetual rights may be acceptable. Directly, perpetual leases of immovable property � land � cannot exist under the laws of the Kingdom of Thailand.

There is no law in Thailand which allows the inscription of the word perpetual on a title document, nor is there any way in which it can be inscribed upon, legally, by a land officer to indicate perpetuity.

The sense of perpetuity, or a system in which the re-hire of the immoveable property or �renewal� of the lease, can be achieved with minimal risk through structures available in the system. Where matters are represented that clearly conflict with the wording of the laws of Thailand, and no further explanation or clarification given, caution should be exercised.


Desmond Hughes is a partner in Belmont Limcharoen.
desmond@belmontlimcharoen.comwww.belmontlimcharoen.com