30+30+30 Lease Renewal Options in Thailand: How Reliable Are They?

What the 30+30+30 Structure Means

The maximum lease term for real property in Thailand is capped by statute. Under the Civil and Commercial Code (CCC, §540), a lease of immovable property may not exceed 30 years; if the parties specify a longer term, it is automatically reduced to 30 years. To work around this ceiling, developers offer foreign buyers the '30+30+30' structure: one registered initial term of 30 years plus two renewal options of 30 years each. On paper, this looks like nearly a century of use.

The problem is that the three 'thirties' carry very different legal weight. The first term is a fully enforceable right, whereas the two subsequent renewals are merely contractual promises - and that is precisely where the core risk lies.

Real Property Right vs. Contractual Promise

Thai law distinguishes between two types of lease provisions:

• A real property right of lease - the right of use itself for the duration of the registered term. It runs with the property and is binding on any new owner.
• A contractual promise - obligations the parties have assumed under freedom of contract, including a promise to renew the lease in the future.

The key consequence: under CCC §569, a transfer of ownership of leased property does not terminate the lease agreement - the new owner steps into the rights and obligations of the former landlord. However, that protection covers only the registered lease term itself. A renewal option falls outside its scope.

The Thai Supreme Court has confirmed this position on multiple occasions: a promise to renew a lease is a personal obligation of the landlord, not a real right of the tenant. If the tenant has not exercised the option before the property is sold or inherited, the new owner is not bound to honour it. The new owner may simply refuse, and there is no judicial mechanism to compel performance.

Why an Option is 'Weaker' Than a Registered Term

A registered 30-year lease is entered in the Land Department's records and attached to the title (Chanote). It is protected against a change of ownership, against sale, and against enforcement by the landlord's creditors. A renewal option, by contrast, exists only as a clause in a contract between specific individuals.

This gives rise to several practical scenarios in which a renewal can be lost:

• Sale of the property. The new owner is bound only by the registered term and has no obligation to sign a renewal.
• Death of the landlord. The heirs take the property but not the deceased's personal promise to renew the lease.
• Landlord's bankruptcy or debt enforcement. Creditors and the liquidator are not bound by the option.
• Dissolution of the developer company. If the landlord was a company that no longer exists, there is simply no one left to perform the promise.

Even when the landlord is acting in good faith and is willing to renew, the second and third 30-year terms must each be registered afresh at the Land Department at the time the renewal falls due - that is, after 30 and 60 years respectively. It is impossible to register the entire 90-year structure in advance: registration is subject to the same 30-year limit.

Comparison: First Term vs. Renewal Options

Alternative for Condominiums: Freehold Ownership via the Foreign Quota

For condominium units, there is a more reliable route than long-term leasehold. The Condominium Act allows foreigners to hold units in full ownership (freehold) within a quota of up to 49% of the total floor area of all units in the building. If the quota has not been exhausted, a foreign buyer receives a Chanote for the unit in their own name - this is a perpetual right, independent of any change in ownership of the building and requiring no renewals of any kind.

To register freehold ownership, the purchase funds must be remitted from abroad in foreign currency, and the buyer must obtain from the bank a Foreign Exchange Transaction form (FET, formerly known as 'Tor.Tor.3') confirming the inward remittance. Without this document, registration of foreign ownership of a condominium unit is not possible.

Leasehold (including the 30+30+30 structure) is typically used where freehold is unavailable: for land, villas, and condominium units that exceed the 49% foreign quota.

How to Reduce the Risks When Leasehold Is the Only Option

The risk inherent in renewal options cannot be eliminated entirely, but a well-drafted agreement significantly strengthens the tenant's position. The most commonly used combination of measures includes:

• Registering the first 30-year term immediately upon completion of the transaction.
• Including in the agreement an express obligation to renew, with pre-agreed terms and a penalty clause for refusal.
• Granting the tenant a right of first refusal or a purchase option over the property.
• Structuring the landlord entity as a Thai company in which the tenant controls key decisions (subject to the restrictions on nominee arrangements).

It is important to understand: none of these measures converts a renewal option into a real property right. They merely increase the likelihood of performance and improve the prospects of compensation in the event of a breach.

What to Check and What to Watch Out For

• Whether the first 30-year term has been registered at the Land Department, rather than merely signed on paper.
• Whether the landlord is an individual or a company, and what will happen to the obligation upon their death, a sale of the property, or a dissolution of the entity.
• Whether the renewal conditions are spelled out specifically in the agreement (duration, price, registration timetable) rather than left to a general phrase such as 'by agreement of the parties'.
• Whether a penalty or other compensation for refusal to renew is provided for.
• Whether freehold ownership of the property is available under the 49% quota pursuant to the Condominium Act - if so, the renewal problem is eliminated entirely.
• When purchasing as a freehold owner, whether the foreign currency remittance documents (FET / Tor.Tor.3) are in order.
• Whether an independent title search of the Chanote for encumbrances and pending litigation has been carried out.