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In the past few years, it appears that every Thai lawyer recommended setting up a Thai company to "purchase" the land that their customers new house sat on.

As a result, most farang, who do not have Thai wives/husbands, complied and bought the land through the Thai company.

Due to the fact that this route is apparently illegal, why does every house or land purchase thread on this forum, have someone who recommends that the prospective purchasers of house/land seeks "good legal advice"

Where do we get this "good legal advice" Do we go back to the lawyers who gave "good legal advice" in the past, or are there a new bunch of lawyers in town who can carry out this simple act.

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For a start I wouldnt go back to the same legal outfit that advised going down this route in the first place.

Try legal practices such as the likes of Johnson Stoke and Masters, Baker & Mackenzie, Clifford Chance, Allen & Overy, Hunton & Williams, Tilleke & Gibbons et al.

Plus Im sure a few others here can recommend other respectable firms. Yes, they normally charge more, but then again you pay for what you get. In this climate of uncertainity, consider it as an investment to safeguard you against future heartache.

(I do not have any affiliations with any of the aforementioned firms, but I have worked on behalf of mutual clients with many of them and have been impressed by their professionalism)

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For a start I wouldnt go back to the same legal outfit that advised going down this route in the first place.

Try legal practices such as the likes of Johnson Stoke and Masters, Baker & Mackenzie, Clifford Chance, Allen & Overy, Hunton & Williams, Tilleke & Gibbons et al.

Plus Im sure a few others here can recommend other respectable firms. Yes, they normally charge more, but then again you pay for what you get. In this climate of uncertainity, consider it as an investment to safeguard you against future heartache.

(I do not have any affiliations with any of the aforementioned firms, but I have worked on behalf of mutual clients with many of them and have been impressed by their professionalism)

Are you implying that "the likes of Johnson Stoke and Masters, Baker & Mackenzie, Clifford Chance, Allen & Overy, Hunton & Williams, Tilleke & Gibbons et al" did not previously go down this time-honoured route?

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Has anyone had direct experience of problems because they did take this well used route to house ownership?????????????????????

You make a good point Astral.

I have looked into all aspects of this during the last 9 months.

In fact I went to see my Thai lawyer yesterday to do the annual accounts for my dormant company that was set up purely to buy land in Thailand.

I was half way decided to do the 'land in wifes name / lease thing'

We had a long talk about the land issue and farangs.

I realise that he likes his 15000 baht a year to do my accounts, but we have had quite a few dealings since I met him 5 years ago and he has always acted in a reputable way. Alyways done what he has promised and has several other farang clients that I know who think he is 'ok'.

He said that Thai laywers dont really spend much time discussing land issues, the hot topic at the moment are the new visa laws.

He really could not understand why farang newspapers made this land issue such a big thing - maybe to sell papers.

He pointed out that not one farang in the Chonburi area had a problem owning land via the company route. He also pointed out there were many thousand of farang companies who own land in this way (10000?) in the Chonburi area alone. I am not sure of that number though - he may just have said many thousand?

He also said if I did have a problem we can 'make a lease for your wife' at that time. Mind you having seen the amount of business tax etc... I will have to pay to transfer the land - I am not so keen on the idea.

I believe and within reason trust him.

Hey he may be wrong - but I am now prepared to leave the company alone and see how it goes.

No - this is not burying my head in the sand - its called making an informed decision.

Others may come to a different decision - fair enough, but that doesn't mean they are right nor I am wrong.

So Astral, I will be interested to see if/when the first reposession of land takes place.

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In the past few years, it appears that every Thai lawyer recommended setting up a Thai company to "purchase" the land that their customers new house sat on.

As a result, most farang, who do not have Thai wives/husbands, complied and bought the land through the Thai company.

Due to the fact that this route is apparently illegal, why does every house or land purchase thread on this forum, have someone who recommends that the prospective purchasers of house/land seeks "good legal advice"

Where do we get this "good legal advice" Do we go back to the lawyers who gave "good legal advice" in the past, or are there a new bunch of lawyers in town who can carry out this simple act.

I have sympathy with this view.

However, I have looked into all aspects of this over the past 9 months.

A bit of a roller coaster of emotions I assure you.

