buying house with Thai wife - marital vs personal property

[h3ith]

How did you organize the legal terms of a house purchase (freehold) with your wife? 

 

1) Last week, I suggested to a property company that my wife would buy the land as freehold and I would buy the house on it. Then my wife and I would sign a usufruct agreement.

2) But the property company replied that my wife should buy both the land and house; then my wife would sell the house to me in in a separate contract. 

Alternative 2 would certainly be simpler for the property company. But I wonder about the short end of the stick.

The sale from my wife to me would trigger a property sales tax. 

My wife would have to get the money for her purchase from me, as a gift.

 

My understanding is:

The land and also the house would be registered as her personal property (not marital property).

When she sells the house (minus the land) to me, this would be a sale of her personal property. So also the cash for the selling price would be classified as her personal property, while the house I purchase from her would become marital property, to be split 50:50 in the case of a divorce. Effectively, 160% of the property value would be classified as hers (first my gift to her: 100% of the house value plus ca. 10% representing the land value; and then 50% of the marital house).

 

I don`t mind to leave her with the land value and 50% of the house value should things go south in a couple of years. After 11+x years of marriage, I'd consider it time served for her if we don't quite make it until death doth part us. But I'm wondering about the value transfers that would increase her calculated "personal property" to more than 100% of the house price should things go to court in 10 years.

 

Before I ask some Thai lawyer - did you use a different legal construction for a house purchase? 

 

 

[northsouthdevide]

If you are not a Thai national, then you won't be able to buy from your wife.

You can only long lease, and IMHO that's your best and probably only option, though in the event of a divorce, you would be entitled to halfe the value of the house, but you would have to go to court to force sale.

[Pravda]

So much fail.... 

[Peterw42]

OP, any usrfruct between husband and wife becomes null and void in the event of divorce.

 

I have read your percentage calculations 5 times and sill can make any sense of it. Where do you get a mystery 10% figure from, or 160% ?

 

You cant own more than 100% of anything. its two separate assets, she owns a percentage of either asset. If I own 100% of microsoft and 50% of apple, I dont own 150% of microapple (if the companies combined)

Sale of a structure is not a real estate or property sale, its done under the Civil and Commercial Code, the same as buying/selling any non-property asset, it just gets noted on the title deeds.

[h3ith]

2 hours ago, Peterw42 said:

Where do you get a mystery 10% figure from, or 160% ?

Assume the house value is 5,000,000 and the land value 500,000. The land value is 10% relative to the house value.

The land would have to become personal property of my wife by Thai law, not joint marital property.

 

Assume my total net worth is 10,000,000 (land, house plus anything else) and her is 0.

In the case of a divorce, the 10,000,000, when it is considered joint marital property, would be split 50:50.

 

1) But:

The land is not married property, but her personal property. So she would get 500,000 for the land plus 50% of the remaining 9,500,000 = 5,250,000. In other words, she gets more than 50% of the 10,000,000.

 

2) Now, if she buys both the land and the house (with a cash gift from me), would both be counted as her personal property? If she resells the house to me for 5,000,000, would a future divorce court conclude that her "personal property" consists of a land value of 500,000 and the selling price of 5,000,000 she got from me for the house that was originally registered in her name together with the land?

Then her personal assets would amount to:

500,000 land

5,000,000 proceeds from the house sale to me

The remaining 4,500,000 would be joint marital property, of which she would get 50% in a divorce = 2.25M.

Thus, her total assets would be 0.5+5.0+2.25 = 7.75m = 155% of the house value of 5M.

My assets after a divorce would be 10 - 7.75 = 2.25. That's my concern.

 

 

[h3ith]

3 minutes ago, h3ith said:

hus, her total assets would be 0.5+5.0+2.25 = 7.75m = 155%

I'm not saying that she gets 155% of the house. That's not possible.

 

I'm saying that if our total net worth of 10M is split up, she gets much more the total net worth of 10M - if both house and land are counted as her personal property rather than joint marital property.

So the house purchase would not only transfer 5.5M into her personal assets, but 7.75M = much more than the value of the house.

 

[Peterw42]

9 minutes ago, h3ith said:

Assume the house value is 5,000,000 and the land value 500,000. The land value is 10% relative to the house value.

That's not how it works, anywhere in the world, most of the value of a house/land is the land.

Land appreciates, houses depreciate.

The figures would make sense the other way around, land 5,000,000, house 500,000.

You cant go apportioning the value against the structure just to suit your requirements. You will find the land office has appraised value to stop people doing just that.

I think you will find the house buy/sell is tied to the original construction permit/building contract, ie: what it cost to build.

[h3ith]

Just now, Peterw42 said:

The figures would make sense the other way around, land 5,000,000, house 500,000.

The property company offers the same house also as a leasehold, for the same price as a freehold. This would imply that the value of the house is much higher than the land value.

[Peterw42]

11 minutes ago, h3ith said:

The property company offers the same house also as a leasehold, for the same price as a freehold. This would imply that the value of the house is much higher than the land value.

No, they are just putting the same price on a leasehold, as the freehold house/land, if someone is silly enough to pay a new freehold house/land price for just a leasehold, that's the buyers problem, not the true value of the structure. The developer is dressing up leasehold as freehold and charging the same price.

Anything to do with the land office is "their" appraised value, not yours (or the sellers) nominated value.

 

 

[h3ith]

1 minute ago, Peterw42 said:

The developer is dressing up leasehold as freehold and charging the same price.

ok, thx for the advice

[h3ith]

16 minutes ago, Peterw42 said:

The figures would make sense the other way around, land 5,000,000, house 500,000.

As for marital property, this would confirm the uneven split of assets:

5M representing the land would become her personal property. And she would get 50% of the remaining 5M of our assets. So 7.5M for her, 2.5M for me in a divorce.

Did any of you have a different legal arrangement when you purchased a house? 

 

[Susco]

If you buy a property with in mind that your wife will divorce you, then better don't buy.

 

Good luck with a house, build on land you are not allowed to access.

[Peterw42]

4 minutes ago, h3ith said:

As for marital property, this would confirm the uneven split of assets:

5M representing the land would become her personal property. And she would get 50% of the remaining 5M of our assets. So 7.5M for her, 2.5M for me in a divorce.

Did any of you have a different legal arrangement when you purchased a house? 

 

Most do the company route, then its basically one asset to worry about, ie: the 50/50 owned company.

A divorce means wind up the company and sell its assets.

[h3ith]

3 minutes ago, Susco said:

Good luck with a house, build on land you are not allowed to access.

I'm not concerned about the house. She can keep it, sell it, whatever.

But I'd like to keep at least a 50% share of my assets if we ever part ways rather than just 25%. 

 

[ICELANDMAN]

43 minutes ago, h3ith said:

I'm not concerned about the house. She can keep it, sell it, whatever.

But I'd like to keep at least a 50% share of my assets if we ever part ways rather than just 25%. 

 

 

And what a friend of mine got after the divorce decision of the judges 25%, I inform you that you are in Thailand so the law is made to the advantage of the Thais

 

[1FinickyOne]

4 hours ago, h3ith said:

Assume my total net worth is 10,000,000 (land, house plus anything else) and her is 0.

Excuse that I have not read the entire post... 

 

If your wife does not have a decent cash reserve, how do you expect to get bought out of your end of the agreement... selling aq 2nd hand house may not be easy... 

 

in my case, I did not spend my last $$ and put everything in my wife's name... I want her to have a good life... w or w/o me... 

[Lucky dog]

Confused by some of the talk here like " if you think your going to get a divorce why buy a house" or "the land is worth a lot more than the house " REALLY??  He is just being smart to protect himself. The house is usually worth a lot more than the land. 

[GreasyFingers]

Have your wife take out a mortgage with you as mortgagor for the full value of the property. But you will have to pay the mortgage registration fee to the LTD.

[khunPer]

15 hours ago, h3ith said:

1) Last week, I suggested to a property company that my wife would buy the land as freehold and I would buy the house on it. Then my wife and I would sign a usufruct agreement.

2) But the property company replied that my wife should buy both the land and house; then my wife would sell the house to me in in a separate contract. 

