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Thread: Property laws in Thailand (Over view)

  1. #1
    The artist formally known as Wabbits
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    Property laws in Thailand (Over view)

    Property laws in Thailand

    Real Estate laws are largely copied from the European civil law systems. Property laws of mainland Europe are also found in Thailand. Below an overview of the main Thailand property laws.

    1 Land ownership by foreign nationals

    A - The Thailand Land Code Act prohibits foreign nationals from owning land in Thailand. The Thai government created one exception to the rule with the Land Code Amendment Act B.E. 2542 (1999) (section 96 bis Land Code Act) allowing foreign individuals to acquire 1 Rai (approx 1600 sq.m) for residential purposes. Under the amendment Act granting permission is subject to the permission of the Minister of Interior and among other rules and restrictions (location) requires the foreigner to remit not less than 40 million Baht (approx 800,000 EURO) into Thailand for specific investment purposes approved by the Board of Investment (BOI approval) beneficial to Thai economy for a specific period of time (in addition to the investment in the real estate property). This is not a viable option for foreign individuals and the exception to the rule was invoked to enable foreign embassies and multinationals to purchase large houses for their ambassadors and CEO's). If granted this is not an inheritable ownership right.

    B - Foreign companies with substantial investments benefiting the Thai economy may have special privileges and exemptions for land ownership granted under section 27 of the Investment Promotion Act, Under section 44 of the Industrial Estate Authority of Thailand Act or section 65 of the Petroleum Act (generally only for the duration of their business in Thailand).

    C - The foreign controlled Thai company with a majority Thai shareholding (in number of shareholders and percentage of shares) is the only vehicle available for foreigners to control their investment in land in Thailand. Even though land ownership by a partly (up to 49%) foreign owned Thai company is as such not illegal under Thai law, the legality of land ownership by most of these partly foreign owned companies is controversial. The Thai government is restricting and discouraging the misuse and illegal or unlawful use of Thai companies to circumvent foreign property ownership restrictions in Thailand. The Thai government has issued guidelines and regulation that must be applied by the local land offices when they are dealing with a partly foreign owned company, primarily aimed at preventing the misuse of Thai nominee shareholders by foreigners and Thai companies as a front for foreign land ownership.
    2 Ownership of condos

    Foreigners, natural and juristic persons, may own a condominium apartment unit in Thailand freehold in their own name. This refers to ownership of an apartment unit registered under the Condominium Act. The main document of ownership of an apartment unit is the condominium unit title deed issued and administrated by the local Land Office. The main requirements for foreign ownership ownership of an apartment are:
    * a) Not more than 49% of the total floor area of all apartments added together in a condominium or apartment complex can be foreign owned. The remaining 51% must be owned by Thai (natural or juristic persons). In case of 100 equal apartments in a complex 49 can be foreign-owned.
    * b) The law stipulates that a foreigner who buys an apartment under the Condominium Act must qualify under section 19 of the Condominium Act. Generally this means bringing in foreign currency into Thailand equal to the total purchase price of the condo. The handling bank in Thailand will issue a Foreign Exchange Transaction form for amounts over 20,000 USD or Credit Note and Letter of Confirmation for smaller amounts.
    Lease of condos
    In case the quota for foreign freehold ownership in a condominium project is sold out, the remaining units may be leased under a 30-year registered leasehold arrangement. Normal lease laws, as for land or house, apply on condominiums. There is no separate law issued regulating the lease of condominium units by foreigners as opposed to buying a condominium freehold in Thailand.
    3 Apartments (not registered under the Condominium Act)

    Apartments not registered under the Condominium Act are generally sold under a leasehold structure, leased as part of the building. Any long term rent (over 3 years) over such unit must be registered with the Land Department and will be detailed in a plan of the building. Apartment buildings not registered under the Condominium Act can also be jointly owned by all owners separate from the land. In this case the interest in the land is secured through a land leasehold or Thai company. There are no individual ownership title deeds issued by the land department. Under Thai law only a condominium registered under the Condominium Act offers freehold ownership.
    4 Rental, hire or lease