I have come to the conclusion that most things are 'illegal' in Thailand and the Thai authorities remind us of this fact when it suits them - bless 'em.

So take all the 'illegal' comments with a pinch of salt and see how they are implemented in the 'real' world.

My favourite list of 'illegal' activites is found here:

My favourite of all was and still is item 39 :o

http://www.thaivisa.com/forum/index.php?showtopic=90291

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Due to the fact that this route is apparently illegal, why does every house or land purchase thread on this forum, have someone who recommends that the prospective purchasers of house/land seeks "good legal advice"

Where do we get this "good legal advice" Do we go back to the lawyers who gave "good legal advice" in the past, or are there a new bunch of lawyers in town who can carry out this simple act.

I will use your lawyer and you can use my lawyer. But do we paid them more because they known more now?

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For a start I wouldnt go back to the same legal outfit that advised going down this route in the first place.

Try legal practices such as the likes of Johnson Stoke and Masters, Baker & Mackenzie, Clifford Chance, Allen & Overy, Hunton & Williams, Tilleke & Gibbons et al.

Plus Im sure a few others here can recommend other respectable firms. Yes, they normally charge more, but then again you pay for what you get. In this climate of uncertainity, consider it as an investment to safeguard you against future heartache.

(I do not have any affiliations with any of the aforementioned firms, but I have worked on behalf of mutual clients with many of them and have been impressed by their professionalism)

Are you implying that "the likes of Johnson Stoke and Masters, Baker & Mackenzie, Clifford Chance, Allen & Overy, Hunton & Williams, Tilleke & Gibbons et al" did not previously go down this time-honoured route?

Good point, i'm also interested to know the answer to this? I'm sure almost all of them at some point recommended the company ownship option.

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It is a good point and of course I cant say for sure, but then again I can only recommend firms based on my own experience with them, all of which has been very good. If someone has had a poor experience with one of the aforementioned say so.

Edited by quiksilva
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It's pretty obvious why the lawyers 'push' the company route. A sweet deal for them to continue collecting (in most cases) year after year in addition to the fees up front.

Just get a superficie. Simple. File it yourself for 75-100 baht. Finished; enjoy your property/home for the rest of your life.

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It's pretty obvious why the lawyers 'push' the company route. A sweet deal for them to continue collecting (in most cases) year after year in addition to the fees up front.

Just get a superficie. Simple. File it yourself for 75-100 baht. Finished; enjoy your property/home for the rest of your life.

Excuse my ignorant but what is this superficie?

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Superficie

Right to use the land, is almost the same thing as the lease contract but is a recognized Law in Thailand. This solution automatically gives you the right to own everything you build on this land, you also have to register and pay tax in the land department every 30 years. This a very common solution for Thais and is also fully accepted by the banks when it comes to finance.

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Superficie

Right to use the land, is almost the same thing as the lease contract but is a recognized Law in Thailand. This solution automatically gives you the right to own everything you build on this land, you also have to register and pay tax in the land department every 30 years. This a very common solution for Thais and is also fully accepted by the banks when it comes to finance.

Forgive my ignorance but is this a usufruct by another name?

Regards

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Superficie

Right to use the land, is almost the same thing as the lease contract but is a recognized Law in Thailand. This solution automatically gives you the right to own everything you build on this land, you also have to register and pay tax in the land department every 30 years. This a very common solution for Thais and is also fully accepted by the banks when it comes to finance.

Forgive my ignorance but is this a usufruct by another name?

Regards

No, they are different animals.

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Superficie

Right to use the land, is almost the same thing as the lease contract but is a recognized Law in Thailand. This solution automatically gives you the right to own everything you build on this land, you also have to register and pay tax in the land department every 30 years. This a very common solution for Thais and is also fully accepted by the banks when it comes to finance.

Forgive my ignorance but is this a usufruct by another name?

Regards

No, they are different animals.

I've not come across this solution before, Google is no help :o

Please enlighten us as to the differences between Superficie and Usufruct :D

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Superficie

Right to use the land, is almost the same thing as the lease contract but is a recognized Law in Thailand. This solution automatically gives you the right to own everything you build on this land, you also have to register and pay tax in the land department every 30 years. This a very common solution for Thais and is also fully accepted by the banks when it comes to finance.

Forgive my ignorance but is this a usufruct by another name?

