Buying a house that is registered to a company. What?

[casualbiker]

I'm currently considering buying a house that is owned and registered by a company. The house was built in 2007, and registered into the company name in 2015. What do I need to look at in reference to the purchase, what paperwork do I need to check etc. I may be renting the house out for a few years before moving in. So what is required company wise to stay legal etc. Thanks in advance for your constructive feedback. Allan

[Mavideol]

it's quite a complex procedure, better seek (proper) legal advise, there are lawyers specialized in the field

[TTSIssues]

Absolutely agree you must take legal advice. A friend of mine bought a house recently that was registered in the name of a company, in fact he actually just bought the company and thus owned the house as well. Very straightforward but he HS an excellent lawyer. Best of luck. 

[Pilotman]

I own a house registered to the company that is in the family.  The Directors are myself, my wife and my daughter, they hold the majority of the shares.  When our lawyers set everything up to purchase the house, they reminded us that to sell the house, we would need to sell the company and of course the house along with it. Apparently it's a straight forward type of transaction, provided the buyer is  aware of the rules of ownership in Thailand and complies with the company share ownership laws and deals through a reputable lawyer. In our case, we will see, if we ever sell.  But of course, this is just me saying this.  As others have advised, get good legal advice. 

Edited June 3, 2019 by Pilotman

[phantomfiddler]

Definitely use a lawyer for this procedure. The "Company" should come with the signed forms declaring that the shareholders have signed over their shares, and all you have to do is come up with 3 persons (including yourself)

to transfer the shares to, and these Thai persons should also sign a P.O.A. form so that they can be changed over should there be any falling out. All very inexpensive but still have a straight lawyer take care of it.

[sikishrory]

Keep in mind that a house registered to a company can cause issues doing visa extensions.

[KhaoYai]

There is of course an alternative - if you're prepared to put the house in a Thai name and protect your investment in another way, there is nothing to stop the company that currently owns the house from selling it to you (actually your Thai partner). The house doesn't have to stay in a company name.

 

Please be aware that if the company that owns the house is not actually trading and it can be shown that it was set up purely to own the house - it is illegal. Its rare that there are any problems of this type but you need to be aware of the risks.  Consider the current changes to the immigration rules - how long before the Thai authorities get around to looking at company house ownership with foreign directors?

 

If you have a Thai partner, friend, wife etc. who is prepared to accept it, you can buy it in their name then take out a mortgage over the property to cover your investment. Provided that mortgage is properly registered on the deeds at the Land Office, the property can't be sold unless the 'mortgage' is repaid - far safer in my opinion. See a lawyer if you want to go down this route and ask him/her to firstly check if the Land Office responsible for the property will accept mortgages in foreign names - some will, some won't.

 

Remember, leaving the property registered in a company name will require payment of taxes, accounts being prepared and an audit every year. Conversely, if you buy the company, there will be no transfer tax on the property as it has not changed hands, whereas if the company sells it to you, there will be tax to pay on transfer.

 

There are also other alternatives but its up to you which you feel safer with - take legal advice.

Edited June 3, 2019 by KhaoYai

[KhaoYai]

3 hours ago, Pilotman said:

When our lawyers set everything up to purchase the house, they reminded us that to sell the house, we would need to sell the company and of course the house along with it.

I think this is incorrect, a company can always sell its assets.

[david555]

Straight forward procedure … but … keep in mind from the moment you take over the company you are responsible for his long (maybe bad financial) history …! "Compare it you could buy a dog with flies "….. safest way is to make start your own company (not so expensive ) and that "sellers  company" sells the house to your fresh company from which you thus know has only your history you know.

[khunPer]

23 hours ago, casualbiker said:

I'm currently considering buying a house that is owned and registered by a company. The house was built in 2007, and registered into the company name in 2015.

[ ... ]

So what is required company wise to stay legal etc. Thanks in advance for your constructive feedback.

