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As the title of this video suggests, we are issuing an ALERT in this matter as this could have tremendous implications for foreigners here in Thailand. Let's just jump in. I thought of making this video after we actually received an email from a viewer. The viewer wrote: "You were right Ben. Only leasehold and consider it gone after 30 years." Then he referred me over via link to the Phuket News, that is thephuketnews.com, the article is titled: Supreme Court decision kills ‘automatic’ 30-year lease renewals. Quoting further: "The Thai Supreme Court's recent decision over the 'automatic' renewal of 30-year lease of a property in Phuket is poised to significantly impact the real estate market in Thailand.

Okay, let's do some background. Unfortunately, a lot of the bucket shops and frauds and charlatans over the years that have for whatever reason, washed up on Thailand's shores and decided to proclaim themselves some sort of legal experts, these idiots have been running around Thailand for years talking about the so-called ‘automatic’ 30 + 30 + 30 leasing. I always talked about this on this channel and wrote about this for years then I always found the legal logic behind the notion of a 30 + 30 + 30 as spurious at best when you read the Civil and Commercial Code provisions pertaining to property and real estate in Thailand in their totality. When you understand that the underlying policy behind the Civil and Commercial Code is to only grant at a maximum, 30 years of usage - unfettered if you will - at a time over Thai Land by foreigners, one truly understands why the notion of an ongoing automatic 30 + 30 lease was kind of ridiculous, and we'll get into the difference between enforceability and voidability and just illegitimate on its face here in a minute. But long story short, it's worth pointing out that again all the fakes and frauds, mostly foreigners over the years that have come out here and pretended to be lawyers, are primarily the reason why this is such a problem now because they are idiots and they don't know what they are doing. They are unqualified and it leads them to put people into positions that sound great; they basically "yes" you to death, they tell you "yes" to everything you want to hear, but in reality you are not in that great a position.

So again, the Phuket News, thephuketnews.com, quoting directly: "The recent decision in Case No. 4655/2566 overturns decades of previous legal holdings by the Supreme Court and Lower Courts and would invalidate the common practice of pre-agreed long term lease renewals." Well again, I don't know that they directly ever ruled on this. This always kind of operated in the breach between a bunch of different rulings - at least that was my understanding - and for purposes of Thai Law I will admit I'm effectively a layman but for purposes of comparative legal analysis, I do have a background, I mean this stuff isn't behind here for nothing, so again, I was not surprised by this at all. In fact I always operated under this notion that 30 + 30 + 30s were not automatic; I always operated under that and told people that as time has gone on, and said look, you can say whatever you want of this thing, but at the end of the day, if you read the Civil and Commercial Code and you understand the background behind it, the policy reasoning behind it, 'automatic' so-called 30 + 30 + 30s didn't make a lot of sense when you look at the law in its totality. That said, quoting further: "effectively rendering them null and void. The decision has important implications for developers, investors and buyers who have organized their property holdings around leasehold renewals."

Well again though, I really question who set that up that way because again a plain language reading in English by the way not and presume it's translated the most in favour as it could be, again I would never and never have advised people to essentially depend on that, because again it was not completely spelled out that that was lawful, and it was only being done again sort of operating in the breach. That said, quoting further: "The Court's firm stance asserts that contractual promises for lease renewal, when made at the beginning of a lease, are 1) unenforceable," - so let's get into unenforceable in a minute. Quoting further: "Violate the Civil and Commercial Code", - that's what I'm talking about when I'm talking about the totality of the law and the policy behind it. Once you understand that, these 30 + 30s really make no sense in that context. Quoting further: "And are void as a matter of law." So the Court is saying, no this just isn't legitimate as a matter of law. And again, that feeds into my analysis of what it's always been which is when you look at this thing in its totality, it states the max you can have is 30 years. So to say that there's an ability to automatically renew by 30 years, kind of negates the underlying reason for the original 30 years to begin with. And you have got to understand that's not the purpose of the law. You don't use the law to erode the underlying policy position. You use the law to reinforce the underlying policy position. That said, quoting further: 

