Can someone explain having a company to own a home here in Thailand

[Thomas J]

I know that to own real estate not a condo you can not if you are not Thai. However in my village numerous people are foreign, and have their homes in the name of the company they own. These people really don’t have a functioning business. They are retired and live in the homes. One owns two homes, lives in one and rents the other out. Another will infrequently rents out but lives there the majority of the time. However most are just retired and live in the home

[blackcab]

2 minutes ago, Thomas J said:

...in the name of the company they own

 

The key thing to understand is that they do not own the company. At best, they own 49 per cent of the company.

[lopburi3]

26 minutes ago, blackcab said:

 

The key thing to understand is that they do not own the company. At best, they own 49 per cent of the company.

So that could turn sour in an instant.  The second thing is this is allowed for firms needing to own property for business reasons - to use this provision to provide nominal ownership to a foreigner could also turn sour.  At best a very dark gray area - IMHO a no go zone.

[ThailandRyan]

Owning the home freehold, and then a 30+30+30 Chanote leasehold is how I have seen it done to be legal by a few of the expats I know living in Hua Hin.

[Salerno]

Basically it's a path many have taken even though it's illegal (no doubt the usual suspects will be along soon to say it's perfectly legit) that, depending on how risk averse you are, may or may not be a chance worth taking. If the powers that be decide to have a major crackdown there will be a few people in the proverbial.

[Delight]

7 minutes ago, ThailandRyan said:

Owning the home freehold, and then a 30+30+30 Chanote leasehold is how I have seen it done to be legal by a few of the expats I know living in Hua Hin.

Foreigners cannot own freehold n the land.

They can -however-lease the land for 30 years.

So lease the land -build the house -after 29.75 years -die.

Very neat and tidy

 

The concept of a 30 plus 30 plus 30 leasing arrangement is not legally possible.

Such an arrangement can be legally drawn up. However after the 1st 30 the land owner  has to sign.

This he will not do. He will simply take back the land with  a FOC house  sited on it.

[Airalee]

12 minutes ago, ThailandRyan said:

Owning the home freehold, and then a 30+30+30 Chanote leasehold is how I have seen it done to be legal by a few of the expats I know living in Hua Hin.

From what I understand, only the first 30 year lease is enforceable and after that, it’s at the lessors discretion as to whether or not they want to extend.  A usufruct is good until death if set up correctly but who’s to say what kind of accident one might have if the landowner wants to regain control of said asset.

[Thomas J]

1 hour ago, blackcab said:

The key thing to understand is that they do not own the company. At best, they own 49 per cent of the company.

Well I am not sure in that regards.  One home I know is owned by a Chinese Couple.  No Thai so they would have to have someone other than the spouse to be the 51% owner.  In another instance the man is from Lebanon and his wife is Russian so again, I don't see how this could work without risking ownership to a non-spouse.  Yet another has the two homes.  He is from Scotland, but has a Thai girlfriend that lives with him.  I suppose they could put the 51% in her name but he has already had one Thai wife leave him and take the house so putting in the company name would seem to equally put him at risk.  Finally if there is not a "legitimate" business isn't the purchase of the home in the name of the company really fraud? 

[ThailandRyan]

9 minutes ago, Delight said:

Foreigners cannot own freehold n the land.

They can -however-lease the land for 30 years.

So lease the land -build the house -after 29.75 years -die.

Very neat and tidy

 

The concept of a 30 plus 30 plus 30 leasing arrangement is not legally possible.

Such an arrangement can be legally drawn up. However after the 1st 30 the land owner  has to sign.

This he will not do. He will simply take back the land with  a FOC house  sited on it.