Presume you are talking about land & house..?

 

A house only, on for example leased land, can be owned by a foreigner, and don't need a costly company set-up. But owing a house, don't mean you own the land under the house.

 

Land & house owned by a company is in principle illegal, if its a so-called shell-company in cover of foreign ownership, with Thai nominee shareholders. You will need a due diligence for both land title deed, and company, before buying an already established company, which mean you'll need experienced solicitor assistance.

 

The benefit of buying a company, and not land, is that the land don't change owner, or being transferred to another name, wherefore no land taxes and transfer fees applies.

 

When you say "registered into the company name in 2015" it sounds like the property changed owner in 2015, and was sold to the company limited.

 

In theory a foreigner cannot hold more the 49% of the shares of Thai company limited – US citizens however has another option under the amity agreement, but real estate ownership is specifically forbidden under the treaty – so engaging in property owned by a Thai company limited, one shall be aware of the 51% ownership risk. However, many law firms makes set-up with controlling votes of shares, for example by using "preferred shares", and/or proxies from the Thai majority of shareholders. Its not the intention of the law, but widely used.

 

In practice you'll need to know about those shareholders that own 51% of "your company", and thereby "your house"; and about how voting rights are distributed between the shareholders, as with normal shares you can only hold 49% of the votes; and that the company has delivered all due annual tax statements; and that the company is free from debt; and if the company has other activities than owing one plot of land & house.

 

In practice you will have annual expenses for accountant and tax-audit for a running company – preferably showing a profit and paying some smaller company tax – and you shall also pay some rent, or leasing fees, to the company, if you you use the property for your private home; anyway the company limited need some income. Preferably the company should have other activities, and income, than just being owner of one land & house used by a major shareholder and director (board member).

 

You ask "to stay legal", however in principle you don't "stay legal", but in practice the method is widely used.

 

If you have Thai family, it might be worth considering using your family as shareholders, instead of illegal nominee shareholders. You need minimum three shareholders in total, and 51% Thai ownership. If the company has 7 nominee shareholders from old-time set-up, you – i.e. your lawyer – shall get it changed immediately, as that kind of nominee set-up is illegal. You can use Thai wife, or girlfriend, as one of the shareholders, and if you have a child, or children, with Thai citizenship – minors can be shareholders under guardian – you should consider gifting your child/children some shares. However, take into consideration that a minor's shares might be difficult to sell, or transfer, you'll need a solicitor's advice; but using a child as needed Thai shareholder you can eliminate the use of illegal nominee shareholders, and your child might not vote against you.

 

You need to get a solicitor's advice about your possibilities, and especially risk, before you make any decision of buying land & house, using the Thai company limited method.

 

PS: I'm shareholder, and director (board member), in a Thai company limited that own land, but the company also has other business activities.

????

[khunPer]

6 minutes ago, david555 said:

Straight forward procedure … but … keep in mind from the moment you take over the company you are responsible for his long (maybe bad financial) history …! "Compare it you could buy a dog with flies "….. safest way is to make start your own company (not so expensive ) and that "sellers  company" sells the house to your fresh company from which you thus know has only your history you know.

You need to calculate the tax-situation, and compare with 3.3% "business tax", and 2% "transfer fee", and eventually "withholding tax"; and eventually company tax, and expenses for closing an old company, which the company owner might also wish to be compensated for.

[david555]

11 minutes ago, khunPer said:

You need to calculate the tax-situation, and compare with 3.3% "business tax", and 2% "transfer fee", and eventually "withholding tax"; and eventually company tax, and expenses for closing an old company, which the company owner might also wish to be compensated for.

I assume that the closing is at expenses for the company holder …, but of course that is part from the negotiations and how eager he is to sell the house .

There are also some who try to sell company alone , and later even are happy to give that empty one for free to avoid te closing "ceremony"????…, depends all from particular situations ….. remember that " dog with flies "

 

In the west such a company sale is sometimes used to get rid of bad history legal  consequences by attracting a ignorant  "mule director "????

