Buying Land

[dzocor55]

i am in the early stages of buying a property (house) i know there are a couple of ways ie.leasing ,and buying through a company,,buying through a company was around 17 years ago when i first visited thailand,but seemed to go out of fashion but this is the route that i have been advised to go by the developer,, i have two options,buy the property through the company thats allready set up,,or buy in the name of my thai daughter in law and have it leased back to me,gratefull for any advise or comments

[nam-thip]

Forget the company route as its not in your favor and illegal

http://www.isaanlawyers.com

USUFRUCT AGREEMENT IN THAILAND

Usufruct contracts are governed by sections 1417 to 1428 of the Commercial and Civil Code of Thailand. A usufruct is a right granted by the owner(s) of the land/house in favor of a usufructuary whereby this person has the right to possess, use and enjoy the benefits of an immovable property (section 1417 CCCT). The usufructuary has the right to manage the property (sect 1414 CCCT). It can be on a piece of land, on a house or on both of them.

A usufruct is a real right (real means in civil law = attached to a thing) that originates from Roman and Civil law. The holder of a usufruct, known as “usufructury”, has the right to use, possess and enjoy the property, as well as the right to receive profits from the fruits of the property. The usufructuary could be a person or an entity (ex: a company). In Thailand, a usufruct can be granted for a period of time (Max 30 years) or for the rest of the life of a living person. It always ends at the death of the usufructuary but come contracts concluded by the usufructuary can survice him.

http://www.samuiforsale.com/

Edited January 15, 2010 by nam-thip

[Loz]

Have you done a REAL cost benefit analysis of renting vs buying?

[spacebass]

Forget what the developer says he just wants to make a sale. He is the last person you should take heed of.

The only way to deal with controlling land in Thailand is by registering a 30 year lease at the land office which is simple done, there is no such thing as an enforceable 30+30 lease and if you want to sell the property and lease the landlord is involved in contructing the new agreement so sounds like a minefield.

As stated above 'The Company Route is Illegal" and Thais conspiring to enable Farangs to control land can go to prison................... if there was money in it !!!!

[Puccini]

...The only way to deal with controlling land in Thailand is by registering a 30 year lease at the land office...

Isn't a usufruct agreement a valid alternative, particularly if it is made for the duration of the usufructuary's life, with the right assignable to another person without requiring the owner's consent?

[clinique]

Usufruct is absolutely the most secure,,, based on opinions from 3 international law firms in Bkk..

Thai company is not legal and improper use of same is now being enforced,,beware,, I agree the developer is the last person you should be taking advice from..

[mnbcm]

Have you done a REAL cost benefit analysis of renting vs buying?

Different people are in different situations.

Something to pass on to heirs, a place to call home that's actually your home; you can't put a price on that in my opinion.

[stgrhe]

Usufruct is absolutely the most secure,,, based on opinions from 3 international law firms in Bkk..

If a usufruct is registered on a piece of land that is owned by the spouse then it is recommended to add a second name, e.g. a trusted younger relative, or to register a 30 years lease in addition to the usufruct. That would give absolute security of the land. The reason for this is section 1469 of the Civil and Commercial Code that reads:

"Section 1469 of the Civil and Commercial Code

Any agreement concluded between husband and wife during marriage may be avoided by either of them at any time during marriage or within one year from the day of dissolution of marriage; provided that the right of third persons acting in good faith is not affected thereby."

[Puccini]

That section 1469 of the Civil and Commercial Code is interesting. Thank you for quoting it, stgrhe. It complicates maters a bit for my acquaintance to whom I meant to suggest a usufruct. His Thai wife has made it known among her Thai friends -- and perhaps her husband is aware of it, too -- that she will file for divorce the moment she gets the Italian passport into her hands.

A 30 year lease also being an agreement, I guess it would also fall under section 1469. That leaves the involvement of a "third persons acting in good faith". You mentioned the addition of a second name in the usufruct agreement? Is it possible to designate two usufructuaries for life in the usufruct agreement?

[waza]

Hmmm interesting

[Naam]

As stated above 'The Company Route is Illegal" and Thais conspiring to enable Farangs to control land can go to prison................... if there was money in it !!!!

not to forget that conspiring Farangs will be decapitated and their corpses sent by slowboat to their home countries!

[stgrhe]

Is it possible to designate two usufructuaries for life in the usufruct agreement?

Two names can be added but I do believe they must be adults.

[thaiwanderer]

I don't know enough about them but:

if a usufruct can indeed be registered in favour of a (foreign) company

and

the land office co-operate and register such a usufruct

and

it will not later easily be interpreted as offending the general prohibition on foreigners 'owning' land

then

using a foreign company would appear (on the basis of the above assumptions) to enable a foreign individual to have the use, beneficial ownership and effective control of the land for their own life and by their descendants forever (as the company need never die) and also allow future sales ad infinitum of the land to another with no need for future active co-operation of the Thai authorities or liability to Thai tax.

(large assumptions aside of course)

[Puccini]

A company (juristic person) does not have a life and therefore cannot get a usufruct for life.

