Buying a House for Americans

[Thailand]

47 minutes ago, simoh1490 said:

The three people in question are farangs that I've come to know over the years, I did however start a thread on the subject over a year ago where I mentioned the fact in the context of the thread which was about proxy ownership, I believe under the chiang mai poster name. But I'm not sure why you think the Land Office doing its job is a newsworthy item, unless you mean Thai visa forum as a form of news, in which case it did. Perhaps the problem with this aspect is use of the word crackdown, it might be more accurate to suggest that the law is being enforced more rigorously.

Simply if such an important law that affects so many is now being enforced more rigorously there would be more information out there.

 

What options did your friends use to comply with the law?

 

 

[bkk6060]

9 hours ago, ericthai said:

has nothing to do with visa agency's,   Also, it has happened in the past that the govt has cracks down on Nominee ownership. i think last time was about 5-6 years ago. 

Sure it does.

Several posts in threads about the coming "crackdown" on the illegal practices of agencies obtaining Visa's for foreigners.  

Edited February 25, 2018 by bkk6060

[bkk6060]

Another way around this ownership issue is a possible "contract sale".  It is done in the US.  Not a lease.

This would normally be done if the property is free and clear.  You set up terms with the owner via a contract best negotiated by an attorney.  The property sale is not recorded with the land office.

[Bill97]

Simply if such an important law that affects so many is now being enforced more rigorously there would be more information out there.
 
 

Enough information out there in the past 3-5 years to tell me and many others that it was a significant problem.


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[Langsuan Man]

47 minutes ago, Bill97 said:

Enough information out there in the past 3-5 years to tell me and many others that it was a significant problem.

Once again deflection, evidence of a crackdown please, not your opinion or "enough information out there".

 

How do we know that the " nominee ownership " paperwork was not done correctly and the land office is just crossing their t's and dotting their i's, not outlawing anything

 

Which of course leads to the main question which is :  If this system is so illegal then why do Land Offices accept the paper work and issue  Chanotes in company names ? 

[simoh1490]

2 hours ago, Thailand said:

Simply if such an important law that affects so many is now being enforced more rigorously there would be more information out there.

 

What options did your friends use to comply with the law?

 

 

One was the subject of a thread I started quite some time back: one friend got out of company ownership (at the insistence of the LO) by using my wife as the Chanotte holder whilst he held a superficies on the house. We only agreed to this before the issue of proxy ownership started to receive attention in the press and at that point we realised the arrangement was illegal and carried a much higher risk than we realised. After much friction between us the friend agreed to transfer title to another Thai person who was OK with the arrangement and my wife got out from under it all - it's worth mentioning that we sought legal advice from Kuhn Sumalee (Chiang Mai Lawyer) before hand and she confirmed the risks.

 

The second friend transferred title to his then long-term girlfriend but took out a usufruct also hence he has some certainty of the arrangement. Others that I have heard about on a second-hand basis have done variants of the above, an usufruct being the most popular way forward for most. In all cases that I know and have heard about, the LO has given owners 6 months to get things sorted and no penalties were applied.

 

 

 

[XGM]

21 minutes ago, Langsuan Man said:

If this system is so illegal then why do Land Offices accept the paper work and issue  Chanotes in company names ? 

Why wouldn't they? a Thai company can legally own real estate. Issues with the law can be if:

 

1. The Thai shareholders didn't really come up with the money for their shares, they are nominees while in fact the foreigner is sole investor.

2. The company does not really act in accordance with its declared activities, in fact it is a shell / straw company set up for the purpose of circumventing the restrictions on foreign ownership of real estate.

 

Those are probably not points that the land office have means to easily examine. Someone else's problem.

Edited February 25, 2018 by XGM

[Bill97]

I am not your research assistant and care not if you do not believe me.

Your last question shows a large lack of understanding.

Good luck charging around on your stallion.



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[simoh1490]

There's some parallels between what's happening on this issue and the change in approach generally towards how law-breaking is handled here and I think many expats are out of date. There was a thread yesterday where a UK based mum was seeking help for her 18 year old son who had been caught smoking ganja in Kah Tao. Old hand long term expats and supposedly knowledgeable newbies all advised the lad to pay a bribe to the police and to leave the country asap. That approach might have worked some time ago but not today, today he's posted bail and he's going to court and there is no option to leave the country until the matter is settled.

 

Ditto buying property in a company name, it was OK once but not anymore, the risk stakes have increased except many don't realise that or even worse, refuse to believe it. 

[Thailand]

1 hour ago, simoh1490 said:

One was the subject of a thread I started quite some time back: one friend got out of company ownership (at the insistence of the LO) by using my wife as the Chanotte holder whilst he held a superficies on the house. We only agreed to this before the issue of proxy ownership started to receive attention in the press and at that point we realised the arrangement was illegal and carried a much higher risk than we realised. After much friction between us the friend agreed to transfer title to another Thai person who was OK with the arrangement and my wife got out from under it all - it's worth mentioning that we sought legal advice from Kuhn Sumalee (Chiang Mai Lawyer) before hand and she confirmed the risks.