Edited June 3, 2019 by david555

[KhaoYai]

10 hours ago, khunPer said:

In theory a foreigner cannot hold more the 49% of the shares of Thai company limited

I believe some Land Offices will not allow more than 39% if the company owns land.

[khunPer]

10 hours ago, KhaoYai said:

I believe some Land Offices will not allow more than 39% if the company owns land.

Sure, but that is a minor detail, and normally cleared by a lawyer by reducing the foreign share to 39% before registration, and raised to 49% the day efter registration...????

[KhaoYai]

3 hours ago, khunPer said:

Sure, but that is a minor detail, and normally cleared by a lawyer by reducing the foreign share to 39% before registration, and raised to 49% the day efter registration...????

Yes, I'd also heard that ????.

[Delight]

On 6/3/2019 at 6:12 PM, khunPer said:

 

In practice you'll need to know about those shareholders that own 51% of "your company", and thereby "your house"; and about how voting rights are distributed between the shareholders, as with normal shares you can only hold 49% of the votes; and that the company has delivered all due annual tax statements; and that the company is free

????

 The whole point of going down the company route is for the foreigner to control 100% of the voting rights.

The other directors are obliged to sign over their votes.

If what you say is correct and 51% of the votes are with Thais then they can vote to sell the house/company and divi up the proceeds as per their share allocations.

 

That applies to all condos and houses in Thailand where the company route is used.  That is  alot of real estate.

Maybe I have misread your statement.

 

Are you convinced that your statement is correct?

 

[Langsuan Man]

2 hours ago, Delight said:

The other directors are obliged to sign over their votes.

If what you say is correct and 51% of the votes are with Thais then they can vote to sell the house/company and divi up the proceeds as per their share allocations.

Not true, shareholders cannot offer shares for sale, that can only be done by the Company Director which the OP is.  But remember that you will have to pay the Land Department Transfer tax upon transfer.  But that tax is only for the land, and the Land Department will determine the tax, which will not include the "house"

 

It is not entirely clear whether you really have to close the company officially, since the company no longer has any assets , so there is no reason to to do an annual "update".  It is thought that the Office of Business Development will automatically close the company after several years of no reporting, but only time will tell

[khunPer]

2 hours ago, Delight said:

 The whole point of going down the company route is for the foreigner to control 100% of the voting rights.

The other directors are obliged to sign over their votes.

If what you say is correct and 51% of the votes are with Thais then they can vote to sell the house/company and divi up the proceeds as per their share allocations.

 

That applies to all condos and houses in Thailand where the company route is used.  That is  alot of real estate.

Maybe I have misread your statement.

 

Are you convinced that your statement is correct?

Thanks for your comment.

And yes, I'm sure I'm correct, because I say »how voting rights are distributed between the shareholders, as with normal shares you can only hold 49% of the votes«; i.e. if your 49% percent shares, or part of them, are not preferred shares with higher number of votes; or some of the other shareholders don't have preferred shares without voting right – for example with a guaranteed annual dividend in return – the 51% shareholders own "your house".

 

You don't need to control 100% voting rights, just you can control 51% for simple majority, and 66% if qualified majority is needed.

 

In the paragraph just above your quote, I said:

»...so engaging in property owned by a Thai company limited, one shall be aware of the 51% ownership risk. However, many law firms makes set-up with controlling votes of shares, for example by using "preferred shares"...«

 

»The other directors are obliged to sign over their votes« has no meaning, its the general meeting, and shareholders votes that count. One director can have full power to single handed control the company; other directors might need to sign together to gain similar power; and a director can also be limited in power, and for example not be able to buy or sell property without approval from a shareholder's meeting. Using nominees, directors or shareholders – which were commonly used until about a decade ago – is illegal.

