Buying Property On An O Visa

[palomnik]

A question recently arose for me that involves visa issues, among other things.

My (farang) wife and I are both retired, and we have been looking for a house to buy for several months now. We finally found a place that we are happy with. The owner is a farang with a business that he owns, and the property belongs to his business. He says that the right to ownership through the company is in effect grandfathered in, since he set up the company before the law changed regarding setting up companies to purchase property in Thailand.

That in itself raises legal questions that are also on my mind, but it's not specifically why I'm writing here (although I'd appreciate advice on that too).

He says that he can sell his ownership in the company to me along with the house, since he is leaving Thailand. To me, that sounds like a good deal, since then we will own the company that owns the property, and there is no need for a nominee. The question is, since we are currently in Thailand on a retirement "O" visa, I'm not at all sure that we can purchase ownership in a Thai company.

I realize that there are other questions that may come up in an arrangement like this, probably including more than a few that I haven't thought of. But the visa question alone could kill the deal. Can anybody out there advise me on this?

[Soutpeel]

Hope you know there has been a "crack-down" on owning property this way over the last few months, setting a company up for the express purpose of getting around the property ownership laws is completely illegal.

Could this be the reason the farang owner is so keen to sell ??....

[XCom]

If it sounds to go to be true, it probably is! I bet his leaving Thailand, soon as his got your cash!

[alfieconn]

He says that the right to ownership through the company is in effect grandfathered in, since he set up the company before the law changed regarding setting up companies to purchase property in Thailand.

Complete load of baloney, the law has always been there, it's just that people were'nt aware of it until about 3 years ago when it came out in the press.

To me, that sounds like a good deal, since then we will own the company that owns the property, and there is no need for a nominee.

A farang can only own 49% of a company therefore 51% is Thai owned.

As a matter of interest where is the house located ? Samui, Phuket

Edited December 21, 2009 by alfieconn

[palomnik]

He says that the right to ownership through the company is in effect grandfathered in, since he set up the company before the law changed regarding setting up companies to purchase property in Thailand.

Complete load of baloney, the law has always been there, it's just that people were'nt aware of it until about 3 years ago when it came out in the press.

To me, that sounds like a good deal, since then we will own the company that owns the property, and there is no need for a nominee.

A farang can only own 49% of a company therefore 51% is Thai owned.

As a matter of interest where is the house located ? Samui, Phuket

I had suspected that the law about foreign onwership had already been in place for a long time, but this was not the first person I'd met that told me that companies set up before a certain date (about 3 years ago) were not subject to the law about companies existing solely to buy property.

As I mentioned in my original post, there were other questions on my mind, and the question about the legality of the company was one of them. I was hoping to find a competent lawyer to answer that one for me - something which I haven't been able to find yet.

The property is south of Chiang Mai, in one of the large mubaan here, with lots of farang. And it is true that the owner is leaving - in a couple of weeks, in fact, regardless of whether he sells the place or not.

The whole process of buying is so fraught with pitfalls that I wonder why I want to buy at all

[aussiebebe]

A farang can only own 49% of a company therefore 51% is Thai owned.

That's correct, the poster 'palomnik' must be aware that all Thai Ltd companies must be majority owned and controlled by Thais. The man offering to sell his company and house hasn't shed any light on his circumstances, or the OP hasn't divulged this in his post; I can only suggest that the seller either used Thai 'nominee' (dummy) shareholders, or maybe has a Thai spouse or friend in whose name the business was registered.

I see no reason to believe or give heed to the seller's assertion that his business has been 'grandfathered in' - whatever that means. If he sells, the new owners will be subject to all the current Thai government-issued directives affecting foreign investment and ownership.

The business will have to be registered in a Thai person's name; so 'palomnik's investment will only be as secure as his arrangements with this trustee as foreign partners can't own a majority in either ordinary or limited partnerships.

My suggestions for someone on an O visa; The present owner would sell his company-owned land and house to a Thai; you could then buy and own the house, not the land, and you could lease the land for up to thirty years by registering it at the local office of the Department of Land (www.dol.go.th) and pay the fee (inc stamp duty) set at 1.1% of the rent payable over the entire lease term. It's hard for a landlord to cancel an officially registered lease and it would give security throughout retirement (let's be realistic) without the costs, legalities and nuances of business investment.

[hhgz]

As another poster mentioned, you can't own more than 49% of a company. However, assuming the company has been set up properly and legally, it's pretty simple. Assuming that the seller is the Managing Director, and the house is an asset of the company, all you need to do is to change the name of the Managing Director. Sunbelt Asia can assist you.

