Squashing the Thoughtless Smasher Splashers in the Property Market

At certain intervals over the past two decades – and even more recently than that – there have been attempts to use attention-seeking reportage to disrupt the overheated property market unnecessarily at the risk of damaging people’s lives through threats to their investments and savings. It is sometimes hard, with so much misinformation in the market, for those not immersed in property or legal matters to be able to clearly differentiate truth from distorted truth – or fiction.

However, fortunately, the truth rises to the top and the truth will ultimately prevail.

As an unashamed, self-admitted, Padel Tennis addict, I continue my highly enjoyable long journey of learning about the behaviour of others and their mindsets, in a close quartered unforgivingly sweaty and endorphin/dopamine/serotonin soaked environment with a shrunken court, glass back and partial sidewalls and doors on either side of the net which, to the uninitiated, seem very innocent entrance and exit-ways.

One particular type of Padel Tennis player, not worthy of much beyond the study one might devote to an irritating and bizarre insect in a jungle, is the ‘Thoughtless Smasher’ who has perhaps irresponsibly binged on Padel Tennis Youtube highlights and imagined her or himself as the next Augustin Tapia/Ariana Fallada, nimbly maneuvering around the Padel court simply waiting for that soft or poor lob before stretching and arching the back ready to choose between a Vibora, Bandeja, Kick or Flat Smash to flummox the opponents.

The thoughtless Smasher lacks all of the education, skill and flair of Augustin Tapia/Ariana Fallada but enjoys, through egotistical delusion, imagining that every ball received is a potential ‘smashable winner’ where an imaginary Youtube padel audience will rain down applause with supplementary ‘oohs’ and ‘aaahs’ and ‘aren’t you simply amazing’ as a final admiring comment.

However, in reality, the ‘Thoughtless Smasher’ understands next to nothing about the beautiful game of Padel or indeed, perhaps, life. They lack any of the skills and grace of professional players and do not know how to play a gentle strategy winning Chiquita, when to use a Rulo to the fence or back wall or when to volley and shorten the opponents time to think about their next move. The ‘Thoughtless Smasher’ is a barbarian disguised in Padel clothing, or maybe not even bothering to dress as a Padel player at all. They may even have some ‘Padel certificates’ and flout their ‘Padel experiences’, which lack quality but have been unfortunately frequent. The ‘Thoughtless Smasher’ feeds off their own uncontrolled mood swings and internal/external aggression battle and believes that forcing through a smash in the wrong place and wrong time will somehow win them the day through brutish force.

They don’t even notice, watching a Padel match, the attention to detail and development of skills and elevation by other far more skilled and tactical players. They are so naturally narcissistic that they are blinded by their own desperation to feel their arm raise up high at exactly the wrong moment, just as a slave-master would raise their hand up to beat a slave simply to show ‘who is boss’, never contemplating the moment the slave would rise up and slay the ‘master’ and secure their rightful freedom. Why let the ball bounce and plan the next move carefully when you can just take a chance by exerting uncontrolled power is the ‘Thoughtless Smasher’s paradoxical ‘thought’. 

The results emanating from the actions and omissions of the ‘Thoughtless Smasher’ present a very interesting set of life lessons:

• Certain participants will not enjoy the game conducted on such a level.
  
  
•  Other participants will revel in their ridicule of the ‘Thoughtless Smasher’, having seen such a beast in many different guises many times before
•  Many balls will hit the glass wall or just fly randomly out (thereby losing the point), and the partner of the ‘Thoughtless Smasher’ will become highly frustrated by the irrational risk-taking which will ultimately result in a complete loss.
•  Injuries can occur from a misplaced smash but that is never a concern of the ‘Thoughtless Smasher’, so measures must be taken to eliminate them from games and protect others. The Padel community is in fact quite adepts at ostracizing bad participants through feedback and co-operation and can make sure the ‘Thoughtless Smasher’ isn’t even invited to a social match.
•  The ‘Thoughtless Smasher’ will very rarely evolve into a nuanced, skillful player and will depart from this world not much the wiser of their weaknesses

There are two main issues in the property market that have regularly been abused in a thoughtless ‘Super Smash’ style that deserve some clarity:

1. Thai Nominee Structures for Holding Land for Foreigners

After all the reports, the raids, the clear disapproval of most stage agencies, the strong advice of those in the know, it should now be well accepted that:

• Foreigners shouldn’t try to trade or acquire land interests, in general. Property investments comprising a mixture of land and buildings, if sophisticated, are a different matter, depending on the context.
  