 

With condos, to my knowledge from other posters, the whole building, or complex, is regarded as "one company", and the 51% Thai shareholders have voting majority of the management of the condos (there are no preferred votes). Using a Thai company limited to own a condo only makes sense, if its a condo outside the 49% allotment allowed for foreign holding.

????

[casualbiker]

Thanks all. Basically if we went this route, then ALL the shareholders would be changed. I would use myself (obviously) and my wife and her sister. Therefore keeping the company in the family.. it seems from most who have done it to be a fairly simple matter.. in the first few years I would probably rent out the house therefore showing profit and loss in the company name. The house would be mortgaged in my wife's name..by waiting a year or two there is approximately 60k saving on the land transfer fees against current transfer fee.. thanks again. Any additional information such as cost for basic company audit /accounts would be good..

[khunPer]

9 hours ago, casualbiker said:

The house would be mortgaged in my wife's name.

I wouldn't think that is possible with property owned by a company limited – please correct me, if I'm wrong – but if your wife has assets, she might be able to be guarantor for a loan to the company.

 

9 hours ago, casualbiker said:

I would use myself (obviously) and my wife and her sister. Therefore keeping the company in the family.

You can for example give yourself 49% ordinary shares; your wife 48% ordinary shares; and your wife's sister 3% preferred shared with a guaranteed annual dividend of 4% of the nominel share value against no voting rights on the preferred shares. That will give you voting majority for 4% of 3% of the company's nominal shareholder capital; i.e. if 2 million baht (normal capital, as a company should include one work permit for a foreigner) then 3% is 60,000 baht, and 4% annual dividend is 2,400 baht.

 

You need to check with your lawyer, if you can change existing shares into preferred shares, or you need to extend the shareholder capital, which will cost a small registration fee for each 200,000 baht extra shareholder capital.

[Delight]

22 hours ago, khunPer said:

 

 

With condos, to my knowledge from other posters, the whole building, or complex, is regarded as "one company", and the 51% Thai shareholders have voting majority of the management of the condos (there are no preferred votes). Using a Thai company limited to own a condo only makes sense, if its a condo outside the 49% allotment allowed for foreign holding.

????

 So you are saying that owning a condo which is in a company makes sense.

By extension are you  also  saying that using a company for a house/land purchase makes no sense and is potentially dangerous?

[khunPer]

12 minutes ago, Delight said:

23 hours ago, khunPer said:

With condos, to my knowledge from other posters, the whole building, or complex, is regarded as "one company", and the 51% Thai shareholders have voting majority of the management of the condos (there are no preferred votes). Using a Thai company limited to own a condo only makes sense, if its a condo outside the 49% allotment allowed for foreign holding.

????

 So you are saying that owning a condo which is in a company makes sense.

By extension are you  also  saying that using a company for a house/land purchase makes no sense and is potentially dangerous?

Thanks for your comment.

No, I said: Using a Thai company limited to own a condo only makes sense, if its a condo outside the 49% allotment allowed for foreign holding – not that it makes sense to use a Thai company limited to own a condo, especially since there is a legal way for full foreign ownership of a condo, when within the 49% allowed for foreign ownership.

 

The situation could be that the foreign buyer insist on a condo in a building, where the 49% foreign allotment is already used, the only option might be a company limited.

 

When buying Land & House there is no legal alternative for us mobs – you need a 40+ million baht investor visa for being allowed to own up to one rai of land – and if you wish to use something else than the wife/girlfriend method, which in some reports have been mentioned as "potentially dangerous", a company limited might be an option, and might even be slightly less "potentially dangerous"...????

 

 

[ThomasThBKK]

This is NOT a good setup.

 

The house SHOULD NOT be in the company balance sheet. It should be in your personal name, look up superficies.

There's HLT taxes IF it's in the company name and IF the company director lives in there: https://www.duensingkippen.com/thailandpropertylawblog/?p=89

 

 

 

 

The correct thing todo in this case would imho be to setup your own structure and then transfer the land to the new structure.

