Counsellor's Corner -
Termination of Shop Lease

Question

I lease a shop space in a shopping complex, because I joined the complex later than the other shop owners, my contract runs until the end of next March. The other owners' contracts expire this month and the landlord has said he will not be renewing them. He is now trying to cancel my lease as well.

A couple of months back I spent a lot of money upgrading my shop and asked the landlord if that was OK, he said yes. Now he is trying to get me out early and the rest of the complex will be deserted for the high season even if I do get to stay.

What are my options?

Answer

Firstly, is the landlord really the owner of the shop space or is he just a sub-lessor i.e. he leases the shop space from an owner and sub-leases the space to you thereafter?

If the 'landlord' is really just a sub-lessor, find out who the real owner of the shop space is and contact the owner to lease the shop space (After your lease has been terminated by the 'landlord').

If the landlord is really the owner of the shop space, peruse the lease contract that you entered into with the landlord carefully on the following issues:

(1) When does the lease period end? Does it really end on March 30, 2010?

If it is provided in the lease contract that the lease period ends on March 30, 2010, then you should issue a written notice to inform the landlord that he is breaching the lease contract by ending it earlier. If the landlord persists in ending the lease early, you have the right to claim against the landlord in court. The amount of money used for upgrading the shop can be included as part of the damages claimed; and

(2) Are there any covenants or promises made by the landlord on letting a shop space in a shopping complex with other shops being leased out?

Please note that if your lease contract is not made in a written form and signed by the landlord or you, the contract will not be enforceable in court. If the lease period is more than 3 years, the contract must be in writing, signed by the landlord and you and the lease is registered by an official of the Land Office. If the lease is not registered, it is enforceable in court for only 3 years.

Your options are:

(a) If, as according to your lease contract, the lease period ends on March 30, 2010, issue a written notice to the landlord as stated in (1) above.

If the lease contract was made verbally, this is still a valid lease contract. Therefore, issue the written notice to the landlord and hope that he adheres to the agreed upon lease period

(b) Lease another better location and perhaps this may help to recover your losses.

Written by David Tan. David is a Lecturer of Business Law at Asian University and author of the book - A Primer of Thai Business Law (Second Edition), available online at www.chulabook.com . In Bangkok, the book is available at all Kinokuniya and Asiabooks bookstores. Any questions to David regarding lease of real estates, business and labour should be sent to blas.inter@yahoo.com. A selected question and its answer will be published in the next issue.

David Tan Articles:

Does 90-year Lease Exist? - David Tan is a Lecturer of Business Law at Asian University. He has kindly provided us with a series of legal articles looking at property and employment law in Thailand. We start by clearing up the 90-year lease issue.

Foreign Ownership of Land? - David Tan continues his series of legal rights articles with an enlightening look at the thorny issue of foreigners owning land in Thailand.

Buying a Condo in Thailand - How to proceed with due diligence when buying a condo in Thailand.

Escrow Agents in Thailand - How to use escrow agents in Thailand when purchasing a property.

Property Purchase Deposits - If you pay a deposit or reservation fee to a property developer, does that mean you have a sale contract?

Lifetime Land Lease? - Is it possible for a foreigner to lease a plot of land for their own lifetime?

Employee Failing Probation - David Tan's series of legal articles move on to employment law. He starts with a look at the requirements for terminating employees who are on a probationary period.

Fixed Employment Contracts - Fixed period employment contracts are a technique employers can use to avoid having to pay severance and provide prior notice of employment termination to employees.

Sacking an Employee - What are the legal implications for an employer to sack an employee in Thailand?

Selecting Outsource Company - If you outsource in Thailand, what rights do the outsource company's employees have from your company?

Contract Protection for Buyers of Condos - How can you be sure your new condo will turn out like the pictures in the glossy brochure?