  
•  Foreigners shouldn’t use Thai people as substitutes for actual co-investors and try to ‘eliminate the risk’ of a joint venture by instead choosing what can be a set of civil or criminal misdemeanours.
  
  
•   Thais shouldn’t volunteer themselves or subject themselves to the risks of being in such a structure and shouldn’t seek financial reward for matters which are not legal investments.
  
  
•   Pre-signing a stock transfer form to an anonymous person is a sure tell-tale sign you have pre-sold your interest, or you don’t care about your investment – or your investment is false, and even the least smart official (or many smart ones) will know that.
  
  
•   If it smells like a nominee, acts like a nominee, looks like a nominee – it probably is a nominee.
  
  
•  There is no need to be scared of Thai companies if they are set up properly, run properly, have a clear purpose, pay taxes, employ people and are involved in net positive things for the Thai economy. The Thai Government and Thai people are generally very welcoming of that type of investment

Leases, Lease Renewals and Viable Alternatives to Unlawful Nominee Structures

Leases are widely sold in Thailand on a 30-year basis, with certain provisions allowing for renewal, and naturally where there is foreign interest in property investment, the most ‘foreign-friendly’ style of leases that can be created in a buyer’s market will be presented, and in a seller’s market perhaps some provisions might be a little bit tougher.

The general maximum period that a hire of immoveable property can be registered for is 30 years. There are actually some exceptions to this in the market – in the Eastern Economic Corridor and under the ‘Lease of Immoveable Property for Commercial and Industrial Purposes Act’, leases can be issued for 50 years. It is worth remembering that there is always room in the law and business for… exceptions.

A provision in a lease which unlawfully extends the lease to be longer than 30 years is unlawful and can be made void.

A provision in a lease dressed up as a renewal but which is in fact ‘an extension’ will therefore be subject to being made void.

A provision in a lease which is a renewal, under which the parties, free to agree under freedom of contract principles in Thailand, agree there will be a renewal subject to conditions, will be valid and enforceable provided – as in all situations in Thailand – it doesn’t contravene Thai public policy.

Thai public policy doesn’t allow abuse of the law, ignoring the purpose of the law or trying to change or dilute the protections of the law through private means. In short, the law should prevail and unless expressly permitted, private parties cannot just ‘contract out’ of the legal jurisdiction of Thailand, for obvious reasons.

When a lease renewal is planned, it can be planned smartly without circumvention: that is it is not possible to determine a rent in 30 years that will somehow be acceptable to the Land Department and Revenue Department – because nobody can predict what a fair rent and fair tax will be. However, a ‘baseline’ fee, a pre-agreement that a renewal is the intention of the parties and that there is an ‘option’ exercisable for a renewal can be valid.

So, whilst Padel, Thai Nominees and Leases/Lease Renewals have no direct link at all, certainly there are some clear lessons to be learned from all of these matters. Market disruption, unchecked aggression and blunted tool approaches may be met with rationality, peaceful strong resistance, smarter analysis and good humour. The measured honest approach will eventually prevail and overcome market participant anomalies – and lucky, poorly executed smashes on the Padel court.

By Desmond Hughes, Senior Partner of Hughes Krupica

Hughes Krupica is a law firm which specialises in Real Estate; Construction; Hospitality; Corporate; Commercial; Tech; Dispute Resolution; and Litigation, operating from Phuket, servicing clients in relation to their business activities in Thailand and in other regions of Asia.