"Case Background and Legal Reasoning. Quoting directly: "The case arose in Phuket, where the Civil Court of Phuket initially ruled in favour of the lessee, upholding the lease renewal clause as an enforceable promise from the original lessor to the lessee. The decision was consistent with past rulings by the Thai Supreme Court and the prevailing consensus in legal opinion that acknowledged renewal clauses in long-term lease agreements as enforceable personal obligations." Again, enforceable personal obligations. Again, you kind of almost have to look at that like covenance whether or not they run with the land, kind of thing in an American legal vernacular if you will, to utilize again Comparative Law. But again, this whole thing ran counter to the underlying policy position of the Civil and Commercial Code itself which lays out a maximum lease duration of 30 years. So, it's bootstrapping to say in my opinion to say that "oh well we can do it if we allow it for an ‘automatic extension’ clause." Well then it negates the underlying 30-year max policy that is clearly enshrined in the Civil and Commercial Code here. Again, I get the Court's legal reasoning behind this and frankly, I think up to this point the legal reasoning has been more one of colour of law unless, well not entirely colour of law, I don't think that's fair to say, but it failed to look at the fact that what they were talking about was a personal enforceable obligation. It's a different thing from being sort of tied to the land. It's sort of like the Statutes of Frauds when you get into sort of the Common Law history if you will, you know Statutes of Frauds said hey we have to have a certain written documents out there in order to be in line with policies on written documents pertaining to real estate, inheritance etc. That said, quoting further: "However, a three-judge panel of the Court of Appeal, Region 8, which includes Phuket, overruled the Trial Court by declaring the renewal clause void. Subsequently, the Thai Supreme Court upheld the appellate ruling, marking a significant departure from previous interpretations." Again, maybe on the personal enforceable obligation side, but I don't think that this has even really been adjudicated fully just purely on the 30-year lease issue and whether or not an automatic renewal negates the requirement that only 30 years is a max under the Civil Code. Quoting further: 

Key Legal Findings of the Supreme Court Decision. "The two primary legal conclusions from the Supreme Court ruling are:" - and this is where the rubber hits the road. So the first one, this is important to understand, "Pre-signed Lease Renewals are Void." Okay, so they are void, they are not voidable. It's not a rebuttable presumption that they are void, they are void, okay. As a matter of law, they are void. Important to understand that. So they are void coming out of the gate. It's not, "oh they're voidable maybe if a Court says so", no they're void. Quoting further: "The Supreme Court found that any agreement at the inception of a lease providing for renewals beyond 30 years is void under Thai Law. Specifically, it held that such arrangements circumvent Section 540 of the Thai Civil and Commercial Code, which states: "Immovable property may not be leased for more than thirty years. If a lease is made for a longer period, such period shall be reduced to thirty years." Quoting further: "After the expiration of the lease, it may be renewed, but such renewal shall not exceed 30 years from the date of renewal." So again, you need to understand the underlying law and the underlying policy. 30 years is supposed to be the max. What this Court is saying is we are not going to let you circumvent that through automatic renewal clauses. That is basically what they're saying. Now even though those have not been completely overruled to date up to now, again they were always tricky because the big question was well the lease still ends; you have got to reenact the lease and then you can only use the Courts to get it through a personal enforceable obligation. Now that's being thrown out. So as precarious as it was before, now it's just non-existent. That said, quoting further: "The Court ruled that attempting to contract for renewals at the start of the lease amounts to an effort to evade this legal restriction rendering such terms legally ineffective from the outset." So again, as a matter of law, these are void; these are not "voidable" - we may go to Court, challenge that later". No it's just you know going in this is how it is. Quoting further:

“Lease Renewal Promises are Not Enforceable Personal Obligations. So in the past, where it seemed that they were primarily able to get this enforced, it was as a personal obligation within the terms of a contract, not so much pertain to the land itself, sort of the running with the land issue as we talked about in covenance in an American legal vernacular. That said, quoting further: "In addition to striking down pre-agreed renewals, the Court rejected the argument that a lessor's promise to renewal a lease could be enforced as a personal obligation." Quoting further: "It held that the promise to extend a lease beyond 30 years does not create an enforceable right for the lessee at the time of renewal. Instead, the Court deemed such agreements void from the outset, meaning that even if the parties agreed to a renewal in their initial lease contract, the lessee has no legal recourse to enforce it when the initial lease term expires." Yeah, in a sense it's kind of similar to the American Contract Law notion of you can't make contracts for legal activity. You can't create a contract to do something that's otherwise illegal. It looks to me that the Court is saying, look if it's illegal to have a lease - which is in plain language in the Civil and Commercial Code - of longer than 30 years, then we are not going to allow a contract that provides for automatic renewals to allow a lease to effectively run past 30 years through that contract. So it's similar to the notion that you can't make a contract to do something that's already illegal, that's sort of the way I look at it. And again, I'm coming through the prism of American Common Law. That said, quoting further:

"What does 'Void from the Outset' mean? Quoting directly: "The ruling that pre-agreed renewal clauses are void from the outset has substantial practical limitations. Because the renewal provisions, whether registered at the Land Department or not, are considered invalid from the start, any pre-paid lease renewal term rental amounts pose a legal dilemma." 

So again, thanks to the Phuket News, tip of the hat to you folks down there. Doing great. Always good information coming out of the Phuket News, I do enjoy that publication. And thanks very much to the viewer who put me on to that particular article, I hadn't come upon it yet myself. But long story short yeah, this is where we stand right now with respect to leases here in Thailand. This is important stuff, and this will probably change a lot of people's calculation when they are looking at possibly buying or in this case renting property here in the Kingdom of Thailand. Now that being said, those who may find themselves overwhelmed by all this, there are multiple options associated with owning property, maintaining real estate here in the Kingdom, and we will certainly be keeping you updated on this channel as that situation evolves.