You can own the home freehold, you just do not own the land if you are not married to a Thai or have a Thai girlfriend/boyfriend in whose name the land was put in at the time of purchase.  You are absolutely correct in saying the maximum legal leasehold on the land is 30 years but then

under the Civil Commercial Code as it states, only the first 30 years is guaranteed valid for the tenant’s rights to the lease (once the lease is registered at the local Land Office). However, there are court decisions which indicate that the renewal clause is personal to the landlord and thus may not be binding on his heirs or future landlords (Lessor). Also, a lease contract can contractually bind the lessor to agree to a second term of 30 years, but again this is only enforceable after the owner of the land goes with the tenant to the Land Office and registers a 2nd term of 30 years. If the owner of the land does not wish to register the second term of thirty years, the tenant could file a lawsuit with the civil court against the owner, the reason being a breach of a contract between two individuals.

[blackcab]

25 minutes ago, Thomas J said:

Well I am not sure in that regards.

 

I'm absolutely sure. Unless you are an American citizen, the total non-Thai ownership of a Thai limited company can be a maximum of 49 per cent. Additionally, there must be a minimum of three shareholders.

 

American citizens can form a Treaty of Amity company, and they can own 100 per cent of the company. A Treaty of Amity company, however, cannot be used to own land.

[Delight]

This topic generates heated discussion on both sides i.e. Using a company as a device to circumvent restrictions in the law with respect to  a foreigner  having rights and responsibilities in relation to house ownership.

Also an apartment in a condo.

 

The governments action only adds to the confusion. The government is very Jekyll and Hyde.

 

See it from the government's point of view.

On the one hand they wish to stop foreigners using land  for residential living.

 

On the other they want foreigners to build houses -buy condos and live in Thailand .Why -money makes the world go around. Governments truly like   lots of foreign money coming into their country.

Copious amounts for preference.

So the government  -if pressed -will state that a foreigner  can lease the land for 30 years.

 

What the government could do is to stop the use of companies at the land office. This would be so easy.

 

In stead they choose  to sit on their hands.

 

To the OP

 

You seek info as to how the company 'work around'  operates

 

Very simple.

 

The foreigner will employ a law company or an accountant to set up the company

 

The foreigner will be allocated  max.49% of the share location. Typically the other 51% are in the names of Thai people. The foreigner usually has no knowledge of the 51%

 

However -and this is crucial. The foreigner will end up with 100% of the voting rights.

The foreigner has the voting rights. That is all that he needs. The foreigner controls.

If the foreigner wishes to dispose of the house he simple transfers both his share allocation and voting rights to the new buyer, The new buyer is now the MD. The price of this transfer is the price of the property.

 

Benefits of this process

 Easy  and very cheap to transfer control   to a  new buyer /beneficiary via a will.. The land office and the other 51% are not involved.

 

Limitations of this process.

The company has to be audited every year. This can cost over 12K Baht .

 

 

Maybe the government will stop the process completely  and potentially declare the every property that employs this process (house and condo) is illegal-and every property  be seized by the government.

 

The expats who reside in property situated in your village are convinced that the loss of their homes will not happen.

 

I suspect that they are right.

 

Other expats live for the day when it actually happens. They wish to see it happen -before they die.

 

Schadenfreude is very common in Thailand amongst  expats

Edited March 1, 2021 by Delight

[sometimewoodworker]

1 hour ago, ThailandRyan said:

Owning the home freehold, and then a 30+30+30 Chanote leasehold is how I have seen it done to be legal by a few of the expats I know living in Hua Hin.

That system has been ruled to be illegal. That some or many haven’t had the lease challenged is luck not law.

The ruling actually found that even the first lease is questionable because of the clauses for subsequent periods.

 

So if anyone (Thai) with enough money and interest were interested they would probably be able to annul the lease.

[Thomas J]

1 hour ago, blackcab said:

I'm absolutely sure. Unless you are an American citizen, the total non-Thai ownership of a Thai limited company can be a maximum of 49 per cent. Additionally, there must be a minimum of three shareholders.

 

American citizens can form a Treaty of Amity company, and they can own 100 per cent of the company. A Treaty of Amity company, however, cannot be used to own land.

