Stickman Readers' Submissions June 30th, 2004

Buying Property

By Sunbelt Asia

You wrote in your last newsletter that a "As a foreigner, you cannot buy a house and have it in your own name." Sorry, but that is not a true.

Any person can register any type of building in their name. Under Thai law, the foreigner can own the structure (for example a house) erected on the land. Certainty of possession of land and house is assured by being the owner of the house. If arranged as above then the house will be separate from the land, and will not be a component part under the Civil Law. Ownership of buildings can be confirmed and the lessor cannot seize the house upon expiration of the lease.

He Clinic Bangkok

Buildings other than condominiums do not have any form of title document, but their sale or long lease can be registered at the Amphur (district) land office. Proof of ownership, must be established either from proof of construction or a document showing sale-purchase (do not confuse this with the House License document, which is only a register of the house occupants).

Transfer of a building, as distinct from its land, requires the posting of 30 days public notice (to see if anyone wishes to contest the ownership). Again just to confirm this, foreign nationals (aliens) may own any building (as distinct from its land) and may register such transfer of ownership into their names at the local district office.

Land is a different story. Just so you know there are a number of ways that a foreigner may follow to own freehold land:

CBD bangkok

• Become a Thai resident / citizen.

• Be the principal investor in a new export orientated Board of Investment (BOI)

approved company [the current maximum size limit of freehold ownership rights is one Rai of land (1600 Sq.m.).

• Make an approved investment of over 40 Million Baht left for a minimum number of

years [the current maximum size limit of freehold ownership rights is one Rai of land (1600 Sq.m.) .

• Acquire the land through a Thai private limited company. This involves the

incorporation of a private limited company of which the foreigner holds 39% of the shares. Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land will be investigated by the Central Land Office in Bangkok (under Section 74 of the Land Code) to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land. Hence the remaining 61% of the shares is held by nominee Thai Nationals who grant an irrevocable and absolute power of attorney over the same. The foreigner retains full control by being the sole director of the company with executive powers. Additional safeguards (if required) include personal loan agreements, the creation of a registered mortgage and / or long lease with pre-paid options to renew.

• Acquire the land in the name of a nominee Thai national who then grants a

registered 30 year lease (residential) to the foreigner in the foreigner’s own name with pre-paid option to renew for a further two periods of 30 years each. The foreigner may also be given the option to purchase the land should the law in respect of foreigner’s land ownership rights change.

• Usufruct Interest (Sidhi-kep-kin) – gives you temporary ownership rights to things on

or arising from the land. In practice, a usufruct is limited to a 30-year maximum period; like leases, the agreement can be successively renewed. In contrast to a lease, a usufruct interest can be sold or transferred, although it expires upon the death of the holder of the usufruct and therefore cannot be inherited.

* Nominee with Mortgage – you can use a Nominee to purchase the house/land and

have a mortgage (registered with the appropriate land department office) on the property in your favors. It is important to note that only the owner of the land is entitled to mortgage the land; the lessee of land does not have the same privilege. The property cannot be sold until the mortgage lender signs the title documents declaring the mortgage cleared. This once again give 100% control over the property although not ownership. The buyer may remove the nominee should any problems arise and transfer in a new nominee at any time. One problem is however if the value of the land is greater than the loan, the person who owes the loan, can pay the loan off and buy the land.

* Elite Card-are offered the opportunity to acquire real estate through a governmental

entity acting as the Thai nominee. To become an Elite-card-member, the applicant has to pay one million Baht for the card.

In practice, the method favored the most by foreigners is to acquire land through a Thai private limited company, and this is the way we recommend for our clients most frequently. The additional advantages are that it establishes a business presence in Thailand and it may be the employer / sponsor in the foreigner’s application for a non-immigrant visa and / or work permit. We are assisting a number of people in helping to set a company up in Thailand for the purpose described.

wonderland clinic

Stickman’s thoughts:

Great info.

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