Regards

No, they are different animals.

I've not come across this solution before, Google is no help :o

Please enlighten us as to the differences between Superficie and Usufruct :D

Please do not take anything I say as the gospel; here is what I believe (after researching) to be the major difference between the two. With the superficie the landlord can give the right to own, upon or under the land,

buildings or plantation. The right of superficies is not extinguished by destruction of the building(home), or

plantation even if it occurs by an act of nature. It's my belief that with a usufruct the usufruct can end if the home is somehow destroyed (fire maybe). This could lead to a legal problem down the road.

I've decided to go the superficies route. The Thai wife (GF actually....never married) will grant the superficie on land I purchased in her name of course as foreigners cannot own land in Thailand. I will own the home once it's built and have the right to use it for my natural life; can even will the superficie to someone else (not that I would unless the wifey and I have a problem).

Ironically, I can't imagine really needing this (super wife) but I see no reason to take a chance.

edit: I don't know why anyone would go the 30 year lease route.....except for the fact a lot of lawyers 'push' this to make some extra baht........

Edited by LoveDaBlues
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If the above is the case, then why the hel_l has everyone been doing the company and leasing route for all these years.

Legal possession of land which can be willed to children etc.

I have no knowledge of it, so can't comment any further, but would love for more info.

Edited by DDIM
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I've decided to go the superficies route. The Thai wife (GF actually....never married) will grant the superficie on land I purchased in her name of course as foreigners cannot own land in Thailand. I will own the home once it's built and have the right to use it for my natural life; can even will the superficie to someone else (not that I would unless the wifey and I have a problem).

Ironically, I can't imagine really needing this (super wife) but I see no reason to take a chance.

edit: I don't know why anyone would go the 30 year lease route.....except for the fact a lot of lawyers 'push' this to make some extra baht........

But you do require a Thai wife to actually own the land?

How would this work for unmarried forgieners?

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Have a friend who used the Method Lovedablues is speaking of and it has proven to be as solid a rock. However in his case the property was built on The Father in Laws propert, just behinf papas house. Beautiful modern home, it's his to live in the rest of his life. But the reality of living in that situation, so close to the anger and resentment. He left the country.

Personaly, I don't worry about my wife at all. But, the real world goes beyond the basic realtionhip. But people don't always die of old age, then I would have the family more then likely dictating terms if I don't do something to cover myself, in the even of her death.

We don't live witin 800 Klms of any family members so I doubt that I would notice any difference in my life if I were here alone as to usage of the residence.

I have no desire to will a home in Thailand to my children what would they do with it. They are not coming here, if they tried to sell it rent it, the Thais would eat them alive since they nothing of the country.

The house in financed, so in essence I pay rent every month for a place to live.

I've seen the plan in action it works if your circumstances fit correctly and would certainly work for me.

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I've decided to go the superficies route. The Thai wife (GF actually....never married) will grant the superficie on land I purchased in her name of course as foreigners cannot own land in Thailand. I will own the home once it's built and have the right to use it for my natural life; can even will the superficie to someone else (not that I would unless the wifey and I have a problem).

Ironically, I can't imagine really needing this (super wife) but I see no reason to take a chance.

edit: I don't know why anyone would go the 30 year lease route.....except for the fact a lot of lawyers 'push' this to make some extra baht........

But you do require a Thai wife to actually own the land?

How would this work for unmarried forgieners?

Simple, you just get the superficie from the owner of the land. Beware, could be a "bad character" and your health could be at risk. :o

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Have a friend who used the Method Lovedablues is speaking of and it has proven to be as solid a rock. However in his case the property was built on The Father in Laws propert, just behinf papas house. Beautiful modern home, it's his to live in the rest of his life. But the reality of living in that situation, so close to the anger and resentment. He left the country.

Personaly, I don't worry about my wife at all. But, the real world goes beyond the basic realtionhip. But people don't always die of old age, then I would have the family more then likely dictating terms if I don't do something to cover myself, in the even of her death.

We don't live witin 800 Klms of any family members so I doubt that I would notice any difference in my life if I were here alone as to usage of the residence.

I have no desire to will a home in Thailand to my children what would they do with it. They are not coming here, if they tried to sell it rent it, the Thais would eat them alive since they nothing of the country.