Alternative 2 would certainly be simpler for the property company. But I wonder about the short end of the stick.

The sale from my wife to me would trigger a property sales tax. 

Firstly, you cannot separate land and house, if it's not separated from the beginning; i.e. if the developer, or "property company", hasn't separated ownership of land and house, it cannot de done later.

 

To own a house, but not the land under the house, you might need a superficies servitude from the land owner; you can read more about superficies HERE.

 

Selling, or transferring, property triggers transfer fee, stamps and eventual sales tax. You can get an idea from the property tax calculator HERE.

 

To my knowledge, and from other posts in Thaivisa forums, you can buy property during marriage with 50/50 split in case of divorce, often meaning that the property will be sold and the outcome split 50/50; but you should check that with a lawyer. You might find more information in the chapter about Family Law in Thailand HERE.

 

Also, when buying property in a Thai spouse's name, you shall consider a last will, if case your spouse dies before you, as you otherwise might only be eligible to half of the estate.

 

Another possibility to look at is "Right of Habitation"-servitude, which you can read more about HERE.

 

However, be aware of that a contract made between husband and wife can be declared void...

Section 1469 Civil and Commercial Code: 'Any agreement concluded between husband and wife during marriage may be avoided by either of them at any time during marriage or within one year from the day of dissolution of marriage; provided that the right of third persons acting in good faith is not affected thereby'.

You can read more about the subject HERE.

 

In general for Thai property: Land increases in value over time, whilst building(s) decrease in value. Appraised value by a land office might not indicate real value, and when it comes to calculation of transfer fees and sales tax, only the highest value might be used, i.e. a land office might claim proof of sales price. As it often is in Thailand, there might be regional differences, so experience from one land office might not be the same in another. Personally I've been dealing with land offices in two provinces, and they had different in demands of documentation for fee calculations. Also a usufruct servitude to a foreigner might in rare cases not always be registered at all land offices...????

[Mavideol]

7 hours ago, h3ith said:

Assume the house value is 5,000,000 and the land value 500,000. The land value is 10% relative to the house value.

The land would have to become personal property of my wife by Thai law, not joint marital property.

 

Assume my total net worth is 10,000,000 (land, house plus anything else) and her is 0.

In the case of a divorce, the 10,000,000, when it is considered joint marital property, would be split 50:50.

 

1) But:

The land is not married property, but her personal property. So she would get 500,000 for the land plus 50% of the remaining 9,500,000 = 5,250,000. In other words, she gets more than 50% of the 10,000,000.

 

2) Now, if she buys both the land and the house (with a cash gift from me), would both be counted as her personal property? If she resells the house to me for 5,000,000, would a future divorce court conclude that her "personal property" consists of a land value of 500,000 and the selling price of 5,000,000 she got from me for the house that was originally registered in her name together with the land?

Then her personal assets would amount to:

500,000 land

5,000,000 proceeds from the house sale to me

The remaining 4,500,000 would be joint marital property, of which she would get 50% in a divorce = 2.25M.

Thus, her total assets would be 0.5+5.0+2.25 = 7.75m = 155% of the house value of 5M.

My assets after a divorce would be 10 - 7.75 = 2.25. That's my concern.

 

 

past posts will tell you that after divorce you will get Nothing, Zero, Ziltch ....

[khunPer]

7 hours ago, h3ith said:

The property company offers the same house also as a leasehold, for the same price as a freehold. This would imply that the value of the house is much higher than the land value.

The property company just makes more money, but might be paid slower if partly paid in installments. Furthermore the will be an extra tax for registration of a lease running longer than 3 years, but no longer than 30 years.

 

For the property company it's a question of getting the investment in land and building(s) back, plus their markup, within a calculated period, with is often 3-5 years in business terms.

[h3ith]

3 hours ago, 1FinickyOne said:

If your wife does not have a decent cash reserve, how do you expect to get bought out of your end of the agreement.

She does not need to buy me out. Assume that almost the entire 10M of my net worth was accumulated during our 11 years of marriage. In a divorce, she is entitled to 50% of it. If accumulated during the marriage, all of the assets are marital property, with or without land or a house. She can claim 50% of marital assets.

