Condo Under Company

[BodhiBum]

Ok, so I realize that it was only through my own stupidity that I ended up with my condo not in my own name, but in a company instead. I transferred the funds in thai baht, so don't have the proper forms, so the condo company went and put my condo under a company. So now I have two questions:

1) Is there any inherent risk in the company being set up by the condo development company with their office employees being the minority shareholders, as I'm the majority controlling shareholder, but I have no idea who the group of Thai shareholders are beyond they work in the office. I had my lawyer look it up, and she says the shareholders are the employees of the development company. She offered for about 7000 baht to change the thai shareholders to be her employees of the law office. But firstly I'd like to know, does it really matter who the thai shareholders are? Does it open me to any risk, such as if I were to meet an untimely demise, does that mean whoever is the minority shareholders they automatically inherit my condo? I wouldn't want to be knocked off when I'm least expecting all for the sake of a several million baht condo. Or am I just getting an over active imagination here? Anyone have any input on this?

2) Is there any hope in hell of me ever selling this condo, being under a company and all? I'd kinda like to sell, if there was a buyer. But how less attractive, or sellable, does it become not being registered under a falang name?

Any advice would be appreciated.

[trogers]

Sell and do it proper the 2nd time round.

[Sophon]

1) Your company structure is illegal as the Thai share holders are nominees, which is not allowed under Thai law. In order for the set-up to have been legal, the Thai share holders would have had to be real investors investing their own money proportionally to their share of the company. There are lots of these companies around, and it may never become a problem for you. But should the authorities for some reason or other decide to examine your company closer it could cause serious problems.

2) It's not so much the condo being owned by a company that would make it harder to sell and/or worth less. What is important is whether the new owner would be able to register it under the foreign quota. If your condo is in a complex primarily targeting foreigners, and where 49 % of the units (actually calculated on usable floor space) are already owned by foreigners, then you could only sell to a Thai or a foreigner who would be willing to take ower your illegal company. That would make your condo worth considerable less or worst case almost unsellable.

If on the other hand there are few foreign owners in your condo complex, then the new owner could simply buy the condo from your company, and you could subsequently close the company. In this case it would make no difference that the condo is currently owned by a company.

I am no expert on this, the above information is gained from years of reading posts on this forum. Hopefully others will have more information for you.

Sophon

Edited March 7, 2011 by Sophon

[Langsuan Man]

Ok, so I realize that it was only through my own stupidity that I ended up with my condo not in my own name, but in a company instead. I transferred the funds in thai baht, so don't have the proper forms, so the condo company went and put my condo under a company. So now I have two questions:

At this point in time, as loath as I am to recommend it, your best bet is to obtain counsel from a Thai lawyer

We don't have enough information on exactly how this transaction was handled but you may have a case if the condo company went and put your condo under a company, merely because you did not transfer funds in a foreign currency. What they told you , what pre sales documents they gave you, the wording of your purchase contract, etc. all come into play

Otherwise trogers has given you the best advice since you have a much better chance selling it to a Thai now, if it is new and never lived in

Most farangs will not touch it, since they buy condos because that is the only 100% legal way to own property here in Thailand; so long as all the requirement for foreign ownership as detailed in the The Condo Law are complied with

[BodhiBum]

Thanks for the info guys. As I suspected there's not a lot of good to be gleaned from my situation. True enough I did it wrong the first time around, but I'd like to salvage this condo if at all possible rather than just doing right the second time around. I know the whole company structure is illegal. Not much I can do about that now. Or is there?

The one thing which perked my ears that Sophon said, which to be honest I never even really considered, is that it may be possible to sell it and the new owner change it to the foreign quota. Well, why wouldn't I be able to change it to the foreign quota? Of course, if the quota hasn't been filled in my building of course. I really just assumed since the condo company told me it had to be under a company, then that's how it stays. But as for your advice, I think I'll do as stated and go ask this question to a Thai lawyer to see if it's possible to change it now. Thanks.

[pkrv]

A complex question - I can however give some reassurance

"Ok, so I realize that it was only through my own stupidity that I ended up with my condo not in my own name, but in a company instead. I transferred the funds in thai baht, so don't have the proper forms, so the condo company went and put my condo under a company. So now I have two questions:"

YES YOU CAN TRANSFER THB - providing the funds come from off shore it does not matter what currency they arrive in. Believe you me I have been through the on shore/off shore problems during the last military coup.

I have all the necessary documentation FETF and 4 letters called Bai Rap Rong (s).

Request the documentation - just demonstrate the funds came from offshore - you can convert to THB offshore, in order to forward on the funds. it's fine. In fact your meant to transfer the exact amount - how else could you do this unless you have a Thai Bank account - which I did not at the time. I was finally forced into a rather complex mixture of transfers to the developer - due to err... other developments (coup - pun intended!)

Edited March 8, 2011 by pkrv

[thaiwanderer]

Some thoughts on the OP's situation:-

It seems a little strange that the condo company just went ahead and put it in a company name rather than flagging the lack of forex forms at the time and suggesting the OP deal with it then.

While not saying its entirely impossible now the condo unit is registered to a Thai company I doubt the problem with the forms alone can be retrospectively sorted out.

Was a discount applied to the price since it turned out to be Thai unit rather than a foreign unit as apparently originally agreed (since the latter is worth more)?

Even if the foreign quota isn't yet used up there is no guarantee the condo company will allow the OP to have the unit moved into the quota (whether by selling it to himself personally or another foreigner).

The OP should obtain good legal advice.

Edited March 8, 2011 by thaiwanderer

[BodhiBum]

Thanks for the responses guys. Ok, so this is the first time that I've heard that the funds only need to come from offshore, and could have been sent in THB. This is what I did, and as thaiwander pointed out, it should have been the duty of the condo company to inform me after the first transfer that what I had done was not correct, and provide guidance to correct the situation. I've thought about that often, and what I figure is that they figured they had a dupe (and they weren't wrong I guess) so they just let me pay up in THB and then made the excuse after the fact and went and put the condo into a company. I protested, but they didn't listen much. And they ended up with one more condo on the foreign quota they could sell for full price. And of course I ended up paying full price for a thai condo.

The reality is that i trusted the condo company when they said they would set it all up for me. Dumb move, but I was no where near Thailand at that time busy working offshore, and by the time I came a year later to check out my new condo, the deed was done. This was all a few years back, so now in retrospect when I'm finally getting around to sorting this mess out, the reality is that the mess probably can't be sorted. And I'm stuck with a condo in an illegal company. But I'll definitely check with a good lawyer to see if there is a means to sell the condo and revert it to the foreign quota (if available). And if not, I guess I'll just use it the odd time, or sell it off cheap to a thai and recoup at least some of my initial investment. No point crying over spilt milk, when you