5 property checks buyers mysteriously overlook in Thailand

[webfact]

5 property checks buyers mysteriously overlook in Thailand

By The Thaiger

 

 

by Desmond Hughes

 

In many countries, once a decision to purchase a property has been made, a deposit paid, the parties should be able to sit back and handover legal matters to their lawyers, and concentrate on admittedly stressful practical matters such as furniture removal, checking boilers / heating / air conditioning systems and often working through a ‘chain’ of interdependent transactions where in some cases each chain involves a buyer loaning monies from a bank.

 

Strangely, the same sets of buyers when investing overseas in countries like Thailand, forget or deliberately dispense with the most essential and often sheer common sense oriented checks. Sometimes just to save a few pennies.

Here are 5 of the most commonly overlooked issues:

 

1. Conducting a Structural and Internal Survey of the Property

 

Because many foreigners are buying outright with cash, there is often no bank looking over the shoulder of the purchaser insisting on the bare minimum checks. Weirdly, many buyers’ approach to the matter of structural integrity appears to be “if it looks like the building is standing up straight, it must be safe and ok to live in”. It is worth remembering that not every pour of cement is the same, not every pillar has the same number of rods running through, and that even though a building permit has been issued, the construction plans may not have been followed and further, after time, a building can deteriorate – visibly and invisibly.  Why not splash out what could be the price of a few cases of overtaxed wine on making sure the ceilings don’t cave in on top of you and your family

 

Full story: https://thethaiger.com/thai-life/5-property-checks-buyers-mysteriously-overlook-in-thailand

 

-- © Copyright The Thaiger 2018-06-14

 

[flyingtlger]

Buying property in Thailand does not seem to be a good investment...... 

[BritManToo]

It's against the law for foreigners to buy property in Thailand.

No need for any 'buyers checks', just don't do it.

[SurinBeach]

And check you're not getting one of those wonderful 30+30+30 year leases which are actually NOT legal but sold everywhere .....

and therefore you might get the whole 90 years deemed VOID by the courts as has happened before ...

[baansgr]

1 hour ago, BritManToo said:

It's against the law for foreigners to buy property in Thailand.

No need for any 'buyers checks', just don't do it.

My name is on the Chanote  of my condo but I guess you mean land 

[NCC1701A]

not a word in this article written by a lawyer saying it is illegal to own land. 

 

too much of a conflict of interest.

[BritManToo]

1 hour ago, baansgr said:

My name is on the Chanote  of my condo but I guess you mean land 

I'll go with this Webster dictionary definition.

Property: a piece of land often with buildings on it that is owned by a person, business, etc

Edited June 14, 2018 by BritManToo

[Hockeybik]

IF you must buy land in Thailand follow these guys, and then employ their services BEFORE you do... https://www.duensingkippen.com/thailandpropertylawblog/

Edited June 14, 2018 by Hockeybik

[sgiandubh69]

3 hours ago, BritManToo said:

It's against the law for foreigners to buy property in Thailand.

No need for any 'buyers checks', just don't do it.

Incorrect - you can buy as much property as you wish. What is against the law is for a foreigner to own land in his or her name. 

That said. A foreigner can be the principal share holder in a correctly established company which can own land.

[watcharacters]

31 minutes ago, sgiandubh69 said:

Incorrect - you can buy as much property as you wish. What is against the law is for a foreigner to own land in his or her name. 

That said. A foreigner can be the principal share holder in a correctly established company which can own land.

 

I thought the establishment of a company for the purchase of a  house and property was  illegal in the strictest sense.

 

Can you briefly explain  "A foreigner can be the principal share holder in a correctly established company which can own land."      Maybe the problem has simply been that many have done the process incorrectly.

 

 

 

edit to add:

Are you referring to the  principal as meaning the majority shareholder?

Edited June 14, 2018 by watcharacters

[zaphod reborn]

It's impossible to get clear title to property in Thailand.  There is always a possibility that an officer in the Land Department has taken a brown envelope to record an illegal or fraudulent land deed.  Phuket is replete with incidents of land plots sold in forest reserves.

Edited June 14, 2018 by zaphod reborn

[tigermoth]

Inspecting buildings in Thailand for structural and services integretity is neer impossible without spending a great deal of money therefore the banks will never do it except to have a completely untrained eye cast over it. This generally means checking for the odd crack in walls and that the paint isn't falling off.

When concrete is delivered to a building site every concrete truck should have its load tested by taking several steel cylinders filled so that the strength can be tested. This is rarely done and the horrific traffic here means that trucks are frequently held up for hours in the traffic so that the only way to prevent the setting process starting is to add water to the concrete which can significently decrease its strength. Also many contractors will buy cheap reinforcing steel. generally from China, which does not have the tensile strength of the steel specified therefore further weakening the concrete.