First you buy a usufruct in your own name from the current company.

Then you buy the remaining land to a new company holding structure that is carefully setup, use an international LAW firm!!

Then you get superficies for the house in your own name, i am not sure this is possible when the house is already on there tho - ask  a lawyer.

 

Make sure you pay the approriate and realistic and real taxes and transfer fees for each step!

[khunPer]

3 hours ago, ThomasThBKK said:

Then you get superficies for the house in your own name, i am not sure this is possible when the house is already on there tho - ask  a lawyer.

Not possible to my knowledge, a superficies is issued before building a house. If a house is already registered together with the land, it normally cannot be separated.

 

Its also depending on what assets are listed in the company limited's books, if the house is listed there, its a company asset.

 

If the house is already separated, it can be sold separate from the land, and only when re-sold registered separate. When building a new house, the building permission – together with other documents with the owner's name – is proof of ownership, eventually together with a superficies; a written permission from land owner is always needed to obtain a building permission in another name than the land owner.

????

[ThomasThBKK]

Not possible to my knowledge, a superficies is issued before building a house. If a house is already registered together with the land, it normally cannot be separated.

 

Its also depending on what assets are listed in the company limited's books, if the house is listed there, its a company asset.

 

If the house is already separated, it can be sold separate from the land, and only when re-sold registered separate. When building a new house, the building permission – together with other documents with the owner's name – is proof of ownership, eventually together with a superficies; a written permission from land owner is always needed to obtain a building permission in another name than the land owner.

[emoji846]

Yeah that's pretty much how i would think it is too.

Would add that you can get a building permit without real land "owners" written permission if you have a usufruct or lease in your name tho.

Then you do the the building permit in your name and superficies - but as you said doing that stuff likely requires the company to sell off the house if it's in their book as an asset first.

 

This is nothing i would personally touch without a good lawyer, too easy to make a mistake...

 

 

Building permit can be changed from company name to personal name till the house is completed afaik.

I think superficies can also be registered up to the completion date, doesn't need to be done before building starts imo.

 

 

 

 

 

 

[CGW]

I have sold three houses that I owned in company names, quick and easy process, cheap also, obviously you need a "Lawyer".

It really is a simple process, you just sign the company over to the "buyer" no more to it than that, taxes etc have to all be in order, but that should be done yearly anyway - no need to over complicate the process - though I'm sure the "Can't" brigade will be along soonest.

Edited June 8, 2019 by CGW

[ThomasThBKK]

I have sold three houses that I owned in company names, quick and easy process, cheap also, obviously you need a "Lawyer".
It really is a simple process, you just sign the company over to the "buyer" no more to it than that, taxes etc have to all be in order, but that should be done yearly anyway - no need to over complicate the process - though I'm sure the "Can't" brigade will be along soonest.

Illegal nominee structure for the buyer as in not knowing the shareholders and them having no substantial business interest.

Extremely dangerous and dodgy, same reason people are losing their property all over samui and co.


Please no one here listen to this.



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[CGW]

23 minutes ago, ThomasThBKK said:

Illegal nominee structure for the buyer as in not knowing the shareholders and them having no substantial business interest.
Extremely dangerous and dodgy, same reason people are losing their property all over samui and co.
Please no one here listen to this.

Didn't take long before the "can't" arrived - as expected - worked for me mate, no skin off my nose what others do, just saying... ???? 

[khunPer]

2 hours ago, ThomasThBKK said:

Would add that you can get a building permit without real land "owners" written permission if you have a usufruct or lease in your name tho.

Thanks for your reply.

 

Lease is depending of the text in the leasing agreement.

 

Not all land offices will issue usufruct for foreigners.

????

[khunPer]

5 hours ago, ThomasThBKK said:

Extremely dangerous and dodgy, same reason people are losing their property all over samui and co.

Do you have any examples of people on Samui loosing their property because of this "structure"..?