thaiwanderer

"Companies and 90 year leases are not too bad "

30 year leases are fine. 90 year leases are laughable.

90 year leases rule donx, you are not helping anyone by saying 90 year are laughable. The principle of the 90 year lease is that you make the renewal option to a right that will follow the title of the property based on idea behind supreme court no. 5770/ 1996. If it works for a 3 year lease why not for a 30 year lease? I'm not fully explaining it. And as a back-up you agree the right to freehold upon full payment. I'm sure this right to ownership clause will be valid and you will be deemed the actual owner and ordered to sell within a year. The government is aware of this structure and included it in the latest land office regulations, if they see this clause in the lease the may refuse the lease.

So with a 90 year lease you can go to court when needed and claim your renewal on the terms as agreed, or your ownership rights to the land

You can of course pay the full freehold price for the property and ask to limit the lease to 30 years, and just laugh about the idea behind the 90 year lease. Or a better idea, take a usufruct, it's free, no taxes, buy in your GF name, no problem at all! and you can rent it out just before you die for another 30 years to your heirs. That's laughable!!!

The same principles need not apply to 30 year leases as they do to 3 year leases and even if the facts are the same those rulings are not binding precedents anyway.

How exactly does a non-registerable renewal option 'follow the title'?

Foreign ownership by way of inheritance with a resultant forced sale is catered for but how do you propose to uphold a contract the purpose of which from the outset is illegal?

And anyway even if that were upheld and forced sale inevitably results you have only then 'secured' the land for 31 years?

At the very most options to renew give a therotecial right of action against the original landowner who may then not own the land your house sits on or has no money with which to compensate you?

Options for conversion to freehold ownership specifically rely on a future change in the law that the lessee is then entitled to own the land.

For that and renewal options you are then in a tricky area of whetehr past payment is sufficient and how far intervening events may overrule the past decsion.

There is NO magic bullet.

To whatever extent foreigners attempt to circumvent the general prohobition on them owning land decorating it with various paper planes of contracts the general prohibition on ownership should never be forgotten.

All attempts to make more secure structures are really only attempts to disguise whats going on.

They are nearly all pathetic if anyone were to seriously investigate them.

Disinformation gives a false sense of security.

If people take the time to honestly consider their own structures and then take a view on how likely they are to come under scrutiny at any time in the future then they can then decide for themselves if their appetite for risk is sufficient.

Each to their own - but the idea that theres some trick that will make a structure that can always avoid falling foul of the general prohibition on foreigners owning land whilst at the same time allowing foreigners to own land is an absolute conceit.

....but its not really true freehold ownership as even when the investment is approved its tied to that investment and has various restrictions.

As I've said before anyone investing that money would likely not be interested in such a weak model for the ownership which on balance is probably less attractive than a basic nominee structure let alone what someone doing business in country may be able to arrange.

We must be misunderstanding each other.

There is more profit on any unit if sold to a foreigner as opposed to a Thai.

Not all units in the same development are necessarily the same (size, spec etc).

There is even more profit to be made across the development by wherever possible confining the sales to foreigners to those units that are larger and have higher spec or are otherwise more desirable.

On the same basis developers will be less inclined to sell to Thais over the Thai quota where they have a reasonable expectation of being able to sell all of the foreign quota.

There is no reason why a developer would not or can not diverge from this but there is every reason not to where there is a resonable expectation in the market in whatever area they are operating that they can stick to it in order to maximise profits, which i don't consider a strange business model at all personally.

I don't think so because:

Its not a debt or lien secured on the condo - it relates to it and does not affect the owners freedom to sell (which is what the land office is interested to know from the CJP).

The CJP may not even know about the lease and anyway is not there to protect the lessee.

The lessee can in no way block or expect to be any part of the negotiations for sale (even if it was a 30 year lease which does not appear to be the case here).

The buyer should make their own enquiries with the land office generally including existence of registered leases and make other enquiries outside the land office for unregistered leases - and even then that's a matter for them with the buyer.

^

Thaiwanderer said

"A foreigner wishing to buy a condo unit does not have the right to insist it is sold to them as a foreign unit even if the quota is not yet exhausted."

and his reason for this is

"not all condo units were created equally and not all are necessarily available to foreigners."

My question is, why would a developer who has 'allocated" a number of units for the Thai quota refuse to sell one to a foreigner under the foriegn quota?

Why would he prefer NOT to sell a condo and not receive any money, over selling and recover some costs?

Because there is more fat on those they had intended to sell to farangs they may not wish to instead do as you suggest - it is their choice though of course economics / hard times MAY dictate that choice you are mistaken if you think every developer must fire sale any unit.

My earlier posts were a correction to the idea that seemed to be supported in the thread that:

farang prospective buyer + farang quota not yet exhausted in particular development = that buyer can have any unit in the development under their own name regardless of anything else and in particular regardless of the developer's wishes

(hence my previous comments)

In another thread Oracle - who seems to be taking advice on his own admission from the bar of the Red Lion rather than the Thai bar - is still saying 90 year leases are valid. I have asked him to quote the relevant section of the CCC.