As far as services go there are many cheap low quality pipes and tubes on the market will not last more than one or two years before problems arise. Compounding all this is the problem here of unskilled and cheap labour.

[over2you]

7 hours ago, sgiandubh69 said:

Incorrect - you can buy as much property as you wish. What is against the law is for a foreigner to own land in his or her name. 

That said. A foreigner can be the principal share holder in a correctly established company which can own land.

Yes. At the moment.

Do you really think that this highly abused (very questionable) system could not be revoked overnight?

This is a hugely corrupt Country that has no democraticly elected Government?

I certainly would not put my hard earned money into Thailand.

I'll stick with renting thanks. 

[xylophone]

7 hours ago, watcharacters said:

 

I thought the establishment of a company for the purchase of a  house and property was  illegal in the strictest sense.

 

Can you briefly explain  "A foreigner can be the principal share holder in a correctly established company which can own land."      Maybe the problem has simply been that many have done the process incorrectly.

 

 

 

edit to add:

Are you referring to the  principal as meaning the majority shareholder?

Your first paragraph is right, inasmuch as it is illegal to form a company with the specific intent of buying a property (including the land). 

 

That means the company has to be set up to have/run a business and be operating as such, including employing Thai workers (four minimum I think) and paying the tax applicable.

 

If it is a bone fide company, operating a business, then a house can be purchased (along with the land, but still subject to a lease) and becomes part of the company.

 

It is my belief that even if all of this is put in place, that the farang shareholding must be 49% or less, but am open to more knowledgeable folk in that regard. By this I don't mean finding ways round the shareholding percentage by the signing over of a Thai shareholding, which again is illegal.

 

Of course, if you have a Thai wife or girlfriend and wish to put it in her name, then the above is not necessary. But I should add, caveat emptor.

[sgiandubh69]

On 6/14/2018 at 10:18 AM, watcharacters said:

 

I thought the establishment of a company for the purchase of a  house and property was  illegal in the strictest sense.

 

Can you briefly explain  "A foreigner can be the principal share holder in a correctly established company which can own land."      Maybe the problem has simply been that many have done the process incorrectly.

 

 

 

edit to add:

Are you referring to the  principal as meaning the majority shareholder?

You are correct- the use of Thai nominee shareholders for the purposes of land purchase is, of course, technically illegal but widely practiced. The concern is that this apparent ‘loophole’ could be abruptly closed without warning thus the principal (majority at 49% maximum) share holder (foreign) losing everything and possibly facing legal action to boot.

Outright ownership through a Thai or a leasehold registered in the land office would appear to be the safest way of having land.

[xylophone]

4 hours ago, sgiandubh69 said:

You are correct- the use of Thai nominee shareholders for the purposes of land purchase is, of course, technically illegal but widely practiced. The concern is that this apparent ‘loophole’ could be abruptly closed without warning thus the principal (majority at 49% maximum) share holder (foreign) losing everything and possibly facing legal action to boot.

Outright ownership through a Thai or a leasehold registered in the land office would appear to be the safest way of having land.

Well not technically illegal......it is illegal, but as you say, widely practised.

 

Yes, it has been mooted that this practice will be subject to a crackdown, and occasionally things get done.

 

The other problem with this set-up is that it leaves one open to all sorts of actions, like losing your house, as in the case of a friend here, and he hasn't got a leg to stand on, legally.

 

The land can be owned by a Thai and you can lease it from them for 30 yrs max, but that's it.

[Aussieroaming]

On 6/14/2018 at 11:31 AM, tigermoth said:

Inspecting buildings in Thailand for structural and services integretity is neer impossible without spending a great deal of money therefore the banks will never do it except to have a completely untrained eye cast over it. This generally means checking for the odd crack in walls and that the paint isn't falling off.

When concrete is delivered to a building site every concrete truck should have its load tested by taking several steel cylinders filled so that the strength can be tested. This is rarely done and the horrific traffic here means that trucks are frequently held up for hours in the traffic so that the only way to prevent the setting process starting is to add water to the concrete which can significently decrease its strength. Also many contractors will buy cheap reinforcing steel. generally from China, which does not have the tensile strength of the steel specified therefore further weakening the concrete.

As far as services go there are many cheap low quality pipes and tubes on the market will not last more than one or two years before problems arise. Compounding all this is the problem here of unskilled and cheap labour.

We had 2 x "Engineers" do a full pre-purchase inspection of our condo before we settled with the developer. The 36 defects noted were rectified and the engineers re-inspected before final payment. I was suprised and pleased with the professionalism shown by the inspector and developer.

[janclaes47]

On 6/14/2018 at 6:14 PM, xylophone said:

Your first paragraph is right, inasmuch as it is illegal to form a company with the specific intent of buying a property (including the land). 

