How solid is a lease renewal option in a leasehold?

What is the problem with lease renewals in Thailand? I have a lease with option to renew, but it seems that it is not legally solid? Any opinion, law reference, so I can understand... Thanks
Asked 6 years ago

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A lease renewal option is not solid at all

But there is a difference if such options are given in a short term or long term lease or rental arrangement. I believe you mean a long term 30 year lease with renewal? In that case it is worthless.

Basic reason for this:

  • A- it is basically a personal contract obligation between 2 parties and not a protected or fixed lease right (following Thailand Supreme Court judgments), therefore not protected by lease/ tenancy laws but considered a mere contract promise between 2 parties and should ownership of the property transfer during the lease it would be lost because it does not create an obligation for someone who is not a party to the contract (e.g. a transferee owner), and;
  • B - as it is legally a mere personal contract promise to do something in the future the promisor may change his mind and you may have no legal recourse in any way in the Thai legal system to enforce your claim (other than you could try to enforce this option in a court but Thai law gives the promisor in the contract several legal reasons helping him not to be forced to give the renewal option to you or the renewal option on the terms he gave in the past (because circumstances change with time)), and;
  • C- following B above, legally a promise to do something in the future (that is what it is) becomes worthless because the role that the passage of time plays in ending your rights or parties obligations to be legally able to enforce such personal promises that are given a long time ago (a promise to renew a lease 30 years later!). That does not work in law because it is considered a mere personal contract promise and not a lease right.

A promise to renew your lease in 30 years time is worthless, even if it is a skilfully drafted lease, it does not work under Thai lease and tenancy laws!

Answered 6 years ago

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