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Posted

For this post I would like to understand the situation if I bought a house and also bought a 30 year lease of the land from a Thai National. Also assume that house prices do not change.

Lets say the house is 6 Million baht but that includes 2 Million baht for leasing the land for 30 years. So 4 Million for the house + 2 Million for the land lease. 

1. When a house is advertised at 6 Million baht lease hold is that price usually the total price that includes the house and the lease of the land for 30 years?

2. I assume that after 30 years if the Thai owner of the land would not renew the land lease for another 30 years then that Thai person would own the land and everything on it. They would own the land and the house and the foreigner would own nothing. Is this correct?

3. Assume I wish to sell the house after 20 years what is the situation?  Would the house + the remaining 10 years land lease be worth just 2 Million?    

But if the new owner could form a new 30 year land lease for 2 Million baht with the Thai land owner then the house would be worth the original 4 Million?

 

Thanks in advance for any help

Keith

Posted
8 minutes ago, hotchilli said:

Rent... 

There's another possibility; register a Thai company and have the company buy/own the land and buildings. This is possible but is a bit involved.

 

You can only own 49% of the shares in the company however in some cases you can record yourself as the GM etc., of the company and record in the company documents that the GM is the only person who can make decisions / sign any document on behalf of the company.

 

There more complications, and from time to time there's 'noise' from the gov't that this situation will be outlawed.  

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Posted
2 hours ago, Stevemercer said:

So, a best case scenario would be to be married to a Thai national, with the land in her name, and a 30 year usufruct on the land. You both live happily ever after for the rest of your lives. After you die, the family might sell or live on the land. 

Note, as far as I know - a Usufruct does not have a term. A Usufruct is in force for the life of the holder and it dies with him/her. I am not saying the a Usufruct cannot have a term - I don't know on that point but it is not normal for there to be a fixed term.

 

If the regsitered land owner dies, the Usufruct and all its terms and conditions passes on to whoever the land is left to.

 

To have any legal authority, a Usufruct must be registered and noted on the title deeds of the land at the Land Office - preferably Chanotte title. When registering a Usufruct, the holder should make sure that their name is on the entry and that the entry on the deeds is duly stamped and dated.

 

My Usfufruct is constructed that way and I've never heard of one having a fixed term.  My lawyer suggested that if I wanted to leave something of value to my family after I died, I could form a new Usufruct that also included my son's name and thus would last for his lifetime.

 

Again, as far as I know, a Usfruct is not covered by the 30 year limit on leases - in essence because it is not a lease.  I know that its difficult to understand what it is, if its not a lease but its not and is not defined as such under the law.  That is of course, until the Thai courts come across a dispute at which time that could change.

 

In general, a Usfruct is far stronger than a lease. It gives the holder the right to fully enjoy the property and even make money from it through letting it out. It gives security to the holder in that the registered land owner cannot sell the property or raise a secured loan against it without the holder's permission.

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Posted

After reading the bulk of the replies...

I have only one thing to add...

Find a good honest lawyer.

They do exist here and have them explain all the INS and outs for occupying and controlling a property here..

 

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Posted
12 minutes ago, bwanajohn said:

After reading the bulk of the replies...

I have only one thing to add...

Find a good honest lawyer.

They do exist here and have them explain all the INS and outs for occupying and controlling a property here..

 

What was that film franchise with Tom Cruise called?

Posted
52 minutes ago, KhaoYai said:

Note, as far as I know - a Usufruct does not have a term. A Usufruct is in force for the life of the holder and it dies with him/her. I am not saying the a Usufruct cannot have a term - I don't know on that point but it is not normal for there to be a fixed term.

 

If the regsitered land owner dies, the Usufruct and all its terms and conditions passes on to whoever the land is left to.

 

To have any legal authority, a Usufruct must be registered and noted on the title deeds of the land at the Land Office - preferably Chanotte title. When registering a Usufruct, the holder should make sure that their name is on the entry and that the entry on the deeds is duly stamped and dated.