The house in financed, so in essence I pay rent every month for a place to live.

I've seen the plan in action it works if your circumstances fit correctly and would certainly work for me.

ray23 makes some good points. Personally, I would NEVER build on/close to in-laws property...........can lead to too many problems......and I've seen them first hand......including 2 different farangs who have had to build a 2nd house because the in-laws took over the 1st house!!! :o

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Superficie

Right to use the land, is almost the same thing as the lease contract but is a recognized Law in Thailand. This solution automatically gives you the right to own everything you build on this land, you also have to register and pay tax in the land department every 30 years. This a very common solution for Thais and is also fully accepted by the banks when it comes to finance.

Forgive my ignorance but is this a usufruct by another name?

Regards

No, they are different animals.

I've not come across this solution before, Google is no help :o

Please enlighten us as to the differences between Superficie and Usufruct :D

IMO Usufruct is the better solution, but superficies is the simpler, though less complete solution. Differences outlined here:

http://www.iamkohchang.com/Real_Estate/leases.htm

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In the past few years, it appears that every Thai lawyer recommended setting up a Thai company to "purchase" the land that their customers new house sat on.

As a result, most farang, who do not have Thai wives/husbands, complied and bought the land through the Thai company.

Due to the fact that this route is apparently illegal, why does every house or land purchase thread on this forum, have someone who recommends that the prospective purchasers of house/land seeks "good legal advice"

Where do we get this "good legal advice" Do we go back to the lawyers who gave "good legal advice" in the past, or are there a new bunch of lawyers in town who can carry out this simple act.

In the latest Samui Express (www.samuiexpress.net): The Department of Special Investigation said it was gathering more evidence to be used in its legal action against 320 law-consultancy agencies on charge of using Thai nationals as nominees. The DSI said it would wage a crackdown on the practice of several law-consultancy agencies.....

Locals used as dummies by real estate firms

The Department of Special Investigation (DSI) said it would wage a crackdown on the practice of several law-consultancy agencies using their staff to be listed as shareholders in foreign real-estate business to circumnavigate the law.

This was announced by DSI chief Sunai Manomai after he and other DSI officials tackled this issue in a meeting with Justice Ministery Caretaker Chanchai Likhitjitthai.

It was reported that 340 law consultancy companies were found involved in using their own staff(s) as shareholders of foreign companies so that aliens could run their real-estate and property businesses on Koh Samui.

The law companies also allegedly issued fake documents in order to avoid paying tax payment.

The DSI said it had received reports that a lot of money (running to billions of baht) had been transferred to the bank accounts of these law firms.

Earlier, a crackdown on public-land encroachment was triggered by the case of the Bandidos gang (allegedly composed of foreigners), which was allegedly behind some real estate companies involved in land encroachments. The gang members, led by Kim Lingaard Nielson of Denmark were arrested middle of last year.

It was alleged that law consultancy companies has a hand in some intrusions into public lands.

According to the law, Thais should own at least 51 percent of a company and foreigners 49 percent utmost, but law consultancy have allegedly used Thai nominees, who are mostly employees of these agencies.

In addition, the law consultancy have allegedly taken advantage of loopholes in the law to give a special rights to foreign shareholders, which allows them to have more shareholder votes. For example, one share of the company would have 10 times so that even with the foreigners' 49 percent stake, they have more seats and can own houses and lands on samui.

From investigations many villa owners on Samui were wanted by the police in Scandinavian countries. Thai police warned that some of them were linked to the Bandidos Gang.

The DSI said it was gathering more evidence to be used in its legal action against the companies on charge of using Thai nationals to own shares on behalf of foreigners.

Land investments on Koh Samui and Koh Phangan have boomed, resulting in so many law consultants offering their service to foreign investors.

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the law consultancy have allegedly taken advantage of loopholes in the law

Is Thailand different from just about every other country in the world where the law is presumed to mean what it says, not what someone thinks it ought to say?

What does a "loophole" mean in legal terms? Nothing, as far as I am aware. The law either prohibits something or it doesn't and the only way to ascertain that is to read it. If someone "takes advantage" of something that the law does not prohibit and certain individuals, politicians, ministers or government officials don't like it then, as far as I am aware, their only recourse is to change the law to reflect what they believe it should say.