 

The second friend transferred title to his then long-term girlfriend but took out a usufruct also hence he has some certainty of the arrangement. Others that I have heard about on a second-hand basis have done variants of the above, an usufruct being the most popular way forward for most. In all cases that I know and have heard about, the LO has given owners 6 months to get things sorted and no penalties were applied.

 

 

 

Thanks for that, makes more sense.

As I mentioned earlier, many foreigners, particularly Chinese are being advised by local real estate agencies to go the shelf company route and that will certainly create future problems. On a slightly different subject but Chinese and real estate agents again. The agents are actively seeking out, and recommending properties for "homestay" with the Chinese operating illegally with no permits and in most cases on tourist and education visas. Another bubble with a big burst potential.

Just depends whether the relevant authorities can be bothered to take action, that does not seem to be the case at the moment.

 

 

[THAIJAMES]

Chinese are definitely trying to use the company route to purchase property, which has led to Land Department to scrutinize carefully all such transactions especially involving Chinese names.   As a result they have been moving to using Thai wifes and Usfustucts just like Farang :).

 

One of my girl friends which is married to a Chinese National claims that dozens of properties are under her name using ufustructs.

Edited February 25, 2018 by THAIJAMES

[XGM]

5 minutes ago, THAIJAMES said:

One of my girl friends which is married to a Chinese National claims that dozens of properties are under her name using ufustructs.

And that's only one girlfriend? I bet all your girlfriends combined own half of Chiang Mai :-)

[simoh1490]

35 minutes ago, THAIJAMES said:

Chinese are definitely trying to use the company route to purchase property, which has led to Land Department to scrutinize carefully all such transactions especially involving Chinese names.   As a result they have been moving to using Thai wifes and Usfustucts just like Farang :).

 

One of my girl friends which is married to a Chinese National claims that dozens of properties are under her name using ufustructs.

Having a usufruct via a Thai spouse is unsafe and I would have thought most people understood that it can be cancelled upon divorce.

[thaibeachlovers]

7 hours ago, Thailand said:

I would have thought that would certainly have made the news as many foreigners have used the "company" option despite the potential problems.  Do you have any links/references to this?

Back in the day when farangs were living in LOS on visa runs, they thought it would last forever too. Everything changes and IMO never to make it better or easier.

[thaibeachlovers]

The fact that there is such discussion going on here is in itself indicative that buying property under any arrangement is at best a gamble that it will not turn out badly. Yes, some are successful, but some punters also win in casinos. However, the house always wins in the end.

 

My reluctance to buy was always predicated on a rock crushing plant or an all night karaoke starting up next door.

[simoh1490]

I have a usufruct with my long standing Thai partner so it can't be cancelled. The house cost me only a small percentage of my cash assets and I love the garden, plus the house generates lots of projects to keep me busy and I don't have to pay rent. My partner gets all my assets when I die so the house is no risk for me, what's not to like.

Edited February 25, 2018 by simoh1490

[scorecard]

On 2/23/2018 at 4:19 PM, LivinLOS said:

Also of note as you mentioned 'americans' a 100% american owned Amity company cannot hold land.. 

 

So yes you can do this, as long as you understand you can only be a minority shareholder, IE you can give away 51% or more of a company you pay for, which holds land you pay for.. 

 

All true, however there's a bit more detail:

 

- By Thai law, a foreigner (any foreigner, regardless of nationality) can only own 49% of the shares in a Thai company.

 

- The other 51% must be owned by a Thai person or a group of Thai people.  After registration the Thai shareholders cannot sell their shares to the foreigner. (The 49%/% / 51% ownership rules always remain.)

 

- When the company is registered at the Thai Companies Office, the official articles of association written and agreed by the owners can state that:

 

- The company has a Managing Director or CEO position and in the registration process it can also be stated (in the articles of association) that the person appointed to the MD / CEO position is specifically you. and also state that MD / CEO is the only person who can sign any documents about anything on behalf of the company. 

 

The last sub-point need further checking because there was some earlier discussion that this could not be done at the company registration time but could happen at a later date.

 

Other members of TV can provide the up to date answers to this point.

 

The initial registration process is not difficult and not expensive (although many Thai and foreign lawyers will tell you it's quite difficult and needs careful negotiations and hefty fees and commissions - not true. But better to get a lawyer to do it for you. However move along if a lawyer asks for anything above say 30,000Baht all up. In reality many other agencies can do this work and tey often charge very nominal fees.

 

When the company is all set up the company can buy land and buildings in the company name.