 

My Usfufruct is constructed that way and I've never heard of one having a fixed term.  My lawyer suggested that if I wanted to leave something of value to my family after I died, I could form a new Usufruct that also included my son's name and thus would last for his lifetime.

 

Again, as far as I know, a Usfruct is not covered by the 30 year limit on leases - in essence because it is not a lease.  I know that its difficult to understand what it is, if its not a lease but its not and is not defined as such under the law.  That is of course, until the Thai courts come across a dispute at which time that could change.

 

In general, a Usfruct is far stronger than a lease. It gives the holder the right to fully enjoy the property and even make money from it through letting it out. It gives security to the holder in that the registered land owner cannot sell the property or raise a secured loan against it without the holder's permission.

I have a usufruct on my thai son's lande title. It expired when I die.

 

Son or his kids who are the joint/equal beneficiaries  when he dies cannot sell or change the property without my written permission. 

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Posted
7 hours ago, Stevemercer said:

For most foreigners, the land would be owned by their Thai wife/relative (e.g. someone with whom you have a close and continuing relationship). Because the foreigner doesn't own the land, they may want greater certainty they can continue to live on the land for the rest of their lives if the marriage breaks down, or something similar.

 

A foreigner can take a 30 year lease/usufruct/lien on the land, meaning that the land can't be sold without the foreigners permission. The usufruct maust be stamped onto the original chanoot (land ownership) to be enforceable. The land offices in some provinces will not do this.

 

You can pay for the land (but it is owned by the Thai national) and you can build a house on the land with a 30 year lease (if allowed by the Province local land office). The land, if sold, would be sold with the house on it.

 

You would only do this as a lifestyle choice, because there are too many uncertainties to consider this an investment route. You must be 100% certain the land has clear freehold title, the Thai national is trustworthy, and the land office will allow the lien to be placed on the land. In the longer term, you should be prepared to walk away from whatever costs incurred if the relationship falls through or there is some reason why you don't want to live in Thailand anymore.

 

In Thailand, if married, you are entitled to 50i% of assets obtained after the marriage. So make sure you marry first before buying the land and building a house. If you are persistent, you may be able to recover 50%, but it won't be anything like the original 6 million baht spent.

 

The land, purchased for 2 million, may increase in value if in a township area or with direct road frontage. The house will not increase in value and a 4 million baht house might be worth only one or two million, particularly if the location is somewhat remote.

 

A Thai family, with 6 million baht to spend, would typically have their heart set on building their own new home and not buying somebody elses house. This is doubly true in rural Thailand where fewer people would have that sort of money freely available.

 

So, a best case scenario would be to be married to a Thai national, with the land in her name, and a 30 year usufruct on the land. You both live happily ever after for the rest of your lives. After you die, the family might sell or live on the land. 

 

If you got divorced, and the ex-wife is agreeable, you could continue to live in the house as long as you want. Just bear in mind that no decent Thai lady (e.g. if you want to marry again) will want to live in a house/land owned by your ex-wife.

 

Alternatively, and if the ex-wife is agreeable, she could sell the property/house and give you 50%. Assuming the land is still worth 2 million, and the house is in excellent shape (maybe 2 million in the best possible outcome), you could get back 50% of 4 million baht, or 2 million baht.

 

If the ex-wife is not agreeable, and uncooperative, you might want to walk away and save yourself all the aggro.

@StevemercerThank you so much for the very detailed, informative and helpful information and the very good advice.

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Posted
5 hours ago, KhaoYai said:

Note, as far as I know - a Usufruct does not have a term. A Usufruct is in force for the life of the holder and it dies with him/her. I am not saying the a Usufruct cannot have a term - I don't know on that point but it is not normal for there to be a fixed term.

 

If the regsitered land owner dies, the Usufruct and all its terms and conditions passes on to whoever the land is left to.

 

To have any legal authority, a Usufruct must be registered and noted on the title deeds of the land at the Land Office - preferably Chanotte title. When registering a Usufruct, the holder should make sure that their name is on the entry and that the entry on the deeds is duly stamped and dated.

