Land

[Bizz]

Real-estate companies owned by foreigners through nominees should restructure their shareholdings now to avoid future problems involving land-holding rights, according to a local lawyer. Foreigners seeking rights to property in Thailand should also consider alternative laws, especially the long-overlooked Real Rights Act, said Nirut Dej-udom, a partner with Bangkok Jurist Limited.

Mr Nirut said that for several decades the governments' stance on the enforcement of real-estate laws had been inconsistent and unclear. This had led foreign-owned developers to exploit lax supervision and loopholes and register themselves as Thai entities. But the amendments to the Foreign Business Act were about to change all that, he added.

Therefore, he urged the companies with nominees to seek real Thai partners who could genuinely invest in their businesses. Once the amended law takes effect, their shareholding structures might be explored and the credibility of the investment by each shareholder scrutinised.

A company that neglects to declare the sources of investment by its shareholders, in particular Thai ones, will face legal action with a maximum jail term of three years and/or a fine of 20,000 baht for an individual and a 50,000-baht fine for a business.

For foreigners seeking the rights to Thai property, he suggested that their contracts be based on the real rights law, which offered more protection to rights holders than normal leasing contracts. Under this law, the rights are attached to the assets, while under leasing contracts, they are attached to individuals.

The Real Rights Act endorses the rights of holders to use the property according to the agreed terms within a specific period. This law has been in place for a long time but is not popular due to its complications.

Clayton Wave, managing director of the property consulting firm Senior Home Real Estate, noted that the amended law had put an end to a decade-long boom in Pattaya's real-estate market during which foreign demand had pushed land prices in the resort city by about 20% a year.

Sophon Pornchokchai, managing director of the Agency for Real Estate Affairs, viewed that Thailand should not fully allow foreigners to own land, citing similar restrictions in neighbouring countries.

He said the government should focus instead on foreign direct investment in export-oriented industries to further strengthen the economy. To attract such inflows, long land leases with low fees could be used as an incentive.

''Vietnam, Cambodia and China allow only long-term land leasing. Although they don't allow foreigners to buy land, foreigners flock to them. It's not necessary to lure investors with the prospects of land ownership,'' said Dr Sophon.

http://www.bangkokpost.net/

[Sunbelt Asia]

Real-estate companies owned by foreigners through nominees should restructure their shareholdings now to avoid future problems involving land-holding rights, according to a local lawyer. Foreigners seeking rights to property in Thailand should also consider alternative laws, especially the long-overlooked Real Rights Act, said Nirut Dej-udom, a partner with Bangkok Jurist Limited.

Mr Nirut said that for several decades the governments' stance on the enforcement of real-estate laws had been inconsistent and unclear. This had led foreign-owned developers to exploit lax supervision and loopholes and register themselves as Thai entities. But the amendments to the Foreign Business Act were about to change all that, he added.

Therefore, he urged the companies with nominees to seek real Thai partners who could genuinely invest in their businesses. Once the amended law takes effect, their shareholding structures might be explored and the credibility of the investment by each shareholder scrutinised.

A company that neglects to declare the sources of investment by its shareholders, in particular Thai ones, will face legal action with a maximum jail term of three years and/or a fine of 20,000 baht for an individual and a 50,000-baht fine for a business.

For foreigners seeking the rights to Thai property, he suggested that their contracts be based on the real rights law, which offered more protection to rights holders than normal leasing contracts. Under this law, the rights are attached to the assets, while under leasing contracts, they are attached to individuals.

The Real Rights Act endorses the rights of holders to use the property according to the agreed terms within a specific period. This law has been in place for a long time but is not popular due to its complications.

Clayton Wave, managing director of the property consulting firm Senior Home Real Estate, noted that the amended law had put an end to a decade-long boom in Pattaya's real-estate market during which foreign demand had pushed land prices in the resort city by about 20% a year.

Sophon Pornchokchai, managing director of the Agency for Real Estate Affairs, viewed that Thailand should not fully allow foreigners to own land, citing similar restrictions in neighbouring countries.

He said the government should focus instead on foreign direct investment in export-oriented industries to further strengthen the economy. To attract such inflows, long land leases with low fees could be used as an incentive.

