We have mentioned several times that it is totally legal for a foreigner to acquire a condominium unit in Thailand. To recap, Thai law makes a provision for foreign ownership of condos provided that 60% of the units in the project are reserved for Thai locals. If the remaining 40% allowance has been bought up by the foreigners, what does a foreign national looking to own a condominium unit do?
The answer is: enter a lease contract. In other words, he will get together with a condominium owner – another foreign national or a Thai local, it does not matter – and sign a contract giving him the right to use the condominium unit as his own for a specific period of time. Typical lease contracts are long-term, with some pacts being in effect for as long as 30 years.
Here is a question that has been asked plenty of times by clients, and it says: “Do I have the right to bring the unit up for rent so I can earn money from it as well?”
From a practical point of view, this question makes sense. There are cases wherein a foreigner decides to acquire a condominium unit to prepare for his retirement, but there are still a few years before that happens. He cannot allow the unit to just gather dust there while he pays for the lease, can he?
The question is: “Is it legal?” The truth is, it depends on the lease.
It is not totally illegal to do that. However, in order for it to be legal, it must be covered in the contract itself. The best way to make sure of that is to retain a legal counsel and go over the contract with him. It is important to read the fine print, not only to find out if subletting is legal and included in the contract, but to know if the whole deal is advantageous to you or not.
So, let us say that you found out that there is no clause defining subletting in the contract. You have two options – find another contract that does, or try to negotiate a subletting clause in the current contract. The terms will go higher – always let the counsel look at the terms, by the way, to make sure they are fair – but you can recoup those when you have a tenant subcontracting the lease and paying you.
Another thing to note – make sure that, if you are getting this condominium for your retirement, that you include your heirs in the contract. If they are signatories, they can use the condominium on your behalf if they decide to visit Thailand for a vacation while you are not in retirement yet. In addition, it also makes sure that they are able to use the unit in the event that you die before the lease ends. In Thailand, the death of a tenant automatically terminates the lease.
There you have it. It is legal to sublease any condo property that you have leased in Thailand, but it has to be stated clearly in the terms of the contract.