    Hire of immovable property (land, house, condominium) for residential purpose by foreigners is governed by Civil and Commercial Code (sections 537 to 571) and further specified by the Thailand Supreme Court. Foreigners are under Thai law allowed to lease real estate property for up to 30 years. As lease is in essence a prepaid rental and a personal right of the lessee, lease structures have major drawbacks and pitfalls. In the Civil and Commercial Code the fundamental principles of hire of property in Thailand are;
    1. A written rental or lease agreement is enforceable by action (a verbal agreement not);
    2. A rental or lease up to 3 years can be written in another language and does not need to be registered with the Land Department;
    3. A rental or lease agreement exceeding 3 years must have a Thai script version registered with the Thai Land Department to be enforceable;
    4. A registered leasehold cannot exceed 30 years. This period may be renewed upon expiration, but it must not exceed thirty years from the time of renewal;
    5. A lease agreement can only be registered over titled property (land with a proper title deed)
    6. A leaseholder can only sub-lease or sell (assign) his leasehold interest to another person if this is agreed in the lease agreement;
    7. A lease registration fee (for registered leases exceeding 3 years) shall be collected at the rate of 1% of the total rental throughout the lease term and stamp duty shall be collected at the rate of 0.1%, also over the total rental throughout the lease termm
    8. A lease must include a reasonable rental
    9. A sublease, rental or lease income is subject to personal income tax.
    Foreigners are permitted to obtain an interest in land through a registered ground or land lease. Contracts for land leasehold often aim to become almost the same or having the same effect as a freehold purchase of land. These contracts are complex and must separate ownership over the house and land and include additional 30-year hire periods and the option in the contract (or addendum to the contract) to transfer the land to a freehold title without further payment. A 90 year lease is not recognized under Thai law but are private contractual structures not based on hire of property laws in Thailand. The registered term and recognized lease rights of the leasehold purchaser remain 30 years. Unless the lease period is renewed the owner may regain possession and ownership at the end of the registered 30 year lease term. It would be up to a court to decide what the actual rights of the leasehold purchaser are.
    5 House ownership separate from the land

    A house separate from its land is an immovable property under Thai law. Transfer of ownership of immovable property must be in writing and registered at the competent authority (i.e. the Land Department). Also a foreigner may own a building as distinct from its land in Thailand; however, the right to own a building upon land owned by someone else depends on the right to use and possess the land (e.g. the lease and/ or the right of superficies term). The transfer of an existing house starts at the local land office and requires a 30 day public notice, after which the transfer is completed at again the land office. A Ta.Bian.Baan or Tabien Bahn is the document which gives the address of the house and states the persons who live in it (it could state the name of the owner but not necessarily). There are 2 types of Ta Bian Baan: 1 The blue Ta Bian Baan (Thor.Ror.14) for Thai nationals and 2 the yellow Ta Bian Baan (Thor.Ror.13) for foreigners. Proof of ownership of the house can be either the official land office sale agreement, as signed at and issued by the land office, or the construction permit issued in the owner's name.
    6 Land ownership by a Thai married to a foreigner

    Foreigners married to a Thai national can't own land themselves but the Land Department will allow transfer of ownership of the land to the Thai national who is married to a foreigner after a joint statement 'letter of confirmation' by the couple stating that the money expended on the land is personal property of the Thai spouse and not a Sin Somros or matrimonial property between husband and wife. This procedural requirement is based on a regulation issued by the Ministry of Interior (March 1999). The regulation issued in 1999 is based on the principle of section 1472 of the Civil and Commercial Code that if personal property has been exchanged for other property (in this case land) that property becomes a personal property of that spouse, and not a joint marital property between husband and wife, therefore the foreigner spouse has no ownership rights in that land based on Thai family laws, ‘property between husband and wife’. Note that only the land part is restricted for foreign ownership, and not land and house.
    7 Nominee owner

    Nominee owner refers to a situation where a Thai national, which is not a Thai spouse of the foreigner, purchases land on behalf of a foreigner or acts as the agent for the foreigner in the land purchase. In practice it occurs that foreigners purchase land and register ownership in a Thai national’s name and in return is given a lease, superficies or usufruct. This could be combined with a loan agreement and sometimes a mortgage registration. This structure is legal as long as the Thai national is not restricted in exercising his or her absolute ownership rights in the land which in essence relates to the freedom to encumber, sell and transfer the land. If such rights are restricted and lies with the foreigner it could deemed that the Thai national acquired the land under section 96 of the Land Code Act ‘as the owner in place of a foreigner’ or acquired land on behalf of a foreigner as his agent. If it is deemed the Thai national acquired the land under section 96 of the Land Code Act, as the owner in place of the foreigner, both the foreigner and the Thai national are liable for fines and even imprisonment.
    8 Usufruct

    Usufruct contract refers to the agreement and the right to use or occupy another's real property for one's life or up to 30 years. A right of usufruct in Thailand gives the right to use and manage a real estate property during a person’s life time. The right in the real estate property exists so long as the usufructuary (the holder of the usufruct right) is alive. After his or her death the real estate property reverts back to the owner. Often a usufruct is given to a family member such as a foreign spouse as a gift with the idea that a foreign spouse is protected in the event of death of the Thai spouse (owner) who then can remain in the property upon the death of the owner, his or her Thai spouse.
    The usufruct interest in the real property in Thailand must be recorded in the official land registry of the local land office. By registering the usufruct agreement the public is put on notice of the recorded usufruct burden on the land and therefore is enforceable against any third parties such as a transferee owner. The right of usufruct is not complete unless registered with the Thailand land department.
    The usufructuary is not allowed to sell the property during his right of usufruct without agreement of the registered owner of the property. The usufructuary under Thai Law has the obligation to maintain the property and take normal care of the property. If the usufructuary fails to do so and the property would lose value and become in a poor state of repair the owner has the right to terminate the right of usufruct. The usufructuary is liable for loss of value or destruction of the property unless he can proof that damages are not caused by his fault. The creation of a usufruct could in certain circumstances be an effective option to protect a foreign spouse during his marriage in Thailand and upon death of his or her Thai spouse, however in some case a usufruct is not the best option.
    9 Superficies

