Private Sector: Extending Foreign Leasehold Ownership A Better Option

[Dogmatix]

"The four categories include high-wealth persons, retirees, individuals who intend to work from Thailand, and specialists who possess certain skills."

 

Unless retiress have so much in assets that their don't care or have no children, the inability to pass on the land to heirs through inheritance will be a problem for many of them. It could also be a problem for a retired couple, if one predeceases the other, if registered solely in the deceased's name or even in joint names. Transfer to the surviving party may require re-establishing right to buy. 

 

The now expired treaty rights for foreigners to buy land in the Land Code specifically provided for foreign heirs to inherit the land but this provision does not. So the estate of the deceased is obliged to sell the land within 12 months and give the proceeds to foreign heirs.  You can imagine the scope this gives Thai lawyers and executors to fleece foreign heirs residing overseas and having no clue about Thai laws.

[Dogmatix]

Most types of land lease are limited to 30 years for Thais and foreigners alike. It would be a good idea to extend this to 50, 90, 99, 125 and periods common overseas.  However, leasing law is pretty scant in Thailand and buying a lease doesn't give you the same ownership rights, as in most developed countries. On a very basic level, it is not even clear that, once the lessor has died or sold the land, the new owner is under any obligation to honour the lease, since a lease is an agreement under the Civil and Commercial Code that binds only the two contracting parties, not future owners of the land or inheritors of the leasehold. So it is also not clear that heirs can inherit the right.  All these details have to specified in the contract which Thai lawyers working on behalf of the land owner will not be inclined to do.  Even if they are included, the leasehold or heirs would have sue in the Civil Courts for damages after violation of these terms.  That means not getting the lease back, if successful, but having to quantify the actual financial damage suffered as a result of breach of contract and trying to claim for that.  Good luck to anyone who ever has to do this. 

Edited November 5, 2022 by Dogmatix

[tomacht8]

1 hour ago, Dogmatix said:

Can you cite examples where Thai courts have rejected the land ownership by a foreigner and what the court ordered to be done to rectify the situation? I am unaware of any cases like this and can't think who would  sue in the court. The Land Department has power to force the company to sell the land or it can seize the land and have the Legal Execution Dept sell it by public auction without going to court. But I have never heard of cases where this happened either.  There have just been threatening noises made from time to time but, so far, never any action. 

 

What has become more difficult, since a letter sent to land offices by the Interior Ministry in the last days of the Thaksin government before the 2006 coup, ordering them to check, is registering land in the name of any company that has any foreigners associated with it at all, whether as shareholders, directors or just people hanging around in the Land Office, Before 2006 the instruction to land offices was just to refer to the director general any transaction where foreigners owned over 40% of the shares but it was easy to get around this by reducing the foreign shareholding to 40% in the Land Office before going up to the counter and increasing it back up to 49% before leaving the office.

I have a Thai lawyer in my family and he sometimes has such company troubles on his desk. One case, for example, was where a Thai shareholder who actually only acted as a straw man died. His Thai heirs knew that the deceased owned shares in several companies. The heirs wanted money for the shares. The case then went through extortion, reporting to the land registry, reporting to the MOC and ended with the annulment of the company share transfer papers in court. Logically, the foreigner could not prove a money transfer for the transferred Thai shares and the holding of more than 49% of the shares ultimately led to the company's dissolution.

 

The company solution only gives 49% security for the foreigner, although he pays 100%. The remaining 51% thai mandatory shares are "secured" via contract constructions with blank share purchase contracts and voting right transfers.

 

Ergo: The company solution to buy land as a foreigner is not that "simple" and not 100% secure.

[SGD]

7 hours ago, Jonathan Vickers said:

If you are looking to retire, (which I am not) 40,000,000 bt will buy you a lovely home near the beach in sunny Queensland, Australia, where you are invited to actually become an Ozzie, are made to feel welcome and respected and where it is beautiful one day and perfect the next! You get to fully own the property, leave it to your children and not have to put up with the narcissistic, xenophobic and persistent racist nonsense of this megalomaniacal Thai system. 

I totally agree. Equally, if you are the sort who has 40m baht lying around for a holiday home, then presumably you have other, better assets elsewhere and some means of managing them, including setting up dodgy Thai companies to own your Thai house.

 

In any case, get outside Bangkok, Phuket and Samui enclaves and you would really struggle to see what you could spend 40m on and for a maximum of 1 rai, it would most surely not be worth it.

 

[Speedhump]

Isn't this 30 year lease for land to live on fantasy? I thought it was 10 years only, with two ten year extensions written in (note: fees to be negotiated each time), and landowner expected not to refuse to agree the extensions.... 

[MyFriend You]

     30 year lease in Thailand, you can own the house, but not the land.

     50 year lease in Vietnam, you can own the house, but not the land - if you go with the leasehold option, Vietnam a few years ago approved foreigners can own approx 1 acre of land, IF and only IF, they immediately build a house on it.  But I understand that has been on hold during the pandemic, as well as the one year Visa for US Residents - in time things will come back to normal........Peace

[steevjee]

On 11/5/2022 at 11:13 AM, jaywalker2 said:

Rich Chinese.

you forgot one important adjective   Corrupt

[NoDisplayName]

On 11/5/2022 at 2:41 AM, webfact said:

The alien acquiring land must invest no less than 40 million baht in a business or enterprise and retain the investment for at least three years.

 

What are the actual requirements here?

 

Must the investment retain the full value of 40 million baht for the entire three years, or will I be permitted to lose the full investment amount right off the bat?

[lujanit]

I wonder if there is another reason Thai's are so worried about foreigners owning land here.  You only have to look at the MM2H scheme in Malaysia.  In the Forest City development (by Chinese developers) in Johor state the number of Chinese purchasers are the vast majority of buyers so much so the Malaysians were worried about it becoming another Chinese enclave.

 

The Malaysians promptly changed the rules governing the MM2H scheme to discourage the Chinese from buying.  Especially the withdrawal of an instant visa when buying in Forrest City.  Since the rule change Forest City has become a ghost town.

 

https://www.tandfonline.com/doi/abs/10.1080/02723638.2017.1405691?journalCode=rurb20