A 30+30+30 years lease has no support by the law. However, the law ("Hire" section of the CCC) supports one extension for a second period of 30 years, IMO theoretically that is, as it depends on the good will of the land owner.

I'm a bit confused by your post - how is one extension supported by the CCC but not two, three or any number of extensions?

I'm not saying 30+30+30 are safe but am confused by the distinction you make between one and more extensions on the basis of the CCC?

Even if the foreign quota has not yet been used up the developer (where 1st sale of the particular unit hasn't occured for example) and later the cjp is still in control as to whether it may yet be included in the foreign quota.

The land office do keep records so they can confirm how many units have been registered under the foreign quota HOWEVER the developer and or cjp's confirmation AND co-operation is also still required.

A foreigner wishing to buy a condo unit does not have the right to insist it is sold to them as a foreign unit even if the quota is not yet exhausted.

If you are buying a second hand unit already owned by a foreigner and which you have properly confirmed is registered as a foreign unit tghen that is different.

Then the foreigner would not be able to buy it, not all units being created equally.

And why would a developer refuse a sale, especially in the current market?

Foreigners 'buy' land and condo units in Thailand all the time without owning them solely in their own personal name.

I was attempting to clarify some confusion I detected in the thread that a unit will necessarily be foreign owned just because the quota isn't exhausted and the prospective buyer is a foreigner.

Regardless of the market, developers may well wish to keep some particular units aside for foreign freehold ownership - which might not be the particular unit a prospective buyer is interested in.

^ Oi, I didn't say that

See my post #33 http://www.thaivisa.com/forum/index.php?s=...t&p=3310667

Hadn't seen that - that was the last part of my post - jumped into yours somehow?

^but why would a Farang want to set up a dodgy company with 51% Thai ownership to own a condo that he can own it 100% in his own name?

IF can own in own name then there is no reason to BUT not all condo units were created equally and not all are necessarily available to foreigners.

The lease itself is perhaps a greater liability.

However (and i note your 'perhaps') seller should indicate the existence of the lease and deposit but to suggest that the lessee here should be involved in 'tri-party' consultations is laughable imho.

The OP is obviously concerned for the deposit and short remainder of the lease but in relation to the sale is of very small significance.

Thanks I knew that would indeed make perfect sense but I couldn't find the source so was I was just whistling in the wind a little.

Even if the foreign quota has not yet been used up the developer (where 1st sale of the particular unit hasn't occured for example) and later the cjp is still in control as to whether it may yet be included in the foreign quota.

The land office do keep records so they can confirm how many units have been registered under the foreign quota HOWEVER the developer and or cjp's confirmation AND co-operation is also still required.

A foreigner wishing to buy a condo unit does not have the right to insist it is sold to them as a foreign unit even if the quota is not yet exhausted.

If you are buying a second hand unit already owned by a foreigner and which you have properly confirmed is registered as a foreign unit tghen that is different.

Then the foreigner would not be able to buy it, not all units being created equally.

And why would a developer refuse a sale, especially in the current market?

Foreigners 'buy' land and condo units in Thailand all the time without owning them solely in their own personal name.

I was attempting to clarify some confusion I detected in the thread that a unit will necessarily be foreign owned just because the quota isn't exhausted and the prospective buyer is a foreigner.

Regardless of the market, developers may well wish to keep some particular units aside for foreign freehold ownership - which might not be the particular unit a prospective buyer is interested in.

Even if the foreign quota has not yet been used up the developer (where 1st sale of the particular unit hasn't occured for example) and later the cjp is still in control as to whether it may yet be included in the foreign quota.

The land office do keep records so they can confirm how many units have been registered under the foreign quota HOWEVER the developer and or cjp's confirmation AND co-operation is also still required.

A foreigner wishing to buy a condo unit does not have the right to insist it is sold to them as a foreign unit even if the quota is not yet exhausted.

If you are buying a second hand unit already owned by a foreigner and which you have properly confirmed is registered as a foreign unit tghen that is different.

So, namoo, 24 hours after your post, the problem was settled. All you had to do was speak with the new landlord. Why didn't you do that initially, rather than getting upset?

Actually, I am very glad that namoo started this topic. It has been confirmed to me that leases are tranferred and enforced even when a sale of the property occurs. It has been my understanding in the past that such is also the case with a 30 year lease.

That is correct as it is regulated by the same law, Hire of Property under the Civil and Commercial Code. There is thus no specific law for a lease in Thailand.

http://www.samuiforsale.com/Civil_Code_tex...sh_II.html#Hire

However please remember the distinction between lease rights and personal rights.

The new owner / lessor is not obliged to honour all the lessor obligations contained in the lease.

The thirty year lease is not extinguished by the lessor selling or otherwise transferring (including dying and others inheriting) BUT for example the obligation to renew that lease is not passed on to the new owner.

The lessee may have a theoretical case against the original lessee but even if successful in establishing that the old lessee doesn't own the subject land and hence no performance of the renewal (for example) can be ordered.

Some strange notions here so let's go to source.

Civil and Commercial Code section 569:

A contract of hire of immovable property is not extinguished by the transfer of the property hired.

The transferee is entitled to the rights and is subjected to the duties of the transferor to the hirer.