[alfieconn]

He says that the right to ownership through the company is in effect grandfathered in, since he set up the company before the law changed regarding setting up companies to purchase property in Thailand.

Complete load of baloney, the law has always been there, it's just that people were'nt aware of it until about 3 years ago when it came out in the press.

To me, that sounds like a good deal, since then we will own the company that owns the property, and there is no need for a nominee.

A farang can only own 49% of a company therefore 51% is Thai owned.

As a matter of interest where is the house located ? Samui, Phuket

I had suspected that the law about foreign onwership had already been in place for a long time, but this was not the first person I'd met that told me that companies set up before a certain date (about 3 years ago) were not subject to the law about companies existing solely to buy property.

As I mentioned in my original post, there were other questions on my mind, and the question about the legality of the company was one of them. I was hoping to find a competent lawyer to answer that one for me - something which I haven't been able to find yet.

The property is south of Chiang Mai, in one of the large mubaan here, with lots of farang. And it is true that the owner is leaving - in a couple of weeks, in fact, regardless of whether he sells the place or not.

The whole process of buying is so fraught with pitfalls that I wonder why I want to buy at all

Legally a farang couple can not own land and a property, the closest you can get is a 30 thirty year lease.

I understand that many people feel more comfortable with owning their own property but renting enables you to be a lot more flexible and you still have your lump sum to invest.

[alfieconn]

As another poster mentioned, you can't own more than 49% of a company. However, assuming the company has been set up properly and legally, it's pretty simple. Assuming that the seller is the Managing Director, and the house is an asset of the company, all you need to do is to change the name of the Managing Director. Sunbelt Asia can assist you.

Yes it's perfectly easy to change the name on a business, but that doesn't make it ok

for a foreigner to have a business for the sole purpose of owning land and a house

Edited December 21, 2009 by alfieconn

[palomnik]

My thanks for all the replies. A lot of what I've heard here includes things that I already knew, though.

My basic question remains: can a foreigner here on a type O visa (retirement) legally be a partner in a Thai-registered company?

My basic assumption is that it is probably a violation of the terms of my visa. Does anybody have an answer to that?

[oracle]

My thanks for all the replies. A lot of what I've heard here includes things that I already knew, though.

My basic question remains: can a foreigner here on a type O visa (retirement) legally be a partner in a Thai-registered company?

My basic assumption is that it is probably a violation of the terms of my visa. Does anybody have an answer to that?

You can legally be a shareholder and director in a Thai company irrespective visa status. When you start doing business or acting on behalf of the company you would need a work permit and a non immigrant via, generally non O is ok.

[oracle]

In addition to my previous post, with a retirement visa you are not allowed to work in Thailand

[palomnik]

In addition to my previous post, with a retirement visa you are not allowed to work in Thailand

Oracle, based on your last two posts it would appear that I can be a minority shareholder in the company; I just can't work for the company. That sounds right. Thanks for the clarification.

That leaves me with the question of whether I can obtain the company and buy the house legally. I believe that the owner is trying to be honest...it's just that like a lot of farang he hasn't thought out every angle involved in the things he's done here, and so far he's been lucky enough to avoid any unpleasant consequences.

On the whole, the smart way would be to use a nominee, but that's a subject for a different topic - or rather, I'm sure that topic has been beaten to death elsewhere on this forum.

[LennyW]

First and foremost, there has been NO change of laws regarding company ownership, just different interpretations of actually applying the law - a whole other debate!!!!!

Yes, newly formed companies formed with the sole intention of owning property are increasingly coming under scrutiny, and this is very fragmented depending on what land office you are dealing with, some sales go through , some dont!

From what you have said so far it appears you are purchasing a house that includes an existing company, if this is the case then you are only registering a change of "Managing Director" and not actually forming a new company to own the property, if this is the case then you should have no problems, and dont worry about it.

Talk to a local lawyer and i am sure he will confirm.

Regards.LWJ.

[wolf5370]

Try again as my link went down just as I hit Add Reply and it was swallowed! (Why does every otheer web site allow me to regain the text with Back except TV?)

OK, it may have been a rumour once apon a time, but I distinctly remember that for land ownership a company had to be greater than a 51/49 ratio. As I said, it may just have once been rumourted, but a light went on in my head.

Legally a farang couple can not own land and a property, the closest you can get is a 30 thirty year lease.

This includes property along with land, so is not entirely accurate (or possibly just ambiguous) - a foreigner can own property, just not land. There is another way to think about it though and thast is to put the land in a Thai name (the company perhaps) and have a USUFRUCT drawn up to protect the land. Plenty here on USUFRUCTS, so a quick search will probably help.