In any reasonable legal system, persons who are subject to a law are entitled to know what it is that the law prohibits, and what is not prohibited. It shouldn't be a guessing game clouded in deep confusion. One should not have to guess what the legislators "intended", or what they may have failed to enact, because that is a matter of opinion and there are as many opinions as there are ***holes (everyone is entitled to one). Thailand's law is codified (written) and the law in respect of any matter either exists there or it does not.

I do not profess to be an expert in Thai Law but I am able to read and I have taken the trouble to read the Foreign Business Act, which is the source of all the controversy. I have read it from cover to cover (or, at least, an English translation) and here is what it says and, perhaps more significantly, what it does not say:

The first point to be noted is that it says absolutely nothing about the "ownership" of land either by Thais or by foreigners.

The purpose of the Act is to prohibit or restrict "foreigners" from "operating" certain defined businesses in Thailand. There is nothing that I have found in any words in the Act that extends beyond that objective.

The Act defines what a "foreigner" is, and, as is common knowledge, this includes a business operated by a company (juristic person) registered in Thailand half or more of whose shares are held by a person not of Thai nationality or by a company which is not registered in Thailand. In all the newspaper reports and internet postings on the subject (even by law firms) I have not seen anybody quote three very significant words which preceed the definition of "foreigner". These words are "In this Act".

This is a common formula used in legislation, for example, in the UK it is often rendered as "for the purposes of this Act" and indeed in the Thai language it no doubt says something similar. In other words, the definition does not extend beyond the Act in which it appears. For example the definition of "foreigner" under immigration law I am certain will not extend to "juristic persons". That is not to say that other Acts may not contain a similar definition but it is the FBA that people keep citing and I am sure if the same definition appeared in the Land Code we would have heard about it.

So where dos that take us? According to what I read in the FBA a Thai registered company owned more than half by non Thais is deemed a "foreign" business for the purposes of the FBA but the company remains Thai for other purposes.

Now, amongst the businesses that cannot be operated by a "foreign" company under the FBA is "trading in land". These two words should not require much explanation and it should be fairly obvious that "buying" does not equal "trading" and it cetainly does not imply operating a business of trading in land. (I think the Samui problems quoted in the thread concern foreigners operating businesses trading in land and being assisted in that enterprise by certain law firms). My reading of the FBA has shown me that these two activities described in the last sentence are contrary to the FBA but there is nothing that says or implies that a Thai registered company can be defined as "foreign" for purposes outwith the FBA. So my understanding is that a Thai company which simply owns (or buys land with no intention of reselling it) is not in breach of the FBA whatever its shareholding because the FBA does not address that circumstance.

Call that a loophole if that is your inclination but to me it is simply a law which does not exist although people seem to claim that it does (it is certainly not in the FBA).

If we look a bit further at the FBA we find the law which makes it illegal for Thais to hold shares on behalf of foreigners. This, I believe, is the oft cited "it is illegal to have nominee shareholders in Thailand" source. But what does it actually say?

Firstly, the words "nominee shareholders" are nowhere to be found. I have challenged anyone to quote to me where that term is used anywhere in Thai law but have found no takers. The challenge remains open. So what does the FBA actually prohibit? The FBA prohibits any Thai national from "aiding or abetting" a foreigner including "holding shares" on behalf of a foreigner "in order for the foreigner to operate the business in avoidance of or violation to THE PROVISIONS OF THIS ACT" (my capitals for emphasis). Again, it is very clear to me, that the offence does not extend beyond the FBA or for any other purpose. In other words, the "nominee shareholder" law relates only to persons who "front" for a farang who is operating one of the prohibited or restricted businesses. The Act makes it clear that that is the only offence it is addressing.

Again, some may say that is a loophole but to me the law "is" what the law "says".

So where does this leave farangs who in the words of the OP "bought land through a Thai company" and where does it leave the lawyers who assisted in that process?

My answer (or, shall I phrase it as a question, first?)

- What have they done wrong?

As far as I can see (or read) "Nothing".