I know I have read about the 49% rule before.  I never heard about the exception for American Citizens.  I do know this.  I am the only American Citizen in the village.  I do not have a company but engaged to a Thai and the home was hers for many years.  All of the others, are from Lebanon, Morroco, China, and Scotland.  They have companies and the homes are in the names of those companies.  The man from Lebanon has a wife from Russia.  The Morrocon man lives alone.  The Chinese couple are absentee owners both from China and The Scotland man does have a Thai wife and a second Scotland man has a Thai girlfriend   So in 3 of the 5 instances the companies would not have the wife as a 51% owner.  I "thought" that if the sole purpose of forming a company was to buy land, that action was prohibited.  The Morrocan man and Lebanon man work.  The Lebanon man for some oil company I am not sure about the man from Morroco.  The Scotland men are both retired, and the Chinese couple as mentioned don't even reside here not do they lease the property.  That is why I raised the question.  It seems so common that this is being done yet these clearly are not "companies' engaged in any business that employs people which is what I thought the intent of the exception of allowing companies to own land was all about. 

 

[Pilotman]

2 hours ago, Salerno said:

Basically it's a path many have taken even though it's illegal (no doubt the usual suspects will be along soon to say it's perfectly legit) that, depending on how risk averse you are, may or may not be a chance worth taking. If the powers that be decide to have a major crackdown there will be a few people in the proverbial.

Not true of course, but when have the facts got in the way of a good story.

Edited March 1, 2021 by Pilotman

[Pilotman]

2 hours ago, Thomas J said:

I know that to own real estate not a condo you can not if you are not Thai. However in my village numerous people are foreign, and have their homes in the name of the company they own. These people really don’t have a functioning business. They are retired and live in the homes. One owns two homes, lives in one and rents the other out. Another will infrequently rents out but lives there the majority of the time. However most are just retired and live in the home

OP,. if you want to PM me I can give you the facts, not the hearsay, bar stool opinion  and rumour. 

[NCC1701A]

3 hours ago, Thomas J said:

However in my village numerous people are foreign, and have their homes in the name of the company they own.

what you will notice as you read the responses so far to your question is that you did not get this answer: "No problem." 

 

good luck. 

 

 

Edited March 1, 2021 by NCC1701A

[Pilotman]

1 hour ago, blackcab said:

 

I'm absolutely sure. Unless you are an American citizen, the total non-Thai ownership of a Thai limited company can be a maximum of 49 per cent. Additionally, there must be a minimum of three shareholders.

 

American citizens can form a Treaty of Amity company, and they can own 100 per cent of the company. A Treaty of Amity company, however, cannot be used to own land.

correct 

[topt]

30 minutes ago, Pilotman said:

OP,. if you want to PM me I can give you the facts, not the hearsay, bar stool opinion  and rumour. 

 

So are you saying that @Delight version of the company "work around" above is incorrect and if so how?

Why not give your version on here so we can all learn.........

[ThailandRyan]

1 hour ago, sometimewoodworker said:

That system has been ruled to be illegal. That some or many haven’t had the lease challenged is luck not law.

The ruling actually found that even the first lease is questionable because of the clauses for subsequent periods.

 

So if anyone (Thai) with enough money and interest were interested they would probably be able to annul the lease.

You better look at the Thai Civil Code, the first 30 years once registered at the land office is valid, its the subsequent 30 year agreement and so on that can become problematic not just for the lessee but for the lessor as well.  Many cases have been heard regarding the subject.

[Pilotman]

49 minutes ago, topt said:

 

So are you saying that @Delight version of the company "work around" above is incorrect and if so how?

Why not give your version on here so we can all learn.........

I have done so a few times, but never again.  I can do without the abuse and the pontifications of people on here, who haven't a clue of what is legal and possible and what is not.  I am happy to PM with Members if they are serious and interested. 

[1FinickyOne]

I put everything 100% in my wife's name... and I don't feel in the least bit insecure about it...