 

Yes by Thai law the company must submit an annual company report every year, the company must firstly get an accounting statement, pay any due company taxes (usually calculated by the accountant, and get official tax receipts and must also have a registered auditor sign a statement that the acct. / tax documents are in order. These documents must all be submitted with the annual company report to the Thai companies office.

 

Fees for the preparation of all of these documents and actual submission to the companies office for all of this range from perhaps 100,000Baht total a year (rip off lawyers) or down to maybe a total of say 15 - 20,000Baht all up (perhaps a knowledgeable local accountant)

 

Failure to submit all of the above can create the risk that the company gets automatically de-registered meaning a possible nightmare in terms of what happens to ownership of any land and houses owned by company.

 

Good luck. 

 

[XGM]

6 minutes ago, scorecard said:

Failure to submit all of the above can create the risk that the company gets automatically de-registered meaning a possible nightmare in terms of what happens to ownership of any land and houses owned by company.

I don't think a company can be automatically de-registered. Liquidation of a company is a long and complex process involving the social security office, ministry of labor, various bodies inside the revenue department, publications in newspapers, holding board meetings (or records of), letters to shareholders, receiving renewed company affidavit twice during the process, bank accounts closure process, all done with active involvement of a liquidator and managing director (or MD's representative using a power of attorney) etc etc.

 

In any case, there are fines and penalties against the company and directors in the event submissions aren't done.

[scorecard]

1 hour ago, XGM said:

I don't think a company can be automatically de-registered. Liquidation of a company is a long and complex process involving the social security office, ministry of labor, various bodies inside the revenue department, publications in newspapers, holding board meetings (or records of), letters to shareholders, receiving renewed company affidavit twice during the process, bank accounts closure process, all done with active involvement of a liquidator and managing director (or MD's representative using a power of attorney) etc etc.

 

In any case, there are fines and penalties against the company and directors in the event submissions aren't done.

 

Point taken but the ultimate reality is that de-registration can and has happened, causing lots of complications, meaning that it's best to ensure the annual reports are submitted on time. 

 

[scorecard]

2 hours ago, simoh1490 said:

I have a usufruct with my long standing Thai partner so it can't be cancelled. The house cost me only a small percentage of my cash assets and I love the garden, plus the house generates lots of projects to keep me busy and I don't have to pay rent. My partner gets all my assets when I die so the house is no risk for me, what's not to like.

 

I have the same, the house and land is all in the name of my adult Thai son, he got his lawyer to add a usufruct to the land title document (the chanut) saying that I can live in the house, and nobody can evict me. Once processed and lodged with the local land title office the only person who can remove it is me. My son cannot remove it. Also means that the land and house can only be sold if I give permission. It automatically cancels at my death. The local LTO also required that my son's wife sign a document that she is aware of the usufruct, what it mens and has no objection. 

 

 

 

 

Edited February 25, 2018 by scorecard

[ericthai]

14 hours ago, Langsuan Man said:

Citation please

 

 Living here for over 16 years the ONLY time there has ever been a "crackdown" on nominee ownership of private property was one case in Phuket , where the governor had the Land Office void the Chanote for a company owned piece of land by the local chapter of the Hells Angeles motorcycle club

 

Hardly a crack down 

That is the only one you know of. I remember reading about the crack downs about 5-6 years ago and then again back around 2004 or so. 

 

 

[ericthai]

13 hours ago, bkk6060 said:

Sure it does.

Several posts in threads about the coming "crackdown" on the illegal practices of agencies obtaining Visa's for foreigners.  

we are talking about Nominee ownership not visas,  Lawyers handle this not visa companies. 

[ericthai]

12 hours ago, Langsuan Man said:

 If this system is so illegal then why do Land Offices accept the paper work and issue  Chanotes in company names ? 

You lived in Thailand for 16 years and you dont know the answer to this....corruption!!  

[THAIJAMES]

13 hours ago, scorecard said:

 

All true, however there's a bit more detail:

 

- By Thai law, a foreigner (any foreigner, regardless of nationality) can only own 49% of the shares in a Thai company.

 

- The other 51% must be owned by a Thai person or a group of Thai people.  After registration the Thai shareholders cannot sell their shares to the foreigner. (The 49%/% / 51% ownership rules always remain.)

 

- When the company is registered at the Thai Companies Office, the official articles of association written and agreed by the owners can state that:

 

- The company has a Managing Director or CEO position and in the registration process it can also be stated (in the articles of association) that the person appointed to the MD / CEO position is specifically you. and also state that MD / CEO is the only person who can sign any documents about anything on behalf of the company. 

 

The last sub-point need further checking because there was some earlier discussion that this could not be done at the company registration time but could happen at a later date.

 

Other members of TV can provide the up to date answers to this point.