No it isn't, you can similar as in the west set up a company to buy real estate, as long as it generates an income.

 

On 6/14/2018 at 6:14 PM, xylophone said:

That means the company has to be set up to have/run a business and be operating as such, including employing Thai workers (four minimum I think) and paying the tax applicable.

 

Four Thai workers is the requirement to qualify for a work permit, not to be a legal business.

[xylophone]

13 hours ago, janclaes47 said:

No it isn't, you can similar as in the west set up a company to buy real estate, as long as it generates an income.

 

 

Four Thai workers is the requirement to qualify for a work permit, not to be a legal business.

This should help...………..

"Expats who own land illegally in Thailand could be deported under tough new laws being drafted by the government.

 

Thai ombudsman Siracha Charoenpanij said earlier this month that he was drawing up "carrot-and-stick" legislation to protect the country from illegal foreign nominee ownership.

 

Under Thai laws, foreign nationals are not allowed to own residential land. They can, however, buy apartments so long as no more than 49 per cent of a development is owned by foreigners. They can also purchase detached villas, but while they can own the house, they cannot own the land the house is on and are only able to lease it for 30 years at a time.

 

To get around these restrictions, some have entered into complicated structures whereby a company is set up to purchase the land. A Thai national holds the majority of shares in that company, but in reality may have no financial interest in the company and may own it on behalf of the foreign buyer.

 

It is these such "nominee ownership" arrangements that the government now wants to crack down on, and Charoenpanij has also proposed a reward – of 20 per cent of the land’s value when sold – for those providing information about illegal ownership. His plans also include penalties for lawyers or consultants who advise foreign buyers on nominee structures".

 

1). Unquestionably it is illegal to buy a house via a company.

 2). It is illegal for a company to be formed with the sole purpose of owning a property. If the company is a trading/working entity employing Thai workers, paying taxes etc then a house can be purchased, but then again the company has to also have a majority Thai ownership and these majority Thai shareholders must be able to show how much they have invested in this company and from whence the funds came.

 

This is to prevent the “Thai nominee company” illegal workaround and nominee companies are illegal...

[baansgr]

3 minutes ago, xylophone said:

This should help...………..

"Expats who own land illegally in Thailand could be deported under tough new laws being drafted by the government.

 

 

 

Thai ombudsman Siracha Charoenpanij said earlier this month that he was drawing up "carrot-and-stick" legislation to protect the country from illegal foreign nominee ownership.

 

 

 

Under Thai laws, foreign nationals are not allowed to own residential land. They can, however, buy apartments so long as no more than 49 per cent of a development is owned by foreigners. They can also purchase detached villas, but while they can own the house, they cannot own the land the house is on and are only able to lease it for 30 years at a time.

 

 

 

To get around these restrictions, some have entered into complicated structures whereby a company is set up to purchase the land. A Thai national holds the majority of shares in that company, but in reality may have no financial interest in the company and may own it on behalf of the foreign buyer.

 

 

 

It is these such "nominee ownership" arrangements that the government now wants to crack down on, and Charoenpanij has also proposed a reward – of 20 per cent of the land’s value when sold – for those providing information about illegal ownership. His plans also include penalties for lawyers or consultants who advise foreign buyers on nominee structures".

 

 

 

1). Unquestionably it is illegal to buy a house via a company.

 

 2). It is illegal for a company to be formed with the sole purpose of owning a property. If the company is a trading/working entity employing Thai workers, paying taxes etc then a house can be purchased, but then again the company has to also have a majority Thai ownership and these majority Thai shareholders must be able to show how much they have invested in this company and from whence the funds came.

 

 

 

This is to prevent the “Thai nominee company” illegal workaround and nominee companies are illegal...

 

That was about 6 or 7 years ago.....still havnt seen any changes.

 

[janclaes47]

2 minutes ago, xylophone said:

It is illegal for a company to be formed with the sole purpose of owning a property. If the company is a trading/working entity employing Thai workers, paying taxes etc then a house can be purchased, but then again the company has to also have a majority Thai ownership and these majority Thai shareholders must be able to show how much they have invested in this company and from whence the funds came.

 

 

 

This is to prevent the “Thai nominee company” illegal workaround and nominee companies are illegal...

 

The construction mentioned is what foreigners do. e.g. forma company that has no actual trading.

 

If a company owns let's say 10 properties, which they offer for lease or rent and create an annual income on which they pay tax, then there is nothing wrong because the leasing and renting is their trade.

[xylophone]

58 minutes ago, janclaes47 said:

If a company owns let's say 10 properties

So how can a farang set up a company to "own" 10 properties, when they are not allowed to own them in the first place??

 

 If a farang bought into an existing Thai company that owned properties, he/she could become a minority shareholder, but that's not the same as owning properties.