[thaiwanderer]

Thanks I knew that would indeed make perfect sense but I couldn't find the source so was I was just whistling in the wind a little.

[alfieconn]

Have you done a REAL cost benefit analysis of renting vs buying?

If you are purely looking at the cost aspect, then buying or even taking out a thirty year lease is a lot cheaper than renting according to my calculations .

[nizarjoe]

please visit kotaseriburuko[dot]wordpress[dot]com. i have an offer for you. i want to sell my land located at Karang Kerakas Lombok Indonesia, there was so very beatifull place.

if u interest please mail me at nizarjoe[at]gmail[dot].com

[InterestedObserver]

A company (juristic person) does not have a life and therefore cannot get a usufruct for life.

Yup, maximum of 30 years allowed.

[dsfbrit]

I wandered into this thread 'by mistake', but am bemused to see the same discussions going on as before. It brought back 'happy' memories of why I joined ThaiVisa - to get help and advice on the FBA crackdown that never happened over 3 years ago.

I am the 'owner' of a house and land in Pattaya. I 'own' it through the company route. My advice to any farang is this

- do not buy ANY house with land in the LOS - rent here and buy a house in your own country. You can then get the rent and the increase in the value of the house and use this money to rent over here. This has many advantages including you are able to leave the LOS in the future if you want to - or move around Thailand as you are not tied to one house for the rest of your life with a Usufruct - or 30 years if a lease.

- if you must own property in Thailand - as it appears the Op feels he must - buy a condo in your own name - not one of the company owned condos. There is no real reason why anyone needs to own land to own an area to live in.

- there is no such thing as a 30+30+ etc... lease. Only 30 years can be registered at the land office. People who tell you otherwise are probably distant relatives of a certain Mr Bernard Madoff.

I am up early so I can go and work in the garden - cut some grass and prune some trees. Although I find this quite relaxing and fun- I would find it even more enjoyable knowing the land was REALLY mine and in 6 weeks time I did not have to go and pay 15000 baht to produce another set of annual accounts for my dormant company that 'owns' this patch of dirt in the middle of nowhere.

So to the OP I would say - unless there is some really really pressing reason why your family needs a house with land - dont do it

Edited February 2, 2010 by dsfbrit

[caf]

Usufruct is absolutely the most secure,,, based on opinions from 3 international law firms in Bkk..

If a usufruct is registered on a piece of land that is owned by the spouse then it is recommended to add a second name, e.g. a trusted younger relative, or to register a 30 years lease in addition to the usufruct. That would give absolute security of the land. The reason for this is section 1469 of the Civil and Commercial Code that reads:

"Section 1469 of the Civil and Commercial Code

Any agreement concluded between husband and wife during marriage may be avoided by either of them at any time during marriage or within one year from the day of dissolution of marriage; provided that the right of third persons acting in good faith is not affected thereby."

This post should be obligatory reading before posting on these threads about land purchase. Well done, stgrhe.

As for superficies, they have advantages. Could you be persuaded to post a summary of them in the same clear way you have posted on usufructs.

many would be very grateful i am sure

caf

[caf]

A positive side of owning the house and using a usufruct or superficie on the land of course is that you can design the house you want to live in for the rest of your days; renting does not have that advantage.

caf

[OKF]

yes, all illegal but everybody does it. Come on guys?

What happens now is that the DSI starts to look at structures with property above 2 rai. Do you seriuosly think they are after the small 1 rai slices where private people build their holiday home? Everybody makes a good living on it, lawyers, property developers, land bankers, small stores etc. Seems to be unrealistic doesn't it?

Also who will go to jail for having a company with illegal structures? What would happen is maybe that you give a warning that you have to restructure with a year or two. Isn't everything eles written here making a bit of a panic?

[jfchandler]

I understand what you are saying, OKF, and indeed, that's the way things have generally gone up until now...

Unfortunately, the thing about Thailand is, the current somewhat permissive approach to company ownership could be changed by government policy in an instant, as occurs with many things.

I doubt anyone in the small-scale situation you describe would ever go to jail for such a thing. But I wouldn't doubt for a minute that there could be attempt to confiscate "illegally" owned property or orders forcing the sale of the property within some timeframe or other kinds of potentially expensive and complicated maneuvering in the Thai legal/administrative system.

When you're talking about a person's intended, ongoing home, those aren't the kinds of risks I would want to face...even if they haven't come to pass, and might never... Just the risk that they could is enough to wave me off...

A usufruct is a documented, supported, enforceable part of Thai law... As long as someone entered into their property acquisition and executed that kind of legal document with the current law in place, I can't see the changing whims of the Thai government having any potential to mess with that... It would make me sleep a whole lot better at night.

[stgrhe]

As requested by Caf, here are the law texts concerning usufruct and superficies.

THAI CIVIL AND COMMERCIAL CODE – PART III

TITLE VII - USUFRUCT

Section 1417 - An immovable property may be subject to a usufruct by virtue of which the usufructuary is entitled to the possession, use and enjoyment of the property.

He has the right of management of the property.

The usufruct of a forest, mine or quarry entitles the usufructuary to the exploitation of the forest, mine or quarry.

Section 1418 – A usufruct may be created either for a period of time or for life of the usufructuary.

If no time has been fixed, it is presumed that the usufruct is for the life of the usufructuary. If it is created for a period of time, the provisions of Section 1403 paragraph 3 shall apply mutatis mutandis.

In any case the usufruct comes to an end on the death of the usufructuary.

Section 1419 – If property is destroyed without compensation being paid, the owner is not bound to restore it; but if he does so to an extent, the usufruct revives to that extent.

If any compensation is paid, the owner of the usufructuary must restore the property so far as it is possible to do so, having regard to the amount of the compensation received, and the usufruct revives to that extent; but, if restoration is impossible, the usufruct comes to an end and the compensation must be divided between the owner and the usufructuary in proportion to the damages suffered by them respectively.

The same rules apply mutatis mutandis in case of expropriation as well as in the case partial destruction of the property or of partial impossibility to restore the property.

Section 1420 – When usufruct comes to an end, the usufructuary must return the property to the owner.

The usufructuary is liable for the destruction of depreciation in value of the property, unless he proves that the damage was not caused by his fault. He must replace anything which he has wrongfully consumed.

He is not bound to give compensation for depreciation in value caused by reasonable use.

Section 1421 – The usufructuary must, in the exercise of his rights, take as much care of the property as a person of ordinary prudence would take of his own property.

Section 1422 – Unless otherwise provided in the act creating a usufruct, the usufructuary may transfer the exercise of his right to a third person. In such case the owner of the property may sue the transferee direct.

Section 1423 – The owner may object to any unlawful or unreasonable use of the property.

If the owner proves that his rights are in peril, he may demand security from the usufructuary, except in the case of a donor who has reserved to himself the usufruct of the property given.

If the usufructuary fails to give security within a reasonable time fixed for the purpose, or if, in the spirit of the objection, he continues to make use of the property unlawfully or unreasonably, the Court may appoint a Receiver to manage the property in his stead. Upon security being given the Court may release the Receiver so appointed.

Section 1424 – The usufructuary is bound to keep the substance of the property unaltered, and is responsible for ordinary maintenance and petty repairs.

If important repairs of measures are necessary for the preservation of the property, the usufructuary must forthwith inform the owner thereof and permit them to be carried out. In case of default by the owner, the usufructuary may have the work carried out at the owner’s expense.

Section 1425 – All extraordinary expenses must be borne by the owner, but in order to meet these expenses coming under the foregoing section he may realise part of the property unless the usufructuary is willing to advance the necessary funds without charging interest.

Section 1426 – The usufructuary shall, for the duration of the usufruct, bear expenses for the management of the property, pay taxes and duties, and be responsible for interests payable on depts. Charged upon it.

Section 1427 – If required by the owner, the usufructuary is bound to insure the property against loss for the benefit of the owner; and if the property is already insured he is bound to renew such insurance when due.

He must pay premiums of the insurance for the duration of his usufruct.

Section 1428 – No action by the owner against the usufructuary or his transferee in connection with the usufruct or vice versa may be entered later than one year after the usufruct comes to an end. But in an action by the owner who could not have known of the end of the usufruct, the prescription of the year shall run from the time when he knew or ought to have known of it.

Definitions:

1.      mutatis mutandis – “Due alteration, or changing whatever is required to be changed. As in, "The changes proposed for the first contract apply mutatis mutandis to all other contracts.” Latin for, things being changed that ought to be changed”.

THE CIVIL & COMMERCIAL CODE – CHAPTER III 

TITLE VI – SUPERFICIES

Section 1410 – The owner of a piece of land may create a right of superficies in favour of another person by giving him the right to own, upon or under the land, buildings, structures or plantations.

Section 1411 – Unless otherwise provided in the act creating it, the right of superficies is transferable and transmissible by way of inheritance.

Section 1412 – A right of superficies may be created either for a period of time or for life of the owner of the land or the superficiary.

If it is created for a period of time, the provisions of Section 1403, paragraph 3*), shall apply mutatis mutandis.

3*) If it is granted for a period of time, the period may not exceed thirty years; if a longer period is stipulated, it shall be reduced to thirty years. The grant may be renewed for a period not exceeding thirty years from the time of renewal.

Section 1413 – If no period of time has been fixed, the right of superficies may be terminated at any time by any partner giving reasonable notice to the other. But when rent is to be paid, either one year’s previous notice must be given or rent for one year paid.

Section 1414 – If the superficiary fails to comply with essential conditions specified in the act creating superficies or, when rent is to be paid, he fails to pay it for two consecutive years, his right of superficies may be terminated.

Section 1415 – The right of superficies is not extinguished by destruction of the buildings, structures or plantations even if caused by force majeure.

Section 1416 – When the right of superficies is extinguished, the superficiary may take away his buildings, structures or plantations, provided he restores the land to its former condition.

If instead of permitting the removal of the buildings, structures or plantations, the owner of the land notifies his intention to buy it at a market value, the superficiary may not refuse the offer except on reasonable ground.