But under Thai law she would get 100% of house and land, plus 50% of the remaining marital assets (mostly investment funds). That would leave me with less than 25% of the original 10M.

 

[khunPer]

1 hour ago, Lucky dog said:

Confused by some of the talk here like " if you think your going to get a divorce why buy a house" or "the land is worth a lot more than the house " REALLY??  He is just being smart to protect himself. The house is usually worth a lot more than the land. 

And all that only matters if land and house is already separated, and to separate land and house you need to do the separation paperwork before building the house...????

[h3ith]

7 hours ago, Susco said:

If you buy a property with in mind that your wife will divorce you, then better don't buy.

I guess you can approach marriage from 3 angles:

1) Never marry because it might end in divorce, with financial implications. That's a personal choice. But I'm not sure how many self-confirmed spinsters and bachelors choose to remain single based on a risk calculus.

2) Marry, with rose-tinted glasses on. Assume that your own marriage can never end with divorce, unlike 30% or 50% of the other marriages. Enjoy this happy perspective while it lasts. 

3) Marry, but without rose-tinted glasses. There is a 1 in 3 risk that a fresh marriage will not last forever. After having survived the first 11 years, as in my case, one can assume that the risk for the next 30 years will be lower, perhaps 1 in 6 or even 1 in 10. That's still a Russian roulette risk. Out of curiosity, I'd like to learn if the rules of the game can be designed so that I just point a pea gun at my temple instead of a .357 magnum. 

[natway09]

They would have trouble getting their hands on any of the "other" married accrued assets in the event of a divorce in particular if they are  in your name.

The house & land (your home) accrued during the marriage can be assessed as part of the assets even although it is in her name but if they exceed the 50%    tough

[1FinickyOne]

52 minutes ago, h3ith said:

She does not need to buy me out.

Then don't worry... just let her have the house and walk away... 

 

55 minutes ago, h3ith said:

That would leave me with less than 25% of the original 10M.

 

That was what I walked away with in my settlement in USA... abt 25% of assets accumulated together... but i knew I would do well in the future and she would not... here, I just buy everything in my wife's name and make sure i have enough in my own name that I can afford to walk away. We do have a village marriage. 

 

Have you discussed your issues/concerns w/your wife.. they are valid concerns.

[sead]

So to make this clear to you. 

Usufruct or not. If its in your wife's name you will probably lose if she sells the house. Usufruct is only valid as long as she doesn't sell the land. When land is sold to brother, or any family member you're screwed. Buy a condominium or a house in only your name would be the best choice for you since you ask these questions. 

Please correct me someone if I'm wrong. 

[Lucky dog]

1 hour ago, 1FinickyOne said:

Then don't worry... just let her have the house and walk away... 

 

That was what I walked away with in my settlement in USA... abt 25% of assets accumulated together... but i knew I would do well in the future and she would not... here, I just buy everything in my wife's name and make sure i have enough in my own name that I can afford to walk away. We do have a village marriage. 

 

Have you discussed your issues/concerns w/your wife.. they are valid concerns.

 

[KhaoYai]

What you suggest is one way but what is the value of the house if you don't own the land it sits on?. In the event of a marriage breakdown you may want to re-coup the value of your asset - who would want to buy it?

 

Another way, if your wife will accept it, is to take a mortgage (legal charge) out over the property.  You can't own the land but the law does not prevent a mortgage over it being held by a foreigner - that would give you far greater protection.  Not all Land Offices will register a foreign mortgage even though its fully legal - mine does.  Speak to a lawyer about this method - if you get no joy I can give you details of one that is conversant with it.

[ncc1701d]

I have contacted a lawyer in Thailand recently about something similar. Their idea is to do 3 possibly 4 things. Register a loan to your wife, create a usufruct as well as an MOU. My situation is slightly different to yours. I’ll pm you their details. The loan registration to a foreigner varied from region to region, but you can call on the loan at any time (is my understanding) and legally she would hav to sell the property and repay the loan to you. I’ll Pm you who I contacted. I would definitely not do anything without contacting a lawyer first.