 

The worst that could happen is that I walk away... [walk away because the car is in her name too] 

[sometimewoodworker]

1 hour ago, ThailandRyan said:

You better look at the Thai Civil Code, the first 30 years once registered at the land office is valid, its the subsequent 30 year agreement and so on that can become problematic not just for the lessee but for the lessor as well.  Many cases have been heard regarding the subject.

You should study recent case law. There has been at least 1 case that has gone all the way up that overturned the previous cases. So unless that precedent is overturned even the first lease is problematic if it contains wording that supposedly guarantees a second and third lease.

 

The case found that the guarantees written into the lease made the complete lease invalid. Registration at the land office is not a guarantee. Land office registrations have been cancelled on occasions.

[ThailandRyan]

35 minutes ago, Pilotman said:

I have done so a few times, but never again.  I can do without the abuse and the pontifications of people on here, who haven't a clue of what is legal and possible and what is not.  I am happy to PM with Members if they are serious and interested. 

I think I will follow your lead and bow out as well, as it seems that there are some that think they know it all as you said.

Edited March 1, 2021 by ThailandRyan

[Patong2021]

You ask a question and then when you get multiple accurate responses that refer to the applicable law and that you do not like, you keep insisting on a different position, suggesting that you are looking for validation of your  view and not an accurate  response.

 

The fact is that foreigners may not own land in their name. It is not an opinion, but the law.

 A foreigner may have a Thai registered company that can own the land. This is subject to the conditions as stated in the Foreign Business Act of 1999. Do not interpret the company option as a way to circumvent the law because it is not.

 

Under the FBA, a foreigner may only own/control 49% of the Thai registered company. Thais must CONTROL the other 51%.  Some people assume that they can get around this requirement through the use of a puppet, i.e. a Thai nominee who is inactive or dormant or simply paid to appear as an administrative person. This is illegal and voids the company authorization and voids the  land ownership as it makes the company an illegal company. 

 

There are three ways you can set up the the company without  an active Thai interest;

1. Through a Foreign Business License (not likely to be granted for  a home ownership.)

2. At the invitation of the government or through Board of Investment agreement. (The foreign large investors have this for their executive  homes.)

3. Registration through the USA Treaty of Amity.  This is subject to the US tax requirements. You are an American. Look at this option.

 

3 hours ago, Thomas J said:

Well I am not sure in that regards.  One home I know is owned by a Chinese Couple.  No Thai so they would have to have someone other than the spouse to be the 51% owner.  In another instance the man is from Lebanon and his wife is Russian so again, I don't see how this could work without risking ownership to a non-spouse.  Yet another has the two homes.  He is from Scotland, but has a Thai girlfriend that lives with him.  I suppose they could put the 51% in her name but he has already had one Thai wife leave him and take the house so putting in the company name would seem to equally put him at risk.  Finally if there is not a "legitimate" business isn't the purchase of the home in the name of the company really fraud? 

Yes, some people look like they  got away with something. This does not mean that it will hold up or that it is legal and subject to the protection of the existing laws. An illegal company has no legal standing to own the land. Illegal  entities cannot seek legal protection for their illegal acts.

 

 

 

[ThailandRyan]

9 minutes ago, Patong2021 said:

You ask a question and then when you get multiple accurate responses that refer to the applicable law and that you do not like, you keep insisting on a different position, suggesting that you are looking for validation of your  view and not an accurate  response.

 

The fact is that foreigners may not own land in their name. It is not an opinion, but the law.

 A foreigner may have a Thai registered company that can own the land. This is subject to the conditions as stated in the Foreign Business Act of 1999. Do not interpret the company option as a way to circumvent the law because it is not.

 

Under the FBA, a foreigner may only own/control 49% of the Thai registered company. Thais must CONTROL the other 51%.  Some people assume that they can get around this requirement through the use of a puppet, i.e. a Thai nominee who is inactive or dormant or simply paid to appear as an administrative person. This is illegal and voids the company authorization and voids the  land ownership as it makes the company an illegal company. 

