Advertorial How to buy and invest in property in Phuket

[Jonathan Fairfield]

How to buy and invest in property in Phuket

 

 

PHUKET: Panuwat Somrit is a Phuket lawyer specializing in property. He has been practicing law for the past six years. He graduated with a Bachelor’s Degree in Law from Ramkhamhaeng University.

 

Here he talks about how to buy and invest in property in Phuket.

 

Buying or investing in property may seem like a straightforward and easy transaction. You simply pay the money, transfer the ownership and that’s it. However, it’s not that way in Thailand. 

 

If  it were, there wouldn’t be so many issues related to buying property here. Many foreigners face problems after they have already bought property. They have to appear in court to fight cases, which is a huge waste of time and money. 

 

One such recent issue was at Aspasia. In March 2015, ten foreign tenants from the Aspasia Phuket Resort, led by Dutch national Jan Cornelis van Zuilekom, complained to Phuket Governor Chamroen Tipayapongtada that they had been locked out of their rooms and had their electricity and water cut off. 

 

The tenants wanted the management to provide them with financial reports, but their request was refused. They then stopped paying the maintenance fee, which resulted in their electricity and water being cut off. The management team claimed that the tenants had no right to see the reports according to their contract, which is why they were punished by having their electricity and water cut off. All of this, the company said, was written clearly in the Management Agreement. 

 

This example can be used as a good lesson for others to exercise caution, as there are many similar cases of this nature in Phuket. 

 

The problem with this arrangement is the ignorance of both parties – the buyer and the project owner – about the management plan or management agreement, after buying or investing in the property. 

 

Buyers or investors mostly focus on the buying and selling agreement, but nobody pays much attention to the management plan. Most buyers and investors are unaware of what else that they have to pay, or what terms and conditions apply for when they live in that property after becoming the owner of it.

 

There are two types of property investment: leasehold and freehold. 

 

Leasehold is a long-term rental that can last up to a maximum of 90 years, but the contract has to be renewed every 30 years. A freehold transaction is when you actually buy the property. 

 

Every property in Thailand falls under Thai law, as well as each private business’s own regulations. Therefore, investors, especially foreigners, have to be careful and study these laws before they decide to buy or lease under a freehold or leasehold agreement. 

 

Most buyers are cautious when deciding how much they have to pay up front and how much they need from the bank. However, it’s what happens afterwards that causes so many problems. 

 

For example, in some cases, owners have the right to vote on how much in maintenance fees they are willing to pay per year. They also have the right to see the financial documents showing the usage of the maintenance fee, as well as to examine how the juristic persons work. This is usually the case in condominiums. 

 

In other types of property, the project owner or management team has the right to decide on how they will utilize the maintenance fee. They can even set their own price for water and electricity. The tenants or owners have no right to be involved with management. They just have to pay the maintenance fees as required.

 

Therefore, everything depends on the management agreement between the buyer and project owner. As a lawyer, I strongly advise all parties to carefully consider the management agreement before making any buying or investment decisions.

 

This will highlight what you can or can’t do after you have bought, what the management’s responsibilities are, etc. Be careful: read the management agreement thoroughly and do not limit your focus solely on the buying and selling agreement. 

 

Contact us NOW 

 

TELEPHONE: 076 – 383180

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[Destiny1990]

So sir had that Aspasia case be settled then? Seems to me the leaseholders are being screwed by that developer who overcharging them for all..

Edited September 25, 2017 by Destiny1990

[portroyal]

Sound advice from the lawyer

But bachelor from Ramkamhaeng ? Ouh la la !

Just ask thai people what they think of Ramkamhaeng University...

[stevenl]

22 hours ago, Jonathan Fairfield said:

Leasehold is a long-term rental that can last up to a maximum of 90 years, but the contract has to be renewed every 30 years.

That is in contradiction with what is the general consensus about this subject, and the general consensus is supported by judges: leasehold is for 30 years, any longer contracts, or roll over contracts, can be deemed void.

[Destiny1990]

Guess that famous lawyer is already speechless!

90 year leases ???

[xylophone]

On ‎26‎/‎09‎/‎2017 at 10:22 AM, stevenl said:

That is in contradiction with what is the general consensus about this subject, and the general consensus is supported by judges: leasehold is for 30 years, any longer contracts, or roll over contracts, can be deemed void.

Yes, I looked at that and thought the same, but to give him the benefit of doubt, perhaps he meant that 30 yr leases could be renegotiated every 30 yrs if both parties agreeable?? Having said that, nothing put in writing/agreed at the time of sale with regards to this will stand scrutiny anyway...........so his bad!

[Mysterion]

10 hours ago, xylophone said:

Yes, I looked at that and thought the same, but to give him the benefit of doubt, perhaps he meant that 30 yr leases could be renegotiated every 30 yrs if both parties agreeable?? Having said that, nothing put in writing/agreed at the time of sale with regards to this will stand scrutiny anyway...........so his bad!

What if they all sign postdated 2nd and 3rd 30 year lease renewals agreements, which are held in safe keeping by the person who paid for the original lease?

 

Then, just before the end of the first lease, they submit the 2nd lease to the land office, and do the same at 60 years.

[xylophone]

2 hours ago, Mysterion said:

What if they all sign postdated 2nd and 3rd 30 year lease renewals agreements, which are held in safe keeping by the person who paid for the original lease?

 

Then, just before the end of the first lease, they submit the 2nd lease to the land office, and do the same at 60 years.

Leases have a 30 year term and not sure that your proposal would stand scrutiny as technically one or both parties are agreeing to 90 yr leases??

 

Just my opinion and legal minds best suited to answer your post!

[Mysterion]

3 hours ago, xylophone said:

Leases have a 30 year term and not sure that your proposal would stand scrutiny as technically one or both parties are agreeing to 90 yr leases??

 

Just my opinion and legal minds best suited to answer your post!

I suppose the property owner could just sell the house prior to the second postdated lease being registered at the land department, which would render the postdated 2nd and 3rd leases worthless as they were never signed by the new owner and never legally registered?

 

[phuketrichard]

90 year leases are and have always been a scam by realtors to sell homes

The owner needs be alive to sign the 2nd- 30 year lease as a recent ID card needs be submitted, as id cards only last 10 years, any post dated leases are not valid.

[xylophone]

52 minutes ago, phuketrichard said:

90 year leases are and have always been a scam by realtors to sell homes

The owner needs be alive to sign the 2nd- 30 year lease as a recent ID card needs be submitted, as id cards only last 10 years, any post dated leases are not valid.

Thanks for that info............pretty well knew there couldn't be an easy way round it, but as you say it has been a scam to sell homes and even saw it on the website of a group of lawyers based here, stating 90 yr leases as an option when buying!

[xylophone]

On 25/09/2017 at 11:05 PM, Destiny1990 said:

So sir had that Aspasia case be settled then? Seems to me the leaseholders are being screwed by that developer who overcharging them for all..

 

On a related note, I wonder if a lawyer like this would have been able to stop the investors in the ACE condominium development in Patong, where the developers are known to the police and other legal entities, from losing their deposits? It would appear that the developers have absconded with the money/funds yet nothing has been done to help the investors!

 

And how about the investors in the development named, "The Park" by Phanason, on Nanai road........... do they stand a chance of getting any of their deposits back, because the development has been stalled now for three years?

 

Just how useful is a lawyer in Thailand when just about anything can happen and where the investors are really left out on a limb – – contacts, power and brown envelopes seem to overrule anything that an everyday lawyer could do!

[DrDave]

On 9/28/2017 at 10:57 AM, Mysterion said:

What if they all sign postdated 2nd and 3rd 30 year lease renewals agreements, which are held in safe keeping by the person who paid for the original lease?

 

Then, just before the end of the first lease, they submit the 2nd lease to the land office, and do the same at 60 years.

What if the lessor is no longer among the living at the time that the 1st or 2nd lease expires?

It would be a little awkward presenting a supposedly new lease document to the land office that bears the signature of a deceased person.

 

Edit: oops - just saw that phuketrichard already mentioned this.

Edited October 2, 2017 by DrDave

[LivinginKata]

48 minutes ago, xylophone said:

<snip>

Just how useful is a lawyer in Thailand when just about anything can happen and where the investors are really left out on a limb – – contacts, power and brown envelopes seem to overrule anything that an everyday lawyer could do!

 

These lawyers are not needed at all for land deals. In my opinion it's all buyer beware of lawers. In my first year here I was still thinking like I was back in the Uk and needed legal help. With my Thai wifes help I soon found that there is no need for a lawyer for land deals ... easy to DIY .... 

[Destiny1990]

54 minutes ago, LivinginKata said:

 

These lawyers are not needed at all for land deals. In my opinion it's all buyer beware of lawers. In my first year here I was still thinking like I was back in the Uk and needed legal help. With my Thai wifes help I soon found that there is no need for a lawyer for land deals ... easy to DIY .... 

Yes and good luck with ur land deals?

[LivinginKata]

9 minutes ago, Destiny1990 said:

Yes and good luck with ur land deals?

 

Thanks for your kind comment. As it happens we have bought some 6 parcels of land in Phuket many years ago and all seem secure. Also some 5 parcels up country  in Thailand - no problems.