[janclaes47]

3 minutes ago, xylophone said:

So how can a farang set up a company to "own" 10 properties, when they are not allowed to own them in the first place??

 

 If a farang bought into an existing Thai company that owned properties, he/she could become a minority shareholder, but that's not the same as owning properties.

The farang doesn't own the properties, the company owns them.

 

Did you notice that I said " If a company owns let's say 10 properties  " ?

 

A farang can setup as many companies as he wants, he only has to make sure that majority of shareholders are Thai and invested the money, and are not just straw men.

 

I also many years ago was told by a lawyer that if the company owns property, foreigner can hold only 39% instead of 49%, but I don't know if that is correct or not.

[baansgr]

On 6/14/2018 at 9:49 AM, BritManToo said:

I'll go with this Webster dictionary definition.

Property: a piece of land often with buildings on it that is owned by a person, business, etc

That's correct,  there is land with condo buildings on it of which I own one.

[xylophone]

1 hour ago, janclaes47 said:

The farang doesn't own the properties, the company owns them.

 

Did you notice that I said " If a company owns let's say 10 properties  " ?

 

A farang can setup as many companies as he wants, he only has to make sure that majority of shareholders are Thai and invested the money, and are not just straw men.

 

I also many years ago was told by a lawyer that if the company owns property, foreigner can hold only 39% instead of 49%, but I don't know if that is correct or not.

Nearly on the same wavelength!!

 

A farang cannot set up a company whose specific purpose is to own property...…..so setting a company up for the company to own it is illegal, if that is its sole purpose.

 

If a farang sets up a company then it has to have a majority Thai ownership, so in effect the farang owns nothing...…which is what the Govt wants. Even if the company runs a bone fide business (not property) then property can be acquired by that company, and the same outcome applies...…….the farang owns nothing.

 

So back on track...…...the Thai nominee company method of buying/"owning" a property is illegal.

 

Again...…...

It helps to become familiar the Foreign Business Act 1999. This sets out the rights of foreign companies in Thailand, as well as what is not permitted.

 Most, although not all, foreign businesses looking to set up in Thailand require a Thai majority shareholding. Many foreigners prefer to form a Thai majority company, to allow the company to operate a business in a category that is otherwise restricted to foreigners. The registration of a Thai majority company generally requires less registered capital and less paperwork than the registration of a foreign company. A Thai majority company can also buy land.

 

 As you quite rightly said......Others however prefer the simpler but highly illegal practice of nominee shareholders. A nominee shareholder is a shareholder in name only; in reality nominee shareholders lacks any real financial stake or interest in the company.  There are companies in Thailand who will offer to supply Thai nominee shareholders. This is extremely high risk as not only will you have no knowledge of who the shareholder of your company is now will they owe you any loyalty, they are likely to be professional shareholders who will probably be listed as shareholders in multiple companies which will soon wave a red flag to the authorities.

 And

1). Unquestionably it is illegal to buy a house via a company.

 The Thailand Alien Business act is quite specific, and there is a blanket offence of circumventing land ownership laws that means anything the appears to allow foreigners to own houses is actually illegal.

 2). Be careful here because it is illegal for a company to be formed with the sole purpose of owning a property. If the company is a trading/working entity employing Thai workers, paying taxes etc then a house can be purchased, but then again the company has to also have a majority Thai ownership and these majority Thai shareholders must be able to show how much they have invested in this company and from whence the funds came.

Edited June 16, 2018 by xylophone

[janclaes47]

2 minutes ago, xylophone said:

So back on track...…...the Thai nominee company method of buying/"owning" a property is illegal.

 

1 hour ago, janclaes47 said:

A farang can setup as many companies as he wants, he only has to make sure that majority of shareholders are Thai and invested the money, and are not just straw men.

 

In what I explain there are no nominees, only legit Thai investors with the majority of shares,and a foreigner who actually can be the initiator .

 

That a foreigner can not own land in Thailand is know for decades probably centuries, and is not the topic of the discussion.

 

The topic is when the company that owns the property is legal and when not.

 

I quoted you because you made the below statement.

16 hours ago, janclaes47 said:

Your first paragraph is right, inasmuch as it is illegal to form a company with the specific intent of buying a property (including the land). 

 

A LEGALLY setup company can have the specific intent of buying property. What foreigners do is NOT a legally setup company. Two different things all together.

[xylophone]

5 minutes ago, janclaes47 said:

A LEGALLY setup company can have the specific intent of buying property. What foreigners do is NOT a legally setup company.

Ah I see what you are getting at...………...my delay because having internet problems!!

 

So a company that is legally set up is in effect Thai owned (majority shareholding) can buy property because it is a Thai company. The farang who has a minority shareholding really owns nothing, so no point really.

 

The fact is that farangs are often told that they can own land/property through a company route, which prompted my comments, and which of course is illegal.