    Right of superficies (sections 1410 to 1416 of the Thailand Civil and Commercial Code) in Thailand is a civil law real estate right. In France it is called 'droit de superficie', in Germany it is called 'Erbbaurecht' and in the Netherlands it is called 'recht van opstal'. The principle of the right of superficies is in these countries the same; it grants the superficiarius (meaning the person granted the right of superficies) the right to build and own buildings, structures or plantations upon land belonging to another person. Basically the right of superficies separates ownership over the land and ownership over the building. The right of superficies in Thailand is limited to a period of time of up to 30 years or for the life of the owner of the land or the life of the superficiarius.
    The right of superficies must be registered on the land title deed to be complete and enforceable. A superficies can be registered as a separate right or as a supporting right (i.e. in combination with a land lease agreement). The person in the agreement granted the right of superficies obtains ownership over the building he builds upon the land, without obtaining or having ownership over the land. A superficies will be allowed before construction or during the construction of a building, generally not for an existing building.
    10 Habitation

    The right of habitation under the civil and commercial law of Thailand refers to the right of a person to live in the house of another gratuitously. The right of habitation differs from a usufruct contract that the person granted a usufruct is allowed to transfer the exercise of his rights to a third person (not the actual usufruct), where the right of habitation grants only the use of a property for the residence of the grantee himself and family. A habitation contract refers to the right of dwelling in a house. The right of habitation is granted gratuitously, otherwise the matter would become 'hire of property'. A right of habitation can be created by last will in Thailand (the owner grants the right of habitation in his last will or testament) or by gift from the owner to a third party. A right of habitation is complete upon registration and endorsement on the title deed at the land office where the property is located.
    11 Servitude

    Servitude is the Thai legal equivalent of an English easement. It is s a non-possessory interest in land. Servitude is governed by the Civil and Commercial code sections 1387 to 1401. Section 1387: 'An immovable property may be subject to a servitude by virtue of which the owner of such property is bound, for the benefit of another immovable property, to suffer certain act affecting his property or to refrain from exercising certain rights inherent in his ownership'. Servitude usually involve two or more separate properties/ plots of land, one of which is burdened and the other benefited by the servitude. The burdened parcel is called the servient property and the benefited parcel the dominant property. Servitude can involve several kinds of benefits and burdens, but usually it involves the use of neighboring well, the use of an access road over adjoining land plots, laying irrigation ditches, laying pipelines or utilities over neighboring plots. A registered right of servitude is an important right in case a plot of land is surrounded by other plots without direct access to a public road. In this case a right of servitude registered over adjoining plots guarantees uninterrupted access to dominant property.
    12 Partly foreign owned Thai company

    Up to the May 2006 Land Office guidelines aimed at preventing the use of Thai nominee shareholders by foreigners, it was common practice for foreigners to purchase land or condominium beyond the foreign ownership quota through a majority Thai owned but foreign controlled Thai limited company. As long as the company had majority Thai shareholdings there were no restrictions when purchasing a property and the partly foreign owned company was treated as any other Thai company. Currently the government is restricting the illegal use of Thai companies by foreigners by enforcing laws that previously were not enforced. Under these laws they specify the procedures for the officials to follow when dealing with partly foreign owned companies registering land or rights over land. In this case the Thai shareholders in the company will be investigated to determine if they are not acting as nominee shareholders on behalf of foreigners. Holding companies formed for property purchase by foreigners are currently much less common. A company formed merely as a front for foreign land ownership or as a ownership vehicle for foreigners is illegal and leads to unlawful land ownership. In case a foreigner chooses to own property in Thailand through a Thai company the foreigner will generally not appear on the company formation documents (Memorandum of Association) or on the shareholder list when the land is transferred to the company. After the property has been transferred to the 100% Thai company up to 49% of the (preference) shares will be transferred to the foreigner. A company that owns a real estate property must appear to be a normal company and file yearly balance sheets and correct accounting. It may not be a dormant property holding company.
    13 Land Titles

    The first and most important part of a real estate investment and buying a house in Thailand is the land title deed. Does the land have a suitable and proper title deed. The land title deed is the official a document administrated by the Land Department which states and proves a person's legal right to own or possess a piece of land, its survey status, as well as rights, obligations, or mortgages on the property. The ONLY viable land titles for investment by foreigners, whether freehold through a company, by a Thai national or through leasehold is in the first place the Chanote (N.S.4.J) freehold land title followed by the Nor Sor Sam Gor (N.S.4.G)

    Less attractive is the Nor Sor Sam (N.S.3) as this land title is not (yet) accurately surveyed and the area must be confirmed with neighboring land. This land may only be sold subject to a 30-days notice period in which it is not uncommon that boundry or ownership disputes are started. This type of land can be upgraded to a Nor.Sor.3.Gor or Chanote.

