Property Purchase In Thailand

Owning a property in Thailand may be a dream for many people, but there are certain restrictions for non-Thai nationals when it comes to property and land ownership. We will outline some of the restrictions and requirements but it is highly recommended that you seek proper legal advice before entering into any property or land purchases in Thailand.

Ownership Of Land In Thailand

The ownership of land in Thailand is governed by the land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior. Thai law stipulates that a foreigner may not own land in Thailand in his name, however, he has the right of ownership of buildings only. This allows for two ways in which a foreigner can purchase land for the sole use of building a property on the land. The first is to purchase a 30 year leasehold on the land, with an option to extend the lease in 30 year periods. As a property will be occupying the land ownership of the land is assured. The lesser will be unable to seize the property after the expiration of the lease due to the property being separate from the land on which it is built. The Land Department requires and lease over 3 years to be registered and is subject to payment of a registration fee and stamp duty. This is calculated by a percentage of the rental fee for the entire period of the lease. The original registered lease will remain in effect even if the property is sold.

The second option is if the foreigner will be operating a business in Thailand. Freehold of land can be purchased by a Thai Limited Company, which means any land purchased by the Thai Company will be owned by the Company and not an individual.

Limited Liability Company In Thailand

Probably the most popular way of purchasing land and property by foreigners is by a Limited Liability Company. This is because the Articles Of Association can be varied to allow more protection for foreign minority shareholders. Thai law states that 51% of shares must be held by Thai juristic persons, and if any company has more than 40% foreign interest and purchases land then they the company will be investigated by Central Land Office under section 74 of the Land Code. This is to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of Thai land. As a result, if the company buys land, the foreign ownership of the company is usually limited to 39% but with the Articles Of Association changed to reflect that the foreigner is the only director and the only person who can legally commit or bind the company in any contractual dealings, such as buying or selling land or property, thereby giving the minority shareholders control over the company.

Ownership Documentation

The land office holds information on all land or real estate within the province. This is the place to conduct any due diligence prior to buying.

Purchase transaction should be recorded in a written from, have documentary evidence showing some form of a deed signifying title, and should be registered and paid. It should be noted that contracts of sale and negotiations between the buyer and seller do not take precedence - as the only transactions conducted at the land office are to record what is being exchanged and what fees are payable. Apartment and condominium leases for more then 3 years should also be registered at the Provincial land office.

Proof of real estate or land ownership that has yet to be surveyed or officially documented is considered dubious and as a result should be investigated further. One should also scrutinize all parties mentioned as owners, as they may not represent the true owners but distant relatives or aunts and uncles. The process to determine ownership can become quite complicated, especially in rural areas where deeds of title and record of ownership change are not altogether as mature as in Western countries. Caution is therefore well advised !

Type Of Documentation

Title Deed - Chanote

A title deed is the purest form of land ownership signifying that the property or real estate has been surveyed and catalogued with the district land office. It ensures easy transfer and is issued mainly in urban areas. One original set is kept in the District Land Office where the registration of land transfer takes place, and the other original set is given to the owner of the land.

Confirmed Certificate Of Use - Ngor Sor Saam Gor

This document certifies the right to own and use land and is often issued pending the upgrade to title deed. This title is very similar to Chanote but has not yet been upgraded because formalities to upgrade the title have not been completed by the owner. Transfer of the certificate is mainly completed at the District Land Office or Branch District level, as the case may be.

Certificate Of Use - Ngor Sor Saam

This is similar to the confirmed certificate of ownerships and use, but lacks completion of formalities such as provision of an aerial surveys or official measurement by the district land office relative to other parcel within the adjoining areas. Transfer of this certificate requires posting of intent at each of the following places:

Provincial Land Office or Branch Land Office.
District Land Office or Branch District Office.
House of the Village Headman.
Location of the land.
Municipal Office, if the land is in a municipality. There is a 30-day waiting period before the transfer is registered by the Chief District Officer or Assistant District Officer, as the case may be.

Certificate of Possession - Sor Kor Neung

This certificate only recognizes possession and does not imply ownership rights with such possession. The certificate is non-transferable. However, a person in possession may transfer physical possession. This certificate is required for issuance of a Certificate of Use, and is most common in the rural areas. Tax Receipt - A tax receipt is evidence of possession, but does not confer ownership rights with possession. It is useful when applying for a Certificate of Possession.

Buying A Condominium

The Condominium Act entitles certain groups of foreigners both individuals and companies to acquire a condominium or apartment units in Thailand, provided that the non-Thai ownership in a condominium project does not exceed, in the aggregate, 49% of the total area of all condominium units in the condominium building.

If purchasing from a development the developers will usually offer a choice of two ownership options being "freehold" or "leasehold". If the units being sold have not had their quota of non-Thai ownership met then you should likely be able to acquire a "freehold" interest in the condominium / apartment development. The "freehold" interest only give you rights to the building per se and not the land.

If the units being sold to non-Thais have had their quota of freehold fully subscribed - then the developer is able to offer a lease interest in the condominium / apartment development. The longest duration a lease can be registered in Thailand is 30 years and it can be written into the contract that the lease is a lifetime lease meaning that you would have 2 options to renew at a max term of 30 years each.

The land upon which the condominium / apartments site is located would be owned by each individual with a majority Thai Shareholding and governed by a juristic entity or body corporate set up by an owners body.

Non-Thais Eligible To Own A Condominium:

Non-Thais who bring foreign currency into Thailand to pay for the purchase of condominium units or withdraw money from a bank account of a non-resident, or withdraw money from a foreign currency account. Any one of the following documents is required:

Having one or more Foreign Exchange Certificate know as the "Thor Tor 3", evidencing the sale or deposit of foreign currency in an authorized local bank. This form must bear the bank's authorized signature and seal in the authorized bank column. The Thor Tor 3 must specify that the purpose of the remittance of foreign currency be for purchase of a condominium unit or units and must in total equal or exceed the price of the condominium.

Non-Thais who are permitted to have residence in Thailand under the Immigration Act. The documents required are either a passport, residence permit and house registration, or else an alien book.

Non-Thais who are permitted to enter Thailand under the Investment Promotion Act. The documents required are a passport plus a letter from the Board of Investment of Thailand certifying permission to live in Thailand under the Investment Promotion Act.

Non-Thais who bring foreign currency into Thailand to pay for the purchase of condominium units or withdraw money from a bank account of a non-resident, or withdraw money from a foreign currency account.