 

There are three ways you can set up the the company without  an active Thai interest;

1. Through a Foreign Business License (not likely to be granted for  a home ownership.)

2. At the invitation of the government or through Board of Investment agreement. (The foreign large investors have this for their executive  homes.)

3. Registration through the USA Treaty of Amity.  This is subject to the US tax requirements. You are an American. Look at this option.

 

Yes, some people look like they  got away with something. This does not mean that it will hold up or that it is legal and subject to the protection of the existing laws. An illegal company has no legal standing to own the land. Illegal  entities cannot seek legal protection for their illegal acts.

 

 

 

Trying to register for the Treaty of Amity is an expensive option and takes many steps and processes that are lengthy.  In the end you still can not own land.

Seven steps: The U.S. Thai Treaty of Amity company (pugnatorius.com)

US-Thailand Treaty of Amity | Siam Legal International (siam-legal.com)

[Salerno]

 

8 hours ago, Salerno said:

(no doubt the usual suspects will be along soon to say it's perfectly legit)

Right on cue ...

5 hours ago, Pilotman said:

Not true of course, but when have the facts got in the way of a good story.

 

Spin it any way you want, setting up a company purely to circumvent the law is in no way legit. As I said, it comes down to how risk averse a person is, not advising for or against but be honest about it at least with yourself.

[Destiny1990]

How about to insert in the lease agreement a clause that if the landowner doesn’t cooperate with the second 30 years lease extension that in that case the landowner has to pay a huge fine of for example of 3 Million Bht to the foreigner.

 Once the landowner signs that lease-agreement with the inserted fine amount in it, then it seems to me that the landowner does need to cooperate with a second extension.

 

[donx]

Thomas J.,

 

You seem to be asking how these foreigners could set up a Thai company when they can only own up to 49% of the shares in the company. The answer is that they either know Thai friends that own the other 51% or, more likely, the Thais that own the other shares were known by the Thai lawyer(s) that established the Thai company.

 

When I first signed up on ThaiVisa, the number of Thai shareholders required was something like 7 individuals. Several years ago this was amended to what I think is either 2 or 3 Thai shareholders. Now these shareholders are supposed to actually provide funds to the Thai company comparable to their ownership shares. That often isn't actually the case which is why many designate them as nominee owners. The foreigner controls the company because his/her shares have more voting power. For example, one foreigner owned share is worth 10 votes while one Thai owned share is worth one vote.

 

Something like this is probably how the foreigners in your village set up a Thai company to purchase the property.

[baansgr]

11 hours ago, ThailandRyan said:

You can own the home freehold, you just do not own the land if you are not married to a Thai or have a Thai girlfriend/boyfriend in whose name the land was put in at the time of purchase.  You are absolutely correct in saying the maximum legal leasehold on the land is 30 years but then

under the Civil Commercial Code as it states, only the first 30 years is guaranteed valid for the tenant’s rights to the lease (once the lease is registered at the local Land Office). However, there are court decisions which indicate that the renewal clause is personal to the landlord and thus may not be binding on his heirs or future landlords (Lessor). Also, a lease contract can contractually bind the lessor to agree to a second term of 30 years, but again this is only enforceable after the owner of the land goes with the tenant to the Land Office and registers a 2nd term of 30 years. If the owner of the land does not wish to register the second term of thirty years, the tenant could file a lawsuit with the civil court against the owner, the reason being a breach of a contract between two individuals.

And the house is worthless without the land it is built on

[pacovl46]

13 hours ago, Delight said:

Foreigners cannot own freehold n the land.

They can -however-lease the land for 30 years.

So lease the land -build the house -after 29.75 years -die.

Very neat and tidy

 

The concept of a 30 plus 30 plus 30 leasing arrangement is not legally possible.

Such an arrangement can be legally drawn up. However after the 1st 30 the land owner  has to sign.

This he will not do. He will simply take back the land with  a FOC house  sited on it.

It is possible for a foreigner to buy land: