Complex Questions Regarding Buying From Farang Friend

[bigcat]

Hi all. I have a long-time friend here in Thailand (we've known each other for 20 years, used to live together, used to work together and so on -- he's a businessman here with a number of condos in his name already). Some time ago, when we were discussing mortgages and stuff (he owns all his condos outright), he suggested that he buys a condo and that I pay him "rent" each month, which is actually repayment on the purchase price, over a number of years. The end result would be that the condo would be transferred into my name following full repayment.

After some research, I've discovered a number of potential problems with this, the main one being: simple transfer of ownership is not so "simple"; it would still require a TT3 form showing transfer of funds for the property purchase even though it has essentially been purchased over time. Obviously, having paid for the condo over that time, neither my friend or myself would want to do this, as it's an extra complication. We also cannot simple pass on the condo as a "gift" unless related in blood, or for a nominal sum as the Land Office would simply think we're trying to avoid transfer fees.

I cannot afford to get a mortgage having been quoted outrageous deposits required (BBL said up to 40% and payments over 10 years). Also, my friend and I agreed to keep the condo in his name for various, but to us valid, reasons until repayment is made. Both of these are not under discussion here. But does anyone have any practical advice on the best way to handle such a purchase?

Thanks in advance.

[PattayaParent]

You could pay him the 'rent' into his offshore account and then when you have paid up the agreed amount of the condo he can transfer the money to your Thai bank account, you get the TT3 and pay him the money into his Thai bank account.

[bigcat]

You could pay him the 'rent' into his offshore account and then when you have paid up the agreed amount of the condo he can transfer the money to your Thai bank account, you get the TT3 and pay him the money into his Thai bank account.

Yeah, we thought of that. Seems like it may be our only option, unless others have any other advice.

[donx]

I agree with PattayaParent on this one. This is probably the best way to do it.

[pkrv]

Hi all. I have a long-time friend here in Thailand (we've known each other for 20 years, used to live together, used to work together and so on -- he's a businessman here with a number of condos in his name already). Some time ago, when we were discussing mortgages and stuff (he owns all his condos outright), he suggested that he buys a condo and that I pay him "rent" each month, which is actually repayment on the purchase price, over a number of years. The end result would be that the condo would be transferred into my name following full repayment.

After some research, I've discovered a number of potential problems with this, the main one being: simple transfer of ownership is not so "simple"; it would still require a TT3 form showing transfer of funds for the property purchase even though it has essentially been purchased over time. Obviously, having paid for the condo over that time, neither my friend or myself would want to do this, as it's an extra complication. We also cannot simple pass on the condo as a "gift" unless related in blood, or for a nominal sum as the Land Office would simply think we're trying to avoid transfer fees.

I cannot afford to get a mortgage having been quoted outrageous deposits required (BBL said up to 40% and payments over 10 years). Also, my friend and I agreed to keep the condo in his name for various, but to us valid, reasons until repayment is made. Both of these are not under discussion here. But does anyone have any practical advice on the best way to handle such a purchase?

Thanks in advance.

Personally I would not touch it with an extra extended barge pole. You really are working on the edges here and are open to abuse. If you trust then that is great, but I would ask the question after 20 years - why now?

[bigcat]

Hi all. I have a long-time friend here in Thailand (we've known each other for 20 years, used to live together, used to work together and so on -- he's a businessman here with a number of condos in his name already). Some time ago, when we were discussing mortgages and stuff (he owns all his condos outright), he suggested that he buys a condo and that I pay him "rent" each month, which is actually repayment on the purchase price, over a number of years. The end result would be that the condo would be transferred into my name following full repayment.

After some research, I've discovered a number of potential problems with this, the main one being: simple transfer of ownership is not so "simple"; it would still require a TT3 form showing transfer of funds for the property purchase even though it has essentially been purchased over time. Obviously, having paid for the condo over that time, neither my friend or myself would want to do this, as it's an extra complication. We also cannot simple pass on the condo as a "gift" unless related in blood, or for a nominal sum as the Land Office would simply think we're trying to avoid transfer fees.

I cannot afford to get a mortgage having been quoted outrageous deposits required (BBL said up to 40% and payments over 10 years). Also, my friend and I agreed to keep the condo in his name for various, but to us valid, reasons until repayment is made. Both of these are not under discussion here. But does anyone have any practical advice on the best way to handle such a purchase?

Thanks in advance.

Personally I would not touch it with an extra extended barge pole. You really are working on the edges here and are open to abuse. If you trust then that is great, but I would ask the question after 20 years - why now?

