Foreign ownership of house/land..... NPV calc for 30 year lease.... Usufruct with Thai law firm, no companies involved.

[rose33]

Hi team

 

A few queries about that age old problem of foreign "ownership" of houses/land/villas/townhouses in Thailand.

 

I'm a middle aged female foreigner.... so the old "put it in your Thai spouse's name" suggestion is unlikely to work for me. Unfortunate, but true.

 

I don't want to wait around trying to meet "a Thai person I trust" so I can put their name on the lease. I want to buy real estate soon. I'm looking for a solution that is a bit more prompt and commercial.

 

So, here are my queries. All genuine guidance gratefully received.

 

1) (a) Has anyone here used a Thai law firm to get a usufruct? i.e., a Thai law firm (company, etc) becomes the legal owner of the land, and issues a lifetime usufruct to the foreigner (in the foreigner's personal name). There would be a side agreement clarifying the many rights accruing to the foreigner in exchange for the chanote title passing to the Thai law firm. There would also be clauses about what happens if the law firm goes belly up.    

If you answered "yes" then...

(b) if you were happy with the results, which law firm & lawyer did you use? (you are welcome to PM, if this site allows it...)

 

2) Has anyone ever bought a registered 30 year lease (i.e., a simple one that reverts to the owner/seller at end of lease). This definitely has less value than a lifetime usufruct. So... if yes... what NPV calc did you use to calculate 30 years of future rent... what assumptions did you make about inflation, rental demand, etc? It's tricky post-covid.

 

3) Has anyone combined (1)(a) with (2) so that the "side agreement" with the Thai lawyer includes a registered 30 year lease for the foreigner? How did that turn out for you? Any experiences to do with the title-holder's "option" to extend the lease another 30 years?

 

4) Any comments about Thai tax on farang houses (lease, usufruct, rental income, etc).

 

Not always getting what I would consider "logical" answers to these questions when I ask Thai lawyers. ????

Not sure if it's a language problem, attempted farang gouging, or just different assumptions/expectations coming from each side.

 

I find it's a fine balance between flexibility to a new culture, and simply being taken for a ride.

 

Not seeking legal or financial advice, just curious about what others have tried and how they found it.

 

Thank you kindly.

[EricTh]

What I know is that putting a usufruct is an extremely difficult task as the land office wants a valid reason. 

[alextrat1966]

15 minutes ago, rose33 said:

There would also be clauses about what happens if the law firm goes belly up.    

That's the problem you are facing with 1)... no matter how many clauses you add, you can still be in trouble. 

 

So you should only do this with a big, financially healthy and reputable real estate firm, (but even this doesn't mean they won't go belly up in the future). 

[KhunLA]

39 minutes ago, EricTh said:

What I know is that putting a usufruct is an extremely difficult task as the land office wants a valid reason. 

I had no problem, on 2 different houses in Udon Thani.  Fast, easy, inexpensive (150 baht), and they were for 'life'.

[KhunLA]

OP, forget a lease.  Usufruct or buy a condo.

[rose33]

Why not a long lease, KhunLA? Thank you.

[rose33]

Was this a usufruct with a Thai spouse? Thanks.

[KhunLA]

1 hour ago, rose33 said:

Was this a usufruct with a Thai spouse? Thanks.

No, not at the time registered.  Finally married couple years after the 2nd one.

 

Lease ... do you really want to commit yourself for a long lease.  Or you'll have a 'either party can void' clause, which makes it useless.  And short leases, many don't want to file, as they get taxes for the full length of the lease when filed.  Just not a fan of.

 

If married, lease is completely useless, as 1 yr after divorce, spouse can cancel the lease, unless that's changed.

[EricTh]

13 hours ago, KhunLA said:

I had no problem, on 2 different houses in Udon Thani.  Fast, easy, inexpensive (150 baht), and they were for 'life'.

Who did you tie the usufruct to? Thai spouse, Thai lawyer or anyone?

[KhunLA]

7 minutes ago, EricTh said:

Who did you tie the usufruct to? Thai spouse, Thai lawyer or anyone?

Owner of property.  Filed with their Chanote at land office.  No need for lawyer.  It's a fill in the blanks form, the clerk at land office fill out on the computer.  

 

Owner simply asks to have placed on Chanote, clerk types in the info, prints it out, sign / sign, attached to Chanote.  Simple, easy, and think it cost about 150 baht.

[EricTh]

5 hours ago, KhunLA said:

Owner of property.  Filed with their Chanote at land office.  No need for lawyer.  It's a fill in the blanks form, the clerk at land office fill out on the computer.  

 

Owner simply asks to have placed on Chanote, clerk types in the info, prints it out, sign / sign, attached to Chanote.  Simple, easy, and think it cost about 150 baht.

 

I am shocked because the owner is not related to you in anyway.

 

Maybe this only happen in your land office, other land office might be stricter?

 

[Adumbration]

19 hours ago, EricTh said:

What I know is that putting a usufruct is an extremely difficult task as the land office wants a valid reason. 

Absolute piffle.  I have three life usufructs on 3 different properties (and 3 different land offices).  I did all of them myself.  Longest one took 1 hour.  Fastest was 15 minutes and the cost for each one was 75 baht.  That is the cost.

[Adumbration]

@rose33

 

Just put the property in a Thai friends with a life usfruct for you stamped on the back of the chanote.  Get the friend to lodge a will at the local Amphur leaving the property to you in the event of their death.

 

If you don't have a Thai friend to use PM me and I will arrange one for you for a fee.

 

Cost for life usufruct is 75baht.  No other fees or taxes apply.

[Liverpool Lou]

20 hours ago, alextrat1966 said:

20 hours ago, rose33 said:

There would also be clauses about what happens if the law firm goes belly up.    

That's the problem you are facing with 1)... no matter how many clauses you add, you can still be in trouble. 

 

So you should only do this with a big, financially healthy and reputable real estate firm, (but even this doesn't mean they won't go belly up in the future). 

"...you should only do this with a big, financially healthy and reputable real estate firm..."

A real estate firm [sic], why?  What legal jurisdiction do real estate companies have?

[Liverpool Lou]

15 minutes ago, Adumbration said:

Just put the property in a Thai friends with a life usfruct for you stamped on the back of the chanote.  Get the friend to lodge a will at the local Amphur leaving the property to you in the event of their death.

You don't know that a will can be changed at any time and it doesn't matter where the original was "lodged" or for what reason!?

[EricTh]

43 minutes ago, Adumbration said:

@rose33

 

Just put the property in a Thai friends with a life usfruct for you stamped on the back of the chanote.  Get the friend to lodge a will at the local Amphur leaving the property to you in the event of their death.

 

If you don't have a Thai friend to use PM me and I will arrange one for you for a fee.

 

Cost for life usufruct is 75baht.  No other fees or taxes apply.

 

In the event of friend's death, how can the friend leave the property to you when a non-Thai can't own the property?

 

What if the chanote is under the developer's name?

 

Can a usufruct be tied to the developer's name or must it be transferred to a Thai citizen first?

 

 

 

[Don Chance]

Why do you feel a need to buy a property, in a country that gives you no rights? Simply rent what you need and invest the money in reits or index funds instead.

Thailand is not a good place to invest in RE because there is very little immigration. It is not a western country.

[alextrat1966]

52 minutes ago, Liverpool Lou said:

"...you should only do this with a big, financially healthy and reputable real estate firm..."

A real estate firm [sic], why?  What legal jurisdiction do real estate companies have?

Because it’s safer that the usufruct is tied to the developer rather than some random Thai or even a lawyer. 
 

 

[Adumbration]

27 minutes ago, EricTh said:

 

In the event of friend's death, how can the friend leave the property to you when a non-Thai can't own the property?

 

What if the chanote is under the developer's name?

 

Can a usufruct be tied to the developer's name or must it be transferred to a Thai citizen first?

 

 

 

A foreigner can be bequeathed a property but probate court will impose a time limit to sell. 

[blackcab]

21 hours ago, rose33 said:

This definitely has less value than a lifetime usufruct.

 

Don't assume so. It's not uncommon for a 30 year lease to cost the same as the current market value of the land.

[KhunLA]

1 hour ago, Adumbration said:

A foreigner can be bequeathed a property but probate court will impose a time limit to sell. 

I believe it's 1 year, needs to be sold / transferred to a Thai national, or legal entity allowed to own land.  Researched it, but quite some time ago, though be surprised if changed.

[KhunLA]

In OP situation, if knowing going to live any 1 place for at least 5-10 yrs, just buy a condo.  Renting / leasing is a waste of money.

[Adumbration]

18 minutes ago, KhunLA said:

I believe it's 1 year, needs to be sold / transferred to a Thai national, or legal entity allowed to own land.  Researched it, but quite some time ago, though be surprised if changed.

Yes it is generally 1 year but can be extended via application to the court.

[EricTh]

10 hours ago, KhunLA said:

I believe it's 1 year, needs to be sold / transferred to a Thai national, or legal entity allowed to own land.  Researched it, but quite some time ago, though be surprised if changed.

 

 

11 hours ago, Adumbration said:

A foreigner can be bequeathed a property but probate court will impose a time limit to sell. 

That's the same as going back to square one whereby a Thai citizen owns it and not the foreigner.

 

It can't be extended indefinitely.

[Adumbration]

3 minutes ago, EricTh said:

 

 

That's the same as going back to square one whereby a Thai citizen owns it and not the foreigner.

 

It can't be extended indefinitely.

More piffle.  You would benefit from the proceeds of the sale, including any capital gains.  Unlike a long term lease, where at the end you get nothing.  A lease is an amortizing asset.  A life usufruct is not. 

[Liverpool Lou]

15 hours ago, Adumbration said:

16 hours ago, Liverpool Lou said:

You don't know that a will can be changed at any time and it doesn't matter where the original was "lodged" or for what reason!?

Sure.  But easier still is to have you clipped for 20,000 baht.

Not really sure what that word salad means but it sure sounds like a threat to me.

[Rimmer]

An inflammatory post has been removed

[rose33]

On 1/21/2022 at 10:00 PM, blackcab said:

 

Don't assume so. It's not uncommon for a 30 year lease to cost the same as the current market value of the land.

Hi Blackcab

 

That's genuinely interesting. Can you say more?

 

Examples, reasons etc?

 

Through my eyes, the deal would be totally different... if I were a Thai seller and the options were to sell (chanote transferred out of my name and never have any rights over the land again), versus 30 year lease to a farang, so that it's guaranteed the whole property will be returned to the family unencumbered in 30 years' time... Geez.... I know what I would choose.

 

I just don't understand the market's reasons for pricing them the same. 

 

Thanks.

 

 

 

[rose33]

On 1/21/2022 at 11:16 PM, KhunLA said:

In OP situation, if knowing going to live any 1 place for at least 5-10 yrs, just buy a condo.  Renting / leasing is a waste of money.

Really important to me to be living in nature close to the earth.

 

I don't object to owning a secondhand condo in my name, as "backup" accom... it's a nice feeling of security. But want to live day to day close to nature far from a city... and all the condos are in cities, of course. Thanks.

[blackcab]

On 1/27/2022 at 8:57 AM, rose33 said:

Hi Blackcab

 

That's genuinely interesting. Can you say more?

 

Examples, reasons etc?

 

Through my eyes, the deal would be totally different... if I were a Thai seller and the options were to sell (chanote transferred out of my name and never have any rights over the land again), versus 30 year lease to a farang, so that it's guaranteed the whole property will be returned to the family unencumbered in 30 years' time... Geez.... I know what I would choose.

 

I just don't understand the market's reasons for pricing them the same. 

 

Thanks.

 

There is often no logic to it at all. Why is unproductive farmland in Isaan priced more than productive farmland in the UK?

 

Or poorly designed and constructed condos in Bangkok priced more than similar but well designed properties in other major capital cities?

 

With 30 year leases these properties are usually in very specific locations where the owner will not sell for any money. An example would be beachside land or city centre land.

 

It's a case of the lessee must have the land so they are obliged to accept the terms of the lessor.

 

This is somewhat similar in your case if your ambition is the long term secure use of land or property.

 

So few people have 30 year residential leases on a house and land from a lessor they are not connected with in some way that you will fall into the unusual category. I think most sellers will try and leverage the situation and they will try and make you pay for what you want.

 

Be prepared to walk away from a few deals until you get what you want.