    Overview of all titles issued by the Thai Land Department Sor Kor 1 (S.K. 1), Nor. Sor. 2 (N.S. 2), Nor. Sor. 3 (N.S. 3), Nor. Sor. 3 Gor (N.S. 3 G.), Nor. Sor. 3 Khor (N.S. 3 K.), Nor. Sor. 5 (N.S. 5), Nor. Sor. 4 Jor (N.S. 4 J.) or Chanote title deed. Land titles issued by other government departments Sor. Por. Gor. 4-01 (S.P.G. 4-01), Sor. Tor. Gor. (S.T.G.), Por. Bor. Tor. 5 (P.B.T. 5), Nor. Kor. 3 (N.K. 3), Gor. Sor. Nor. 5 (G.S.N. 5)
    .

  2. #2
    Cadet
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    This is very useful info! Thanks.
    http://2.s04.flagcounter.com/count/epU/bg_FFFFFF/txt_FFFFFF/border_FFFFFF/columns_1/maxflags_1/viewers_3/labels_0/pageviews_0/flags_0/.jpg

  3. #3
    Uber Star Soi wanderer Thai Dreamer ผู้เพ้อฝัน Stillearly's Avatar
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    Quote Originally Posted by tank View Post
    This is very useful info! Thanks.
    How have you had time to read it ?...... Ten posts in as many minutes

  4. #4
    Uber Star Soi wanderer Thai Dreamer ผู้เพ้อฝัน RakThai's Avatar
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    Quote Originally Posted by Stillearly View Post
    How have you had time to read it ?...... Ten posts in as many minutes
    And changed nationality as many times.. 555

  5. #5

  6. #6
    Liberal Conservative Distantpeak's Avatar
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    Can anyone confirm if this post and a similar post in another thread are relevant? Mike posts nice photos so am assuming not a spammer? Just trying to understand his motivation?
    Singularity prediction... 2043...

    Immortality to follow within 5 years...


  7. #7
    Uber Star Soi wanderer Thai Dreamer ผู้เพ้อฝัน RakThai's Avatar
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    Quote Originally Posted by Distantpeak View Post
    Can anyone confirm if this post and a similar post in another thread are relevant? Mike posts nice photos so am assuming not a spammer? Just trying to understand his motivation?
    More money in real-estate than in photography?
    Distantpeak likes this.

  8. #8
    Uber Star Soi wanderer Thai Dreamer ผู้เพ้อฝัน Stillearly's Avatar
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    Quote Originally Posted by Distantpeak View Post
    Can anyone confirm if this post and a similar post in another thread are relevant? Mike posts nice photos so am assuming not a spammer? Just trying to understand his motivation?
    one post of pics and seven of spam ....

  9. #9
    Liberal Conservative Distantpeak's Avatar
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    Quote Originally Posted by Stillearly View Post
    one post of pics and seven of spam ....
    4 normal posts and 4 linked posts...

    But if the links are relevant? Can anyone confirm?

    That's what I meant when I said you let one guy advertise... and soon others follow...
    Hatari likes this.
    Singularity prediction... 2043...

    Immortality to follow within 5 years...


  10. #10
    Uber Star Soi wanderer Thai Dreamer ผู้เพ้อฝัน Stillearly's Avatar
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    Quote Originally Posted by Distantpeak View Post
    4 normal posts and 4 linked posts...

    But if the links are relevant? Can anyone confirm? That's what I meant when I said you let one guy advertise... and soon others follow...
    The pics are advertising as well , linked to a commercial site - same as the property posts

  11. #11
    Liberal Conservative Distantpeak's Avatar
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    Anyone think he should stay?
    Singularity prediction... 2043...

    Immortality to follow within 5 years...


  12. #12
    Liberal Conservative Distantpeak's Avatar
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    Going, going...
    Singularity prediction... 2043...

    Immortality to follow within 5 years...


  13. #13
    Uber Star Soi wanderer Thai Dreamer ผู้เพ้อฝัน RakThai's Avatar
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    Quote Originally Posted by Distantpeak View Post
    Anyone think he should stay?
    I think there should be a advertisement sub forum, where people or businesses interested can post their spam for a small fee..
    easy to ignore for anyone not interested, and money generating for the forum as a whole...
    Hatari likes this.

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