Can You Really Do a 3+3+3-Year Lease? What You Must Know Before Signing!

P’Ex, my client wants to lease a building for 10 years but wants to sign a 3+3+3 contract. Can they do that?

Ex: Can they do it…? Yes, but I don’t recommend it.

Why, P’?

Ex: Do you have 5-10 minutes? I’ll explain it to you.

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When it comes to long-term leases,
you usually see them in commercial properties —
shophouses, showrooms, office buildings, home offices,
or retail spaces.

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The reason they need to be long-term is because tenants investing for commercial use
need to do interior fit-outs,
buy equipment/furniture,
and set up backend systems.

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If it’s a storefront,
it takes time to build brand awareness.
Moving around is like moving house —
not ideal for a business.

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That’s why most tenants start with at least 3 years,
to test the market.
Some who’ve done extensive surveys
may decide to go all in and sign for 10-30 years.

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Normally, for leases longer than 3 years,
the landlord and tenant
must go together
to register at the Land Office,
so it’s officially noted on the title deed
that there’s a long-term lease for X years.

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This registration on the title deed
comes with a fee of 1%
of the total rent for the entire lease term.
If there’s a land rent fee specified in the lease,
that’s also included.

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There’s also 0.1%
for stamp duty.

Total fees are 1.1%.

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For example:
If the rent is 50,000 baht/month,
and the lease is for 10 years,
total rent is 50,000 x 12 x 10 = 6,000,000 baht.

Registration fee: 1% of 6M = 60,000.
Stamp duty: 0.1% of 6M = 6,000.
Total: 66,000 baht.

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Usually, the tenant covers these fees,
but it can be shared or negotiated.

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Because of these fees,
some people think of ways to avoid them,
leading to the idea of a 3+3+3… lease instead.

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But many don’t know that
when you do a 3+3+3 contract,
if you pre-sign all periods at once,
#don’t do that.

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When disputes escalate to court,
only the first 3-year contract
#is legally enforceable.

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That means legally, it’s only valid for the first 3 years.
From year 4 onward,
it cannot be enforced in court.

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This is an attempt to avoid Section 538
of the Civil and Commercial Code.

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Some might suggest
adding a “promise clause” stating:

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“When this lease term ends,
the landlord promises to extend the lease to the tenant
for another X years
under the same terms and conditions.”

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If you want to renew multiple times,
specify the exact number of renewals.

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Also include conditions like special returns —
e.g., the landlord can increase rent at X% every Y years.

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When the time comes,
if both parties agree,
the original contract can continue without making a new one.

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But this “promise clause”
— if not registered —
is only enforceable up to 3 years.

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So if the first contract is 3 years,
and the promise says “renew for another 3 years,”
no registration is needed.

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But if the promise says “renew for more than 3 years,”
then it must be registered.

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When an offer and acceptance under the promise clause happens,
if the landlord refuses to register,
the tenant can sue
to force the landlord to register.

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Therefore, the simplest way:
If you want a lease longer than 3 years,
just register it properly from the start.
No need for legal gymnastics.

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Trying to exploit legal loopholes
to bind for more than 3 years
is not easy.
If you mess up, the contract can become unenforceable.

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Having been to civil court many times,
I advise not to rely on legal loopholes.
They work both ways.
And you’ll see just how shameless
and manipulative people can be
to avoid liability in court.

#GoingToCourtIsNotFun

#BetterSafeThanSorry

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The benefit of registering a long-term lease on the title deed
is to protect the tenant’s rights,
giving them stronger legal standing.

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If a tenant invests millions
and the business is booming,
they won’t have to worry about the lease being abruptly ended.

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Sometimes, a landlord might see the tenant’s business thriving,
get greedy, and want to take over,
refusing to renew the lease.

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Or they might see a chance to jack up rent
to an unreasonable level when renewing.

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Or the landlord might sell the property
without the tenant knowing,
leading to a new owner
who wants to use the space themselves.

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But if it’s registered on the title deed,
even if there’s a new owner,
the tenant’s rights remain protected
until the lease term ends as registered.

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Registration protects other rights too,
such as mortgage, habitation rights, usufruct, servitude.

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If a long-term lease is registered,
future buyers are fully aware,
because the lease encumbrance is clearly stated on the title deed.

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On signing day, everything may seem sweet.
But no one knows what might happen in the future —
possibly even ending up in court.

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If you don’t walk together to the Land Office on day one,
you might end up walking together into the courtroom.

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Don’t try to avoid the law,
and you won’t face future problems.
Most problems arise from trying to bypass the law.

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So I recommend registering in front of the Land Office officer.
When disputes arise,
the damages can be far greater
than the 1.1% registration fee you tried to avoid.

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As an agent,
you should educate and advise
both landlord and tenant transparently
about the pros and cons
of registered vs. unregistered long-term leases.
Then let them decide.

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Parinwatch Knapakvorn (X)

CEO of Matching Property Co., Ltd.

AKA: The “Agent Few-Fan” of Huai Khwang

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Real estate (universe-wide) / investment / marketing / sales

Law / accounting / tax / spiritual

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Consult on anything — except lending money.
Get your Starbucks card ready though.

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