''Vietnam, Cambodia and China allow only long-term land leasing. Although they don't allow foreigners to buy land, foreigners flock to them. It's not necessary to lure investors with the prospects of land ownership,'' said Dr Sophon.

http://www.bangkokpost.net/

Because of this article, a number of people have asked today, what is the 'Real Rights Act"? It is the Land owner granting servitude of a usufruct or superficies.

www.sunbeltasiagroup.com

[SamuiRes]

http://www.bangkokpost.net/

Because of this article, a number of people have asked today, what is the 'Real Rights Act"? It is the Land owner granting servitude of a usufruct or superficies.

www.sunbeltasiagroup.com

Thank you Sunbelt but can you explain Superfices please as I can find no reference to it in any on line Law Dictionary.

[quiksilva]

There's plenty of threads on this topic, please search the forum, its been explained several times. In partial answer however it is where the land owner grants the right to a 3rd party to register ownership of structures on the land.

Its hardly ideal but its still better than nothing.

Im starting to think that it might be a good idea to clean up a few threads on this and similar topics and sticky them..,

[SamuiRes]

There's plenty of threads on this topic, please search the forum, its been explained several times. In partial answer however it is where the land owner grants the right to a 3rd party to register ownership of structures on the land.

Its hardly ideal but its still better than nothing.

Im starting to think that it might be a good idea to clean up a few threads on this and similar topics and sticky them..,

I did actually try that which brought up two results which effectively told me nothing.

Superfices must be defined somewhere - as I said it is not in any Law Dictionary I have searched so where does it stem from and under which Thai Law does it achieve its validity.

[BKK90210]

OK...the below is from one of the thai law firms

-What are the characteristics of the right of superficies?

1. Creation of a separate right of ownership of the building(s) built on the land. Basically, the right of superficies is the right of a tenant to own the construction he built on upon a land;

2. The right of superficies is transmissible to the heirs;

3. The right of superficies is not terminated by the destruction of the buildings, even by force majeure;

4. The right of superficies is granted for a period of 30 years and can be renewed per period of 30 years at a time;

5. The right of superficies must be made in written and is registered at the Land Department. A mention of its registration is inserted on the back of the original land title deed kept at the Land Department as well as on the back of the land title deed kept by the land owner;

6. The right of superficies can be terminated only “If the superficiary fails to comply with any essential condition specified in the act creating the superficies or, when rent is to be paid, he fails to pay it for two consecutive years”;

-What is the difference between the right of superficies and the lease agreement?

A lease agreement is a contract by which “…a person called the letter agrees to let another person, have the use of a property for a limited period of time and the letter agrees to pay a rent therefore”.

-What are the main features of a lease agreement?

A lease agreement can be drafted in such way to grant the same features as the right of superficies.

The right of superficies or the lease agreement can be used to achieve the same results. The main difference however is that most of the interesting features of the right of superficies are expressly stipulated by the law e.g. the law stipulates the creation of a separate right of ownership of a building in the case of the right of superficies. It also stipulates the transmissibility to the heirs. In other words the beneficiary of a right of superficies will own the house he built on the land even if it is not specified in the superficies Agreement. His heirs will be entitled to inherit his house even it is not written in the contract.

[Sunbelt Asia]

Thank you Sunbelt but can you explain Superfices please as I can find no reference to it in any on line Law Dictionary.

The Thai Civil Commercial Code

TITLE VI

SUPERFICIES

Section 1410.

The owner of apiece of land may create a right of superficies in favor of another person by giving him the right to own, upon or under the land, buildings, structures or plantations.

Section 1411.

Unless otherwise provided in the act creating it, the right of superficies is transferable and transmissible by way of inheritance.

Section 1412.

A right of superficies may be created either for a period of time or for the life of the owner of the land or of the superficiary.

If it is created for a period of time, the provisions of Section 1403 paragraph 3 shall apply mutatis mutandis.

Section 1413.

If no period of time has been fixed, the right of superficies may be terminated at any time by either party giving reasonable notice to the other. But when rent is to be paid, either one year's previous notice must be given or rent for one year paid.

Section 1414.

If the superficiary fails to comply with any essential condition specified in the act creating the superficies or, when rent is to be paid, he fails to pay it for two consecutive years, his right of superficies may be terminated.

Section 1415.

The right of superficies is not extinguished by destruction of the buildings, structures or plantations even if caused by force majeure.

Section 1416.

When the right of superficies is extinguished, the superficiary may take away his buildings, structures or plantations, provided he restores the land to its former condition. If, instead of permitting the removal of the buildings, structures or plantations, the owner of the land notifies his intention to buy them at market value, the superficiary may not refuse the offer except on reasonable ground.

www.sunbeltasiagroup.com