Well, after 20 years, why now? 20 years ago, we were 17 and not in Thailand. In our 20s, we bought a condo together in the UK as an investment. Then we both moved to Thailand having sold the condo for a tidy profit. Why now? Because after 8 years of paying rent in Bangkok I decided I wanted to own and it turns out that he is able to help me financially. A legal agreement will be drawn up for this, of course.

[ThaiLawOnline]

You make a purchase agreement where the transfer of ownership is done NOW. You could pay by installment but I would add a LOAN agreement from the actual owner that you have to pay by installements, according to both of your intentions.

The actual owner can protect his loan by registrating a mortage (I believe you pay 1%) at the land department on the fact that he loans you money...or something like this. You are the owner now. You have to pay back a loan by installments. He has a protection (Chinese people here use "sale with rights of redemption" which is tougher...you don't pay, he repossed his condo, fully, without going to court!)

Some problems with the method I told you:

1) Legal fees for contracts (loan, mortage, you can transfer by yourself...)

2) Fees to register the mortage (1% but there were some modification is some field 2 months ago..not sure if it applies)

3) And if you don't pay, the actual owner will have to go to Court (more fees) to get back his condo or sale it, for getting back the money you will owe him.

This might not be the best solution. We don't deal a lot with condos here in Isaan. People normally pay the full amount. But maybe this could guide you and someone can add if it could be a good way or not for you. I don't know your situation....

[donx]

You make a purchase agreement where the transfer of ownership is done NOW. You could pay by installment but I would add a LOAN agreement from the actual owner that you have to pay by installements, according to both of your intentions.

The actual owner can protect his loan by registrating a mortage (I believe you pay 1%) at the land department on the fact that he loans you money...or something like this. You are the owner now. You have to pay back a loan by installments. He has a protection (Chinese people here use "sale with rights of redemption" which is tougher...you don't pay, he repossed his condo, fully, without going to court!)

Some problems with the method I told you:

1) Legal fees for contracts (loan, mortage, you can transfer by yourself...)

2) Fees to register the mortage (1% but there were some modification is some field 2 months ago..not sure if it applies)

3) And if you don't pay, the actual owner will have to go to Court (more fees) to get back his condo or sale it, for getting back the money you will owe him.

This might not be the best solution. We don't deal a lot with condos here in Isaan. People normally pay the full amount. But maybe this could guide you and someone can add if it could be a good way or not for you. I don't know your situation....

One other potential problem may be the requirement that when a farang buys a condo, the funds must come from offshore. Would this requirement be satisfied by the fact that the mortgage or loan is being provided by the previous owner who was able to prove when he purchased the condo that the funds came from offshore?

[pkrv]

You make a purchase agreement where the transfer of ownership is done NOW. You could pay by installment but I would add a LOAN agreement from the actual owner that you have to pay by installements, according to both of your intentions.

The actual owner can protect his loan by registrating a mortage (I believe you pay 1%) at the land department on the fact that he loans you money...or something like this. You are the owner now. You have to pay back a loan by installments. He has a protection (Chinese people here use "sale with rights of redemption" which is tougher...you don't pay, he repossed his condo, fully, without going to court!)

Some problems with the method I told you:

1) Legal fees for contracts (loan, mortage, you can transfer by yourself...)

2) Fees to register the mortage (1% but there were some modification is some field 2 months ago..not sure if it applies)

3) And if you don't pay, the actual owner will have to go to Court (more fees) to get back his condo or sale it, for getting back the money you will owe him.

This might not be the best solution. We don't deal a lot with condos here in Isaan. People normally pay the full amount. But maybe this could guide you and someone can add if it could be a good way or not for you. I don't know your situation....

One other potential problem may be the requirement that when a farang buys a condo, the funds must come from offshore. Would this requirement be satisfied by the fact that the mortgage or loan is being provided by the previous owner who was able to prove when he purchased the condo that the funds came from offshore?

Absolutely correct! The answer is No!

Edited June 19, 2008 by pkrv

[bigcat]

From what I've learned recently, after 8 years of work-permitted work in Thailand, all taxes paid, all social security paid and all my salary coming from a Thai company into a Thai bank, as it will for the foreseeable future, the TT3/transfer is not always needed.

Edited June 20, 2008 by bigcat

[PattayaParent]

Surely that's only true if you've got Permanent Resident status?

[bigcat]

Surely that's only true if you've got Permanent Resident status?

You may be right. I am seeing my lawyer next week to sort it all out. Permanent Residency costs, though, doesn't it? I know there's a guide here so I guess I should look at that. (Just did and for an expat married to a Thai, it's around 100,000 baht). All I need now is a ton of money, which if I had, I wouldn't be asking all these questions. dam_n!

Edited June 20, 2008 by bigcat