 

The initial registration process is not difficult and not expensive (although many Thai and foreign lawyers will tell you it's quite difficult and needs careful negotiations and hefty fees and commissions - not true. But better to get a lawyer to do it for you. However move along if a lawyer asks for anything above say 30,000Baht all up. In reality many other agencies can do this work and tey often charge very nominal fees.

 

When the company is all set up the company can buy land and buildings in the company name.

 

Yes by Thai law the company must submit an annual company report every year, the company must firstly get an accounting statement, pay any due company taxes (usually calculated by the accountant, and get official tax receipts and must also have a registered auditor sign a statement that the acct. / tax documents are in order. These documents must all be submitted with the annual company report to the Thai companies office.

 

Fees for the preparation of all of these documents and actual submission to the companies office for all of this range from perhaps 100,000Baht total a year (rip off lawyers) or down to maybe a total of say 15 - 20,000Baht all up (perhaps a knowledgeable local accountant)

 

Failure to submit all of the above can create the risk that the company gets automatically de-registered meaning a possible nightmare in terms of what happens to ownership of any land and houses owned by company.

 

Good luck. 

 

Would like to add info to the good information above:

 

1.  I have 2 Thai companies one 100% owned by foreigners under the  American Thai treaty of Amity.   That company cannot purchase any land.

2. At the time of opening your Thai majority company (my other company) you can state in the articles of association that the managing director has sole signing rights on any transactions for example the purchase and selling of land.  This can also be changed at any time in the future.

 

Now here is the important part:

To protect yourself, you can go one step further and go to the business development department and have it on record that you should be present in person for any changes in the share structure or articles of association.  This prevents someone using a forged/unknowingly signed power of attorney to change company structure and take over your company.

Edited February 26, 2018 by THAIJAMES

[THAIJAMES]

15 hours ago, simoh1490 said:

Having a usufruct via a Thai spouse is unsafe and I would have thought most people understood that it can be cancelled upon divorce.

1. The usufructs are not between husband and wife it is between the wife and the husbands business contacts and friends.  So even after divorce the contract would still hold.

 

2.  I don't believe usufructs can be cancelled regardless of death or divorce of the land owner, it passes on to the person that inherits the land.  I think depending on the usufruct, it is valid for either a number of years or more commonly until death.

[simoh1490]

1 hour ago, THAIJAMES said:

1. The usufructs are not between husband and wife it is between the wife and the husbands business contacts and friends.  So even after divorce the contract would still hold.

 

2.  I don't believe usufructs can be cancelled regardless of death or divorce of the land owner, it passes on to the person that inherits the land.  I think depending on the usufruct, it is valid for either a number of years or more commonly until death.

1 - understood

 

2 - the usufruct is not cancelled if the issuer or chanotte holder dies, it's merely passed on to their heirs as a part of the chanotte.

BUT the usufruct most certainly can be cancelled upon divorce where the chanotte holder is Thai. and the usufurct was granted by a spouse, simply, contracts between a husband and wife are not binding upon divorce.  Cancellation is not automatic and must be applied for but is typically granted as long as it doesn't contravene the division of assets made at the time of divorce.

[LivinLOS]

On 2/25/2018 at 11:49 AM, bkk6060 said:

Another way around this ownership issue is a possible "contract sale".  It is done in the US.  Not a lease.

This would normally be done if the property is free and clear.  You set up terms with the owner via a contract best negotiated by an attorney.  The property sale is not recorded with the land office.

Poor advice.. 

 

Lease contracts over 3 years must be registered or are voided.. 

 

My understanding is this is done to ensure collection of taxes, but could be wrong on that. 

[LivinLOS]

On 2/26/2018 at 9:27 AM, simoh1490 said:

BUT the usufruct most certainly can be cancelled upon divorce where the chanotte holder is Thai. and the usufurct was granted by a spouse, simply, contracts between a husband and wife are not binding upon divorce.  Cancellation is not automatic and must be applied for but is typically granted as long as it doesn't contravene the division of assets made at the time of divorce.

Also has to happen within 12 months of the formal divorce date. 

 

So a year of being nice.. 

[scorecard]

On 2/25/2018 at 11:49 AM, bkk6060 said:

Another way around this ownership issue is a possible "contract sale".  It is done in the US.  Not a lease.

This would normally be done if the property is free and clear.  You set up terms with the owner via a contract best negotiated by an attorney.  The property sale is not recorded with the land office.

 

Done in US. Is that relevant to the OPs question about Thailand?

[bkk6060]

3 hours ago, scorecard said:

 

Done in US. Is that relevant to the OPs question about Thailand?

 

Well it could be as I know someone that did this purchasing a house in Chiang Mai.

He set up a contract payment plan with the Thai seller who had the house free and clear.

A win win, the guy got the house and the Thai is making decent interest and getting a monthly income.

It is not a lease.

 

To answer your question... I am just putting out a possible option which obviously you have none.....

Edited March 1, 2018 by bkk6060