What should a Land and Factory Lease Agreement include under Thai law?

1. Definitions and Interpretation
2. Lease of the Premises
3. Permits
4. Term and Renewal
5. Rent and Payment
6. Security Deposit
7. Lessee's Obligations
8. Lessor's Obligations and Warranties
9. Right of First Refusal
10. Insurance
11. Termination
12. Return of the Premises
13. Registration, Stamp Duty and Costs
14. Confidentiality and Personal Data
15. Notices
16. Governing Law and Disputes
17. General

• Title and encumbrances. Obtain certified copies of every title deed from the Land Office and check the owner's name, the land area and the encumbrances registered on the back (mortgages, leases, servitudes). If there is a mortgage, tick the mortgage option so that it is disclosed in the Lessor's warranties, and consider asking the bank for a letter acknowledging the lease.
• Zoning and permits. Check the town-planning zoning of the land, the building permits and the certificate of building use with the local authority, and confirm with the factory authority that the Permitted Use can be licensed at this site. Clause 3.3 lets the Lessee leave if a permit is refused because of the site, but it is far cheaper to check first.
• Authority to sign. A company signs through the director or directors named in its latest company affidavit, with the company seal if required. Anyone else needs a power of attorney. An individual owner who is married and leases marital property for more than 3 years needs the spouse's written consent.
• Foreign-owned companies. A foreign-owned company may lease land in Thailand, but normally may not own it unless it has a specific investment promotion privilege. Keep this in mind when relying on the right of first refusal in Clause 9.

• A lease of land and buildings is a dutiable instrument (Stamp Duty Schedule, Instrument 1): 1 baht for every 1,000 baht, or part of 1,000 baht, of the total rent for the whole term. For the initial Term in this Agreement, the duty is the amount the system calculates from the figures entered. Each additional counterpart needs (calculated by the system from the figures entered).
• Under the Revenue Code the Lessor is liable for the duty and the Lessee cancels the stamps. Clause 13.2 says who bears the cost between the Parties.
• The total rent is 1,000,000 baht or more, so the duty must be paid in cash to the Revenue Department, not by fixing stamps.
• A lease that is registered at the Land Office pays the duty in cash at the Land Office on the day of registration. A lease signed electronically pays through the Revenue Department's e-Stamp service within 15 days after signing.
• An unstamped lease cannot be used as evidence in a Thai civil court until the duty and a surcharge are paid (Revenue Code section 118).
• A power of attorney used to sign for a Party carries stamp duty of 10 baht for a single act or 30 baht for more than one act (Instrument 7).

• If the Term is longer than 3 years, register the lease at the Land Office where the land is located within 30 days after signing (Clause 13.1). If a renewal takes the total lease period past 3 years, register the renewal too (Clause 4.3). An unregistered lease of more than 3 years can be enforced for 3 years only (Civil and Commercial Code section 538).
• The Land Office charges a registration fee of 1% of the total rent for the registered term. The law says the costs of making a lease are shared equally unless agreed otherwise (section 539); Clause 13.2 records what you agreed.
• Registration uses the Land Office's own Thai-language forms. Bring the original title deeds, the parties' identity or company documents, powers of attorney and, if the officer asks for it, a certified Thai translation of this Agreement. A lease cannot be registered for more than 30 years at a time (section 540).
• A registered lease binds a buyer of the land. A renewal option may not bind a buyer automatically, which is why Clause 4.3 requires the Lessor to make it a condition of any transfer.

• Rent for land and buildings is exempt from VAT (Revenue Code section 81(1)). Charges for services, utilities or equipment that the Lessor provides are subject to VAT if the Lessor is VAT-registered, so invoice them separately (Clause 5.6).
• A company Lessee must normally withhold 5% of each rent payment and give the Lessor a withholding tax certificate (Clause 5.5). File and pay the withheld tax by the 7th day of the following month.
• Land and building tax is assessed each year on whoever owns the land on 1 January. This Agreement states whether the Lessee reimburses it. Commercial and industrial property pays a higher rate than residential property, so ask the local authority for last year's assessment before agreeing.

• The Lessee applies for its factory licence or notification, environmental permits and any hazardous substance permits. The Lessor must provide the owner's documents within 7 Business Days (Clause 3.2).
• Under the Building Control Act the building permit for any alteration is applied for by the owner of the building (section 21). The Lessor signs the application as owner, and the Lessee pays for the permit and the works (Clause 7.6). Works done without a required permit can be ordered stopped or demolished, and the owner is exposed to the penalty.
• Record any existing contamination, waste or damage in the Handover Record with photographs. The Lessee is responsible only for contamination caused by its own operations (Clause 7.5).

• Inspect the site together on the Commencement Date, fill in Schedule 1 and exchange photos and videos within 3 Business Days (Clause 2.3).
• At the end of the lease, the Lessee has the number of days in Clause 12.1 to remove machinery, stock, waste and temporary structures, paying rent for that period. Plan the removal of heavy machinery early.
• The Lessor may claim against the Lessee for damage to the premises within 6 months after they are returned (Civil and Commercial Code section 563).

• You chose arbitration. The arbitral institution's fees and the arbitrator's fees are payable in addition to lawyers' fees. An award is enforced in Thailand through the court, and abroad under the New York Convention.
• Disputes go to the Thai courts, which is usually the cheapest route when both Parties have assets in Thailand. A Thai judgment is not automatically enforceable abroad.
• A Thai court works in Thai. English documents relied on in court need a certified Thai translation.

Compiled from the notes that accompany the English contract templates on this site, published by Phuwara Krobtaku (ภูวรา ครอบตะคุ), Thai attorney-at-law, licence no. 477/2558. The short answer and summary at the top of this page are put together by the site from the template's clause headings and notes. Statutes are quoted only in the official Thai text: Thai is the only official language of Thai legislation, and an unofficial translation can mislead. Article registry OKC-FA2406. If you reuse this content, please credit the author and link to the original.