If you?re not a Thai citizen, you can?t own land in Thailand
(Condo ownership laws are different)
Thailand has similar?property laws?and regulations as most western countries. ?The Thailand Civil Code is based on the mainland European civil law system and has copied the aspects from common law countries. Thai property laws are considered western. What makes buying real estate in Thailand different and more complicated is that?Thai land laws?prohibit foreigners from owning land outright, thus making it impossible for foreigners to obtain outright freehold ownership over land and house. ?With that said, one can see that many foreigners are investing in real estate and own vacation or permanent homes all over Thailand. ?This is generally done through a 30 year lease-hold contract. ?The lease-hold contract or ?yellow book?, is merely a vehicle for foreigners to occupy property in Thailand for residential (or investment) purposes only.
The process for a foreigner to purchase a house and land would normally start with negotiating a total price for purchase and lease of house (building) and land. ?Hence, there would normally not be a monthly lease payment on the land (there are exceptions). ?Here is a typical lease-hold contract?with an additional 2 ? 30 year (total of 90 years) renewals.
Typically, the following general steps are taken when a foreigner makes the decision to purchase a home with a 30 year lease in Thailand.
- Foreign buyer chooses a real estate company and real estate agent he/she feels comfortable with
- They look through a catalogue of available properties and drive around looking at specific houses within their budget
- Once the foreign buyer has found a property he/she likes, a reservation deposit is made to show sincere interest in purchasing the house. ?Typically, the reservation deposit is around 100,000 ? 200,000 THB
- If this is a property purchase outside of Bangkok, it may be necessary to file a 30 day notice of intent to purchase the property at the land office. ?This is just a paper exercise that is required in the land office
- A lawyer then does a full title deed search to make sure the land you are purchasing is indeed owned by the person you are buying it from, as well as making sure the land you are purchasing is the same land listed on the deed
- A lawyer then provides due diligence on the property your are intending to buy. ?This will ensure correct property boundaries, discovery of any planned building projects that may interfere with the scenic view you believed came with the house, proper building permits have been paid for, etc
- A contract is drawn up between the seller and the buyer and then carefully reviewed by both parties. ?Changes to the contract should be made at this time if there is further negotiating required. ?Contracts are then signed
- An escrow agent or escrow company is chosen to hold the buyers purchasing funds. ?This can be either your lawyer, real estate agent, or even in some cases, the property developer
- In the case of a lease hold agreement, a real estate lease registration fee is charged at the rate of?1 %?of the?total rental?throughout the whole lease term and collected by the land office at the time of registration. Also a stamp duty is collected at a rate of?0.1%?of the total rental throughout the lease term
- You are given the rights to occupy the property
?What Happens When I Sell My Lease Hold Property?
In general, when you sell your land under a lease-hold contract, the lessor must continue to honor the contract with the new owner you have just sold to. ?This does not alway mean that the lease term will reset itself back to year zero for the next ?lease-hold owner. ?That being said, it is possible to request that the true land owner create a brand new 30 year lease-hold contract starting at day one for the person you just sold to. ?With property developers, there are many incentives to do this. ?There will be standard fees associated with the transfer of any lease. ? In the case of most property developers, they may be happy to do this for each new lease-hold property transfer; however, it should be expected that if you sell your property after 5 years of occupying a 30 year lease, there will only be 25 years left on the contract, and the same balance of 25 years will transfer to the new lease-hold purchaser.
So what happens if I have been living on the property for 27 years and there are only 3 years left on my lease of the land?
If you have used a good and reliable real estate agent as well as a knowledgable property lawyer, your contract will probably include a separate contract wherein the true owner of the land is under a promissory or contractual obligation to renew your lease for additional 30 year terms. ?It must be stated that this separate contract is currently not a protected right under the ?Hire Of Property Law? in Thailand. ?The renewal of your lease terms should be written and agreed upon in a separate contract which, again must be stated, is not a protected right in Thailand. ?That means, in the worst case scenario, you may be required to hire a lawyer to enforce this separate contract.
Can I Start A Company To Own Land In Thailand?
In the past, holding companies have been set up to circumvent the land laws in Thailand, so that a foreigner (through a false company) can own land as a minority shareholder in said company. ?Since May 2006, this loophole has been declared illegal and it is not advised to purchase land this way. ?There is an inherent risk that your land contract could be voided by the land office. ?Siam Society Real Estate does not recommend purchasing property through a holding company as a vehicle to gain land ownership in Thailand. ?You may also put yourself at risk of being deported from the country if you do not hold a valid work permit while ?operating a false company? in Thailand.
The real estate laws in Thailand restrict all foreigners from owning any land in Thailand with the sole purpose of severly limiting foreign land ownership. ?The reason for these laws is to safeguard the country from the danger of having too many foreign investors owning Thai property, which could lead to foreign politcal control in various ways. ?It makes sense to do this. ?Thailand should be for Thai people. ?Because there are a lot of foreigners with more money than your average Thai citizen, there is an inherent danger or risk of foreigners controlling the majority of land here, and thus potentially the political system as well. ?Hence, in it?s most general form, Thai law restricts all foreigners from owning any real land in Thailand.
Buying real estate in Thailand follows a different legal process than buying real estate ?in a country offering outright property ownership for foreigners. Property laws in Thailand are straightforward (foreigners cannot own land) but sales structures aimed at foreigners are often complex and confusing.?Real estate in Thailand?can legally be divided into the following objects:
- Apartments that are registered under the Condominium Act of Thailand
- Apartments NOT registered unde the Condominium Act
- Land
- House
- Land and House
The Term Of A Lease Cannot Exceed 30 Years?.
?but can be renewed for two more consecutive 30 year leases
The term of a real estate lease in Thailand may be fixed or periodic. The maximum lease term in Thailand is 30 years (section 540). Any lease of immovable property for a longer period than 30 years in Thailand may only be made by renewal of the lease contract upon its expiration. Based on supreme court judgment it is possible to say that a valid and enforceable renewal can only be made within a period of 3 years prior to the expiration of the first lease term (not 30 years prior to expiration). If for example the lessor and lessee have executed 2 or more consecutive 30-year lease agreements it shall by law be deemed as 1 lease and reduced to 30 years. ?Restating this, one can have a contract written stating that the true property owner agrees to renew the lease contract for a second 30 year term within 3 years of the first 30 year lease expiring. ?This is enforceable according the Thai supreme court judgment, but a new contract must be written during these remaining 3 years. ?This same procedure can be done one last time for a total of 90 years. ?After that, the lease term is no longer valid. ?Leases cannot be passed down to surviving parties in the event of a death of the lessee, unless prior agreements have been made in an outside contract between the seller and the buyer.
For specific leases by foreign corporations the Thai government created a longer term in a specific act; the?Hire of Immovable Property for Commerce and Industry by Foreigners Act B.E. 2542.
Thai law puts a limit of 30 years on any property lease in Thailand. Parties cannot extent this term in the contract. For the same reason parties cannot make an?enforceable provision?for renewal of a 30 year lease term. A renewal promise in a 30 year lease agreement is under Thai hire of property laws not enforeable by legal action and legally best described as a?moral obligation?to the person or developer who gave the option. A renewal promise in a 30 year lease agreement merely hold the illusion of a longer lease contract.
Author: paul
Skype: paultvanslyke
Source: http://siamsocietyrealestate.com/2012/buying-real-estate-thailand-foreigners-land/
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