We all know that a foreigner cannot own land in Thailand. The circumstances we are concerned with is where the land is not owned by a foreigner, it is owned by a Thai juristic person, the Thai company. There is nothing in Thai law that anyone has ever suggested to me that prevents a Thai company from owning land. A company does not equal its shareholders. It is a totally separate "person" in every country in the world as far as I am aware. Indeed it takes quite a leap in terms of logic to contrive a scenario where a company can be a different "nationality" from the country under whose laws it is incorporated. That would need some very specific and perhaps impossible legislation unless we are in Alice's Wonderland (where everything is what it is not).

But doesn't the FBA do exactly that? No, it does not, as far as I can see. Nowhere in the FBA does it say that a Thai company ceases to be Thai as a result of foreign sharholding. The "entity" that becomes "foreign" under the FBA (when operated by 50%+ farang shareholders or their nominees) is not the company. Whoever drafted the Act was too smart too make that leap in credibility. The entity that becomes "foreign" is the "business", not the company. (If you don't understand the distinction, I'm sorry, I can't help you here). So how can it possibly have any application outside the FBA? For the purposes of prescribing what activities a company can engage in it is possible to make an (albeit artificial) distinction between the nationality of the company and the nationality of the "business", but that does not work for other purposes and it certainly does not work in relation to land ownership. A "business" cannot own land because there is no such "person" as a business, juristic or otherwise.

So despite the scary news items and the declarations by others including "some" legal advisers I have become convinced that the existing FBA has no relevance whatsover to the ownership, per se, of land by a Thai company whether the shareholders are Thai or farang. I cannot see the new FBA, if it is enacted, changing that. It would be too much of a contradiction of what a "company" is in law.

I'm not saying tht there may not be some other law that prevents a Thai company with foreign shareholders from owning land but if it exists no-one has brought it to my attention in over 6 months of asking and if it does exist why are people always referring to the FBA in that regard?

Yes, I know that the Land Office refuse to register land owned by companies where they consider the foreign shareholding too high but as far as I can establish that is simply the practice of a government department which is not embodied in law.

This is my understanding based on all the information I have been able to acquire. If it is wrong and you know differently (and can substantiate your view) please let us hear from you.

So, in answer to the OP, "Where do you get good legal advice" I think is its hard to come by even from paid professionals. However, I don't think all the lawyers in Thailand have been acting illegally. I think they know what they are doing but may not want you to know. You are more likely to run to them if you are worried about something.

Also there are a great many people in Thailand who do not like the idea of farangs being able to occupy land here. Some of these persons are to be found in very high places and official positions. When you hear Ministers and government officials use phrases like "loopholes in the law" and "against the 'spirit' of the law" (whatever that is) then you have a strong clue that the practice is really legal but they don't like it and their attitude is don't do as the law says, do as I think it should say.

DISCLAIMER: Of course, you should not rely upon anything I have said here. You should always seek good legal advice. :o

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  • 2 weeks later...

Alf Witt,

I commend you for the above entry which is very clear and well researched. It is rare for such detail and analysis to be presented in TV, despite a massive need for it.

Well done.

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Yes a very good post Alf.

In fact it would be a good MAIN topic to discuss in its own thread. How about making it a main topic?

I have also spent a lot of time looking into this whole land ownership issue - since last May when it was first printed.

Although I could not put is so eloquently, I think it says very well what I have been slowly coming to think.

Last week when I went to see my lawyer about another matter - he said pretty much the same thing when I mentioned the land /company thing.

No doubt that comment will attract such feedback as 'well he would wouldn't he', but I believe him scarily enough. No I am not gullible nor stupid and I am very wary of people - believe me.

He has spent a lot of time in Thai courts defending farangs and knows the Thai legal system well.

So to add to the debate of this thread, I am not so sure that lawyers cannot be trusted in the dealings

related to company / land ownership setup.

After all have they been proven wrong yet - has one farang been let down by their Thai lawyer in this arena - is there 1 case of a farang having his/her land confiscated and the lawyer 'doing a runner'.

If the 'land police' knock on my door I will go and see him and we will discuss all the options, along the lines of Alf's post I suspect.

There may be an out of court settlement we can arrive at.

If not we will put together out best case and go into court as a team to debate/fight the issues.

I may lose.

I may even win.

However, I do think my lawyer would do his best.

He cannot do more than his best.

So start trusting your lawyer a bit more may be a good idea - he may just know more about the Thai legal system than we do.

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