 

My Usfufruct is constructed that way and I've never heard of one having a fixed term.  My lawyer suggested that if I wanted to leave something of value to my family after I died, I could form a new Usufruct that also included my son's name and thus would last for his lifetime.

 

Again, as far as I know, a Usfruct is not covered by the 30 year limit on leases - in essence because it is not a lease.  I know that its difficult to understand what it is, if its not a lease but its not and is not defined as such under the law.  That is of course, until the Thai courts come across a dispute at which time that could change.

 

In general, a Usfruct is far stronger than a lease. It gives the holder the right to fully enjoy the property and even make money from it through letting it out. It gives security to the holder in that the registered land owner cannot sell the property or raise a secured loan against it without the holder's permission.

KhaoYai, thank you for the very good information, it's much appreciated.

Posted
5 hours ago, 4MyEgo said:

Others have answered your question.

 

However, from my point of view, looking outside the scope of the question, if you were, for example, thinking of investing such an amount, you would want to be able to recoup it entirely as you would any investment, over time of course, after all, buying a dwelling is a long term investment, i.e. under normal circumstances.

 

The above said, buying land in your wife's name and then building a house on it in my opinion is a waste of money, i.e. unless the land is hers already or is cheap  enough and the build is a good price.

 

I will use my situation as an example, purchased a 1,000 square metre block with a 20 metre frontage over a decade ago just outside a village for 120,000 baht and we built the house some years later when I retired, the entire outlay was under 2 mil for a single level rendered 6 bedroom house with 3 bathrooms.

 

If I walk away tomorrow, it's hers while the other 4 mil for arguments sake would be invested outside Thailand earning a tax free return.

 

In other words, why would you want to go all in, especially when there is no return on your outlay, I won't call it an investment, because it's not, it's hers, best case scenario, you would get 40% back if and when it was sold after expenses, and that 40% wouldn't be on the 6 mil outlaid, it would 40% of whatever someone was prepared to offer you depending on where it is.

 

Perhaps a condominium with some nice ocean views in your name would be a better investment, you could will it to the wife, if married ? 

 

I prefer to keep things simple, I have heard of these Usufructs and the like, but to me, if it ain't "fee simple", i.e. title is in my name suffice to say, then it's not mine and a loss I would have to consider before I went into it.

 

 

 

 

 

Thank you @4MyEgo  for good information and advice.

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Posted
8 hours ago, Stevemercer said:

A foreigner can take a 30 year lease/usufruct/lien on the land, meaning that the land can't be sold without the foreigners permission

I'm not sure you are correct about it. I am pretty sure the landlord can sell whenever and to whomever they want to, but the sale will not effect the lease which means it's not going to be easy to sell a plot of land with a long term lease on it for a reasonable market price.

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Posted
12 hours ago, Keith5588 said:

For this post I would like to understand the situation if I bought a house and also bought a 30 year lease of the land from a Thai National. Also assume that house prices do not change.

Lets say the house is 6 Million baht but that includes 2 Million baht for leasing the land for 30 years. So 4 Million for the house + 2 Million for the land lease. 

1. When a house is advertised at 6 Million baht lease hold is that price usually the total price that includes the house and the lease of the land for 30 years?

2. I assume that after 30 years if the Thai owner of the land would not renew the land lease for another 30 years then that Thai person would own the land and everything on it. They would own the land and the house and the foreigner would own nothing. Is this correct?

3. Assume I wish to sell the house after 20 years what is the situation?  Would the house + the remaining 10 years land lease be worth just 2 Million?    

But if the new owner could form a new 30 year land lease for 2 Million baht with the Thai land owner then the house would be worth the original 4 Million?

In most cases there is only a title deed for the land. If you lease a plot of land and build a house on it under normal circumstances you won't be able to get a separate title deed for the house, meaning you actually own nothing. AFAIK only in gated communities built by developers they sometimes get separate chanot for the land and the house on it. So basically you can't calculate a price for the house and a price for the land.

In any case, how could you sell the house without the land? 

As for doing it through a company as some1 suggested - this falls under a dark grey area as it is basically illegal to register a non performing company for this purpose. I know that many people go this route but there is a risk that the authorities will find out and you might lose it all. Also, if the land is owned by a company you will have to pay yearly taxes as well as more tax when you sell the land.

So the only legal way to "own" land is to get it registered to a trusted Thai person and then "lease" it from that person for 30 years in hope that after 30 years the registered owner will lease it to you again for another 30 years. Mind you - a 30+30+30 years is also illegal and a court can void it completely (including the initial 30 years).  

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Posted
7 hours ago, LukKrueng said:

I'm not sure you are correct about it. I am pretty sure the landlord can sell whenever and to whomever they want to, but the sale will not effect the lease which means it's not going to be easy to sell a plot of land with a long term lease on it for a reasonable market price.

With a lease maybe but not with a properly constructed Usufruct that is duly registered on the deeds.

 

Firstly, the Usufruct forbids sale without the holder's consent and secondly, if someone wanted to buy the land to either use or develop/sell, the Usufruct would prevent them from doing that. Would you buy a property that you couldn't do anything with?

 

If though, that person was in it for the long run and was prepared to accept they were buying land that has a protected 'tenant' (for want of a better word) on it, then the 'tenant' can and may well agree to such a transfer.  The transfer, unless it forms an inheritance, cannot take place without the 'tenant's' consent.

 

It is very important that a Usfruct is constructed by a lawyer who understands them - any clauses that don't strictly follow the law can invalidate the whole agreement.

 

Its very hard to 'get your head around' exactly what a Usufruct is - the only way I can describe it is that its as near as you can get to ownership without actually owning it. The Usfruct has a price, agreed between the owner and the holder and not a rental. Basically you are buying the rights to hold and use the land and those rights are only for the benefit of the original holder.

 

A lease however (rarely with a domestic property) may be transferable and thus have a value.  However, it is highly likley to contain restrictive clauses and is certainly not as secure as a Usfruct.

 

Anyone who is thinking of a Usufruct to give them a level of protection in case of a break-up - i.e. providing the funds to build a house that is ultimately in a wife's/husband's name should consider this................

 

It is quite common for such properties to be built on family land - possibly surrounded by other family houses.  In the event of a breakdown of a marriage/relationship, it is highly likely that the family will become hostile. Would you really want to stay in those circumstances? Personally, I'd never build/buy a house anywhere near Thai family.

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Posted
15 hours ago, scorecard said:

I have a usufruct on my thai son's lande title. It expired when I die.

 

Son or his kids who are the joint/equal beneficiaries  when he dies cannot sell or change the property without my written permission. 

I add more, the usufruct is recorded in detail on the back of the land title document (chanut) which shows my Thai son as the sole 'owner' of the property. I have a copy of both sides of the chanut. 

Posted

Rent or buy a condo I've never understood why anyone would do the leasehold thing.

 

As long as you don't expect any return on a leasehold ... UP2U

 

6 houses later and a few rentals and I really never lived anywheres for more than a few years.  So a 30-year anything, that's way too long, and unpredictable for me.

 

Posted

As  long as I’ve lived in Thailand I’ve wanted a house, but until I can legally own it and the land it sits on with MY name on the documents I’ll stick to buying condos.

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Posted
6 minutes ago, Fairynuff said:

As  long as I’ve lived in Thailand I’ve wanted a house, but until I can legally own it and the land it sits on with MY name on the documents I’ll stick to buying condos.

Many set up a company, 49% owned by you and 51% by a few shareholders, you are the majority shareholder.

Posted
On 2/3/2023 at 7:23 AM, Stevemercer said:

30 year usufruct on the land.

A Usufruct a Latin term meaning for Life. The Usufruct remains in force for the remainder of your life. Which is a way getting Virtual freehold. But you cannot leave it to anyone in a will.

 

A Superficies under a lease of land can give you the right to build on the land for a 30 year lease. After which you have to return the land to its original state. Or negotiate to sell the building to the Land Owner as the lease comes to its end.

 

Check the words Usufruct and Superficies on Siam Legal if you want it clearly defined.

 

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Posted

Note to anyone thinking of buying a property through the 'company route'.

 

Whilst this is possible and legal - subject to conditions, if the company is set up solely for the purpose of owning land by a foreigner, that is completely illegal. It is circumvention of the Thai Land Law. Circumvention is specifically dealt with in that law and is stated as illegal.

 

There are probably 100's of you out there that 'own' a property that way - some will have for many years but if your company isn't trading and has no reason to own land, its illegal.

 

You may never have a problem or you could have one tomorrow.  Given the amounts involved and that the penalty is forfeiture - its not something I'd consider as way of obtaining security.

 

I would also point out that the Thai courts are not stupid - paying a little income tax each year does not constitute trading, no matter what your 'Thai Lawyer' tells you.  Thailand does not operate in the same way as most western countries do - there is rarely any comeback on lawyers for giving bad advice and even less chance of them being 'struck off'.  I know of one Thai lawyer who was involved in a serious property fraud where a foreiegner lost a very large amount and to the best of my knowledge, he's still practising.

 

A fully operating Thai limited company with foreign shareholding that has a reason to own land can do so legally.  On thing that I believe is legal is where a property development company owns several properties for either sale or rent.  I don't think it would be illegal for such a company to rent a property to a director but again, you have to consider if a Thai court would view it that way. It would probably be better if the lease was not in the director's name.

 

You would also have to make sure that the 'rent' is clearly visible as income for the company. Some areas will allow foreigners to hold 49% of the shares of a company that owns land - others reduce that considerably.  I am told however that if there are no foreign directors when the company buys land - there is no restriction later, subject of course to the maximum 49%. 

 

My lawyer also advises me that for the moment, no matter what the foreign shareholding is, it is possible to remove voting rights etc. from all the other directors which would in effect mean that the foreigner has complete control of the company.

 

So in essence, although it is possible for a foreigner to 'own' land in Thailand, it can be very complicated.  This possibility is actually 'control' over that land but given the changes aimed at circumvention over the last few years (rules banning nominee shareholders etc.), those routes may not last forever.

 

There is still very strong feeling against foreigners owning land in Thailand - as illustrated by the decision to shelve plans to allow limited ownership last year. I can't see that changing any time soon.

 

I'm perfectly happy with my Usufruct but I don't have a wife to complicate matters.  Even if I was to re-marry, the property would be protected because:

 

a). I as a foreigner don't 'own' it.

 

b). In any case, the 'asset' was held before marriage and as such does not form part of the marital property in the case of a divorce.

 

The 'owner' is a trusted friend of many years.  I also have one other document that in my and my lawyer's opinion, secures my investment but as my lawyer pointed out - "this is Thailand and everything is subject to interpretation".  I'm not going to go into what that document is but I'm happy that I'm safe.  I've 'owned' my house for almost 9 years and at the very least I'm guaranteed occupancy until I die.

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Posted
On 2/4/2023 at 10:00 AM, brianthainess said:

Many set up a company, 49% owned by you and 51% by a few shareholders, you are the majority shareholder.

Yes and all you’re doing is skirting the law. There are also endless stories of those set ups going bad. One such instance with someone I know personally.

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Posted
9 hours ago, KhaoYai said:

I know of one Thai lawyer who was involved in a serious property fraud where a foreiegner lost a very large amount and to the best of my knowledge, he's still practising.

That also happened to a friend of mine here in Phuket, and despite trying all legal avenues to remedy the fraud, whereby the lawyer had forged documents and sold the house, he got nowhere.

 

In fact the ruling from the judge was that because he had used the "Thai nominee" route to be able to buy the Villa, he had circumvented Thai law and therefore he had no comeback.
 

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