Did you know that there are several types of land lease agreements? And what are the differences between them? If not, today, Pacharakrit Property Co., Ltd. will explain them to you, along with examples to help you understand better.
First and foremost, a land lease agreement is a crucial document for both short-term and long-term lease transactions. This document simplifies the process and serves as a clear communication link, ensuring mutual understanding between lessee and lessor. Therefore, drafting a land lease agreement is extremely important in the real estate industry, and everyone should understand its implications. Pacharakrit Property Co., Ltd., a leading organization providing consulting services in real estate investment, property sales and leaseback, mortgages, and loan applications, will summarize the key points as follows:
- Long-term land lease agreement
A long-term land lease agreement is a contract for a lease term of more than 3 years, which the lessee must register at the land office in the district where the property is located. The types of such contracts can be categorized as follows:
1.1 Standard lease agreement.
- A contract that is similar to a typical real estate lease where the tenant only pays rent.
- The lessee cannot transfer the lease rights.
- In the event of legal action, the person wishing to file a lawsuit must have clear evidence of the lease agreement in order to be able to file a lawsuit.
- In cases of litigation, it must be done within the timeframe of the contract. For example, if a lease agreement is for 3 years, the lawsuit must be filed within that 3-year period as stipulated in the contract.
1.2 Reciprocal Lease Agreement
- A contract in which the tenant is required to pay other compensation as agreed upon with the landlord, in addition to the rent.
- The tenant can transfer the lease agreement to their heirs.
- In cases where a building is constructed on leased land, the tenant is responsible for the construction costs, and the completed building becomes the property of the landlord.
- In the event that the rented building is in a dilapidated condition, the tenant is responsible for any repairs or renovations.
- Short-term land lease agreement
A short-term land lease agreement is a contract for a lease term of less than 3 years. In this case, it is not necessary to sign the contract at the land office. The details are as follows:
- The landlord and tenant can enter into a land lease agreement with each other.
- Clearly specify the details of both the “tenant” and the “landlord.”
- Clearly state the rental fee.
- Clearly specify the rental period, from the start date to the end date.
- Specify all other agreed-upon terms and conditions completely.
- Both parties must sign completely and properly.
The information that must be specified in the contract is as follows:
- Date of contract
- Contract location
- Tenant’s name and address information.
- Landlord’s name and address information.
- Lease Agreement
- Information regarding the rental property includes the address, area, title deed number, purpose of lease, and activities to be conducted on the leased premises.
- Agreed rental period
- Advance deposit required, specifying the amount, payment method, and payment schedule.
- Rental rates and payment methods include bank transfers, checks, or cash.
- The tenant agrees to pay the land tax on behalf of the tenant.
- The lessee agrees not to use the land for any purpose other than that specified in the land lease agreement, unless authorized in writing by the lessor.
- The lessee agrees not to sublease the leased land unless authorized in writing by the lessor.
- The lessee agrees to facilitate the lessor or the lessor’s agent in inspecting the land within the specified timeframe.
- If the lessor sells the land before the lease expires, the lessor must give the lessee advance notice within the specified period.
- If the tenant fails to comply with any of the terms of the contract, the landlord has the right to notify the tenant to comply, or to terminate the contract and demand reasonable compensation.
- If the lessee is forced to vacate the leased land for any reason, the lessee cannot claim damages or demolition costs from the lessor.
- On the date the land lease agreement was signed, the lessee inspected the land and any structures (if any) and found them to be in good condition for the lease, and the land was properly delivered to the lessee.
- Signatures of both the tenant and the landlord.
How was that? We hope the sample contracts and information we’ve shared today have been useful to our readers. Don’t miss out on valuable knowledge; follow our interesting articles on all channels of Pacharakrit Property Co., Ltd. We are a leading real estate investment consulting firm specializing in property sales, mortgages, and loan applications. If you’ve read this far and are interested in our services, you can contact us for a free consultation using the details below!
