House Purchase Via "company"

[monkeyclub]

As I stated in another section of TV, sorry to bring this up again, however, I'm new at it and require confirmation from those who have been there and done it already.

I was recently viewing property in a Moo Baan, details are many so I will get to the point.

On the question of Chanot? Tabien Baan? the answer was:

1. Register the property in a Thai Nationals name: or

2. I may form a company, but will be bound to it for not less than Ten years

3. The company will be formed using the standard 51% - 49% deal with all the trimmings, however, I MUST be married to the 51% Thai shareholder

(I realise all the risks associated with Thailand at this time, and have no intention of diving in wallet open, just clear up a couple of points for future reference and consideration)

Please confirm my theory that the front office sales rep is mis-informed.

Thanks.

[cclub75]

As I stated in another section of TV, sorry to bring this up again, however, I'm new at it and require confirmation from those who have been there and done it already.

I was recently viewing property in a Moo Baan, details are many so I will get to the point.

On the question of Chanot? Tabien Baan? the answer was:

1. Register the property in a Thai Nationals name: or

2. I may form a company, but will be bound to it for not less than Ten years

3. The company will be formed using the standard 51% - 49% deal with all the trimmings, however, I MUST be married to the 51% Thai shareholder

(I realise all the risks associated with Thailand at this time, and have no intention of diving in wallet open, just clear up a couple of points for future reference and consideration)

Please confirm my theory that the front office sales rep is mis-informed.

Thanks.

-1 "or" 2, is basically the same : thai ownership. Simply more complicated. So ?

-must be "married" to the thai shareholder... is utter BS. A total joke.

-"bound to 10 years". Again, coming from out of space.

-last point : the "company scheme" is becoming more and more dangerous, because of the amendement of FBA (still pending).

-last last point : the people who gave you thoses advices are misinformed. Or are trying to misinform you...

[quiksilva]

Confirmed. the sales guy is taking you for a ride. the company option is no longer workable, unless your wife really does have the means to pay for 51% of the house.

If you plan to buy in cash be your wife's mortgagor. If you need a loan, your screwed, unless you trust your wife.

[fletchsmile]

-1 "or" 2, is basically the same : thai ownership. Simply more complicated. So ?

-must be "married" to the thai shareholder... is utter BS. A total joke.

-"bound to 10 years". Again, coming from out of space.

-last point : the "company scheme" is becoming more and more dangerous, because of the amendement of FBA (still pending).

-last last point : the people who gave you thoses advices are misinformed. Or are trying to misinform you...

Trying to give them the benefit of the doubt. They are perhaps trying to combine advice with laws and mixing them up in the process of communicating to you.

No.1) Diff between the Thai national and the company route is that you have zero holding with Thai national (they own it), whereas in company route you have a % holding. This could be an issue in the event the Thai national died or decided to sell etc.

No.3) There is no legal requirement that the company has to be set up with you married to the Thai shareholder.

But.., there is a lot of fuss at the moment about legality of "nominee" shareholders. Such companies look suspiciously like they have been set up to by-pass property laws. Let's face it, how many people would legitimately buy shares in a company whose only assets are someone else's house and land? Especially if only one house and land are involved and not a portfolio. If on the other hand the main shareholders are man and wife, there's not the same question around nominees. Hence the sales rep may be trying to say: you should be careful of the company route unless it's your spouse. Or the sales rep's company may not want to get involved with nominee structures in any way.

Generally what they're saying is not wholly accurate...

Edited September 3, 2007 by fletchthai68

[SiamLegalinPattaya]

One of the safest option is to lease the land for 30 years, with options to renew it (for a total of 90 years).

If you decide to build a company, you need 6 other shareholders, Thais must own 51% of the shares (unless you are American, you can register under the treaty of Amity and don't need Thais), you don't need to be married, and you can control your company with the preferred shares structure (more votes for you even if you have 49% or less).

There are other options like making a usufruct or superficies agreement.

[donx]

One of the safest option is to lease the land for 30 years, with options to renew it (for a total of 90 years).

If you decide to build a company, you need 6 other shareholders, Thais must own 51% of the shares (unless you are American, you can register under the treaty of Amity and don't need Thais), you don't need to be married, and you can control your company with the preferred shares structure (more votes for you even if you have 49% or less).

There are other options like making a usufruct or superficies agreement.

Since your user name implies that you are in the legal business, I felt I should clarify one of your points. Although an American can register a company under the treaty of Amity and doesn't need Thais, this company will be considered a foreign company and therefore can't be used to purchase land. Correct me if you feel that I am incorrect in my understanding of the matter.

[monkeyclub]

Theres a wealth of information on Thai Visa forum.

Amoung other efforts it's top of the list in my proccess of forming check lists, and assist with ideas in forming an opinion.

points noted, thanks all.

[SiamLegalinPattaya]

Donx, correct.

Sorry, I should have written more clearly. Companies under the treaty of Amity can do business as Thais but can't own land. Same for work permits. All foreigners need a work permit, including Americans.

[BL4u]

One of the safest option is to lease the land for 30 years, with options to renew it (for a total of 90 years).