[happylarry]

One thing to check is that he has had a competent lawyer audit the company accounts each and every year and has paid the taxes due each year.

Its this that keeps the government from knocking on your door. (Accounts and taxes cost upwards of 25,000 each year)

One other thing to consider is that when you start a company (or aquire as in this case) , if you sell the house without selling the company it then costs a hel_l of a lot to shut the company down again. Which is why your seller wants to transfer the company to you, of course.

HL

[alfieconn]

Try again as my link went down just as I hit Add Reply and it was swallowed! (Why does every otheer web site allow me to regain the text with Back except TV?)

OK, it may have been a rumour once apon a time, but I distinctly remember that for land ownership a company had to be greater than a 51/49 ratio. As I said, it may just have once been rumourted, but a light went on in my head.

Legally a farang couple can not own land and a property, the closest you can get is a 30 thirty year lease.

This includes property along with land, so is not entirely accurate (or possibly just ambiguous) - a foreigner can own property, just not land. There is another way to think about it though and thast is to put the land in a Thai name (the company perhaps) and have a USUFRUCT drawn up to protect the land. Plenty here on USUFRUCTS, so a quick search will probably help.

Is this not a nominee ? people do not seem to understand, foreigners cannot own land in Thailand, quite simple really, there are ways round it but they are just circumventing the law and there could be implications later.

[alfieconn]

That leaves me with the question of whether I can obtain the company and buy the house legally.

Mr Palomnik, have you not read the above post's , you can own 49% of the company with the other 51% belonging to legal Thai shareholders who are therefore not nominees.

The current owner only holds 49% of the company.

Anyone can own a house legally, you just cannot own the land it sits on.

On the whole, the smart way would be to use a nominee

you don't get it do you !

Edited December 22, 2009 by alfieconn

[ivowatson]

One thing to check is that he has had a competent lawyer audit the company accounts each and every year and has paid the taxes due each year.

Its this that keeps the government from knocking on your door. (Accounts and taxes cost upwards of 25,000 each year)

One other thing to consider is that when you start a company (or aquire as in this case) , if you sell the house without selling the company it then costs a hel_l of a lot to shut the company down again. Which is why your seller wants to transfer the company to you, of course.

HL

Even the most competent lawyer cannot find everything out what this company did before, i.e. borrowed money, was a guarantor for another (dubious) company, stopped paying instalments for a company car, etc.

That is why one should never buy or take over an existing company.

To shut the company down after selling the house should cost between 20 and 30K excluding taxes.

[palomnik]

That leaves me with the question of whether I can obtain the company and buy the house legally.

Mr Palomnik, have you not read the above post's , you can own 49% of the company with the other 51% belonging to legal Thai shareholders who are therefore not nominees.

The current owner only holds 49% of the company.

Anyone can own a house legally, you just cannot own the land it sits on.

On the whole, the smart way would be to use a nominee

you don't get it do you !

I get it!

My concern is this: my visa. Farang that do work, even voluntary work, have been known to jeopardize their visas if the visa does not allow for employment. Since I am here officially as a retiree I don't want to lose my visa just because I acquire a 49% share in a company.

[palomnik]

One thing to check is that he has had a competent lawyer audit the company accounts each and every year and has paid the taxes due each year.

Its this that keeps the government from knocking on your door. (Accounts and taxes cost upwards of 25,000 each year)

One other thing to consider is that when you start a company (or aquire as in this case) , if you sell the house without selling the company it then costs a hel_l of a lot to shut the company down again. Which is why your seller wants to transfer the company to you, of course.

HL

Thanks for the info, Larry. And BTW my wife and I love your dog! We used to keep shepherds - it's our favorite breed.

[donx]

My concern is this: my visa. Farang that do work, even voluntary work, have been known to jeopardize their visas if the visa does not allow for employment. Since I am here officially as a retiree I don't want to lose my visa just because I acquire a 49% share in a company.

Owning 49% (or whatever amount it is) share of a company isn't a problem, but the acting as the Managing Director may be. It has been commented on here before that the actions performed (e.g. signing off on the accounting documents) constitutes "work" and would therefore require a work permit. Others have commented that so long as this activity is performed outside of Thailand, then this would not violate the work permit requirement.

I doubt that they all really travel outside of Thailand before they perform their duties as a Managing Director, but perhaps they do. Several TV members control property via the Thai company ownership route. I bet many of them are here on retirement visas the same as you. They could give you more information. If I were you, I would look at past posts by members here, find out which ones went this route (which many have attested to), and send a PM (private message) to those that seem like they could give you more advice. Additionally (or alternatively) you could contact Siam Legal, Sunbelt, or one of the other legal firms that are familiar with this issue.