Assuming your lease is silent on the issue.........

Lessor has sold the property and it seems the new owner is not doing anything to breach the lease you have.

AFAIK the lease is not voided or voidable just because the property has been sold.

It seems its only you that wants a way out?

The buyer seems happy you are a sitting tenant and has merely stepped into the sellers boots.

I suspect you would have great difficulty getting or being entitled to any of the deposit back if you leave early, and rightly so as you are then in breach?

Condo..

5.2m in foreign name - 4.2m Thai/company name...

Penny pinching ?? - whats 1m B amongst friends ??

Just for your consideration........

Worst case scenario - nominee Thai company - not be able to freely exercise your vote in the members decisions, lose the unit and therefore lose 4.2million, go to prison then if survive not be allowed back into Thailand.

However unlikely this might make spending a measly 1million look not so bad?

Condo..

5.2m in foreign name - 4.2m Thai/company name...

Penny pinching ?? - whats 1m B amongst friends ??

Could one not just purchase the condo under a Thai company then resell the condo to yourself before the developer had finished selling their foreign quota? Obviously you get hit with 3.xx% tax on the transfer, but sure beats paying 1M extra.

No - if sold under Thai quota it doesn't then become part of the Foreign quota by being sold to a Foreigner (even if the Foreign 'quota' is yet to be exhausted).

It's the developer's decision which units are registered as Thai or Foreign.

AFAIK no bar on a Thai company owning more than one property (why would there be?).

Whether its a safe method is another matter but the number of properties held makes no real difference to that - except eggs in one basket.

Not if the seller knows the buyer is in reality a foreigner, which they will.

We may be confusing each other but on the basis of what you are now saying if its so easy to show its not a nominee company as you say then it seems its equally so easy to see that your company is out and out illegal for holding land.

The whole point of 'nominee' structures is for a foreigner to attempt (with greater or lesser degrees of success) to have beneficial ownership, use and control of land without highlighting this fact to the authorities and perhaps being able to withstand some low level scrutiny.

To the extent yours is not a nominee structure you may have more control than an atypical version but hand in hand with that is yours would appear to be more obviously in breach of the law (thais together owning a minority of share capital if i read you correctly?).

Regardless of that the advantage of the 30 year lease is that if the thais turn bandit on you for whatever reason you still have 30 years.

If you have as effective control as you say then that reason to favour a 30 year lease doesn't exist.

In your structure or any other nominee version the 30 year lease does not provide a cloak of protection if for any reason the landowning structure is ever investigated and there is any suggestion on the paper trail that you were complicit in the set up (in fact holding a lease will generally point a few fingers at you anyway).

This is of course all based on future unknown enforcement of current laws which themselves may also change, but to entirely ignore that posibility rather than assessing the risk and making your own choice as to what to do would suggest everyone may as well just squat on land and leave it at that.

I am not criticising you its just your posts appeared to indicate your structure was somehow better and to be entirely honest unless i am missing something yours would seem to be worse than the usual lazy nominee structures.

Thank you, I am well aware of 'cross share' companies as you put it as well as multi layered etc.

It was just i was intrigued that you seemed to be suggesting either yours was not a nominee structure or was not an atypical nominee structure or somehow had something new.

Will all due respect whilst yours is ever so slightly more 'complicated' than a single nominee structure it is by far and away still less complicated and more easily noticeable by even the laziest official should the time ever come than alot of widely used structures.

Your lawyer or bookkeeper may have suggested its 'more clever' but again with respect its not.

But as with all such efforts to illegally circumvent the law if your happy with it thats all that counts.

Not going to labour the point (too much) as OP's question appears to be answered by finding out the difference in tax liability between short and longer lease - assuming a lease is even required (as apparently it isn't for strengthening the hold on the land) - which his bookkeeper can answer.

However if the OP is so inclined i'd be interested to know how his structure differs in an advantageous way from a 'normal' nominee company.

On the basis of the above (and assuming a mistake distinguishing shares and voting rights hasn't been made by the OP?) Thais only own 0.25% and 0.50% of the companies - if not an exceptional case I cannot see how this doesn't offend the FBA or Land Code (even more so than atypical 51/49 or less foreigner weighted nominee companies)?

His lawyer may well have had a widely worded power of attorney to deal with the lease to begin with.

Obvious conflict of interest as lawyer and lessor - although lessee weeking to circumvent the law can't really complain.

If not an out and out scam by the lawyer i imagine (though i may be wrong) that the lease hasn't been cancelled rather the land office just refused to register it?

The lease should specify whose liable for taxes although as its a sham agreement lessee should pay for the tax (presumably the lawyer hasn't received the full amount for giving the lease?).

Ironic really that the lawyer who 'helped' the friedn break the law now has hive over a barrel.

SUGGEST MODS MOVE TO REAL ESTATE FORUM?

IF happy with structure and tax cheaper on rolling yearly leases than I can see the advantage of that.

However its not at all clear your structure is legal especially on basis of 5/1000 and 5/2000 thai shares.

That of itself would appear to be even more oviously at odds with the law than the 'usual' nominee company structures????

Based on declared values anyway?