If you decide to build a company, you need 6 other shareholders, Thais must own 51% of the shares (unless you are American, you can register under the treaty of Amity and don't need Thais), you don't need to be married, and you can control your company with the preferred shares structure (more votes for you even if you have 49% or less).

There are other options like making a usufruct or superficies agreement.

Please explain 'for the total of 90 years'. Why not with 5 renewals for the total of 180 years. The 2 renewals must be written in the law somewhere. Just curious where

Just saw you are still advertising with 'company structure to own land'. How do you structure a company to own land?

[quiksilva]

I can tell you where the 90 years comes from people selling lease agreements and company structures (I wont call them lawyers) and real estate developers.

What all budding lessees should know is that renewals are only recognised as a contractual obligation between the two parties named in the original contract, and in fact only the first 30 years is recognised under Thai law. Therefore should the Lessor pop his clogs before the lease expires the renewal option dies with him, it would also become void if the lessor is a firm which goes out of business or if the land is sold to another party, who can choose not to renew your lease.

[cclub75]

I don't see anywhere how you structure a company to own land. You just setup a company and this company, we are talking about a THAI limited company, can buy land, like any other jurisdistic Thai person. Just go in Phuket, Hua Hin or Pattaya and you will see that it's common practice, even if not recommended.

Not recommended ? I hope you are ironic...

You should have a look to this:

paper....

What people don't understand is that we have 2 problems :

-the fact that a "foreign" company (as defined by the FBA) can't own a land

-but also simply the fact that it's legally (with FBA draft 2) very difficult to control a "foreign" company.

Therefore, the "house via company scheme" is a double liability.

The scheme sold by "lawyers" has 2 flaws. Land and nominees (dual shares structures) problem...

Now... everything was fine for many years (see Phuket). Nobody was afraid. Sabai. Happy. The illegal by the force of the will became legal (natural).

The problem now is that, from a political point of view, it seems that the thai elite wants to stop the party. Really.

Therefore, naive foreigners could feel, soon, the reality of their "double liability".

Edited September 5, 2007 by cclub75

[tjo o tjim]

Therefore, the "house via company scheme" is a double liability.

I know it shouldn't be an issue, but if there is a legal problem with the developer (investigation by FBA or other), as long as your lease is registered with the land department you are safe, right?

So many of the property sales now seem like a game of "hot potato..."

[moose]

If a company is set up legally i.e. less than 40% farang owned, correct voting rights etc, I assume it can own land. Yes or no?

If this is done and only the land is in the company and the house is in your personal name, if you loan money to the company to buy the land and take a 30 year lease from the company with company rules that it has to be 70% vote to sell the land or close the company and you keep the chanote title would this not solve most of the problems?

!. loan repaid on land sale, so initial investment returned.

2. 39% of profit on land , all profit on house.

3. Interest on loan thereby giving back some of the profit lost on the land sale(only payable on sale of property).

4.As you hold deeds and your vote is needed to do anything this ensures your rights.

I am sure there are a million holes in this theory ,please can you point them out and help me plug them.

Thanks

[cclub75]

If a company is set up legally i.e. less than 40% farang owned, correct voting rights etc, I assume it can own land. Yes or no?

Strange question.... of course a thai company can buy land.

But please explain to me, would you buy a land with you own money, via a company that you don't control ?

I understand that you want to use some special provisions inside the Articles of Association of the company... But at the end of the day, you don't have the control of the board. Some thai shareholders could try to challenge your "locks" in front of courts.

Or could for instance delay the payements of your "loan" for whatever reasons. What would be your options then ? Go to court. And wait a few years.... ? Sure.

The basic rule should be....the Murphy's law

Don't trust, in any circumstances, a "genuine" thai shareholder. Don't trust some very delicates schemes on paper, that lawyer in the West would find cute and efficient. This is a Thailand. The field of play is totally different.

This is why all the discussion about the amendement of the FBA is biaised : the thai gvt doesn't understand that it can't work that way. The basic rule of capitalism is : keep the control of your money. But that's another story.

[moose]

c club75, if I have a lease I don't own anything, this way I own 39%. If the loan is secured against the land then it has to be repaid on sale of the land like a mortgage.

Nothing is repable until the sale of the land, so it cannot be late.

If I have a 30 year lease from the company how can I be worse of, at least I have the land cost back, 39% of the profit and I still have the 30 years same as everyone else.

I don't mind paying a percentage of any profit from the land for this.

[moose]

No-one got any opinions? Is this a viable option to just a lease? Sunbelt, Siam leagal Any ideas?

[watchoutfarang]

You can still 'buy' a house and land via thai company as far as I am aware you need Thai national to own a the full precentage and then all you need to do is transfer 49% into your name after the deal has been done at the land office - no investigation will occur after that and you will be safe. However, you do need to 'trust' the Thai nationals who will be your initial Shareholders. I am doing this and it is a massive gamble, but the other 30 year lease alternative is alway there should they decide to investigate my company at a transfer cost of 15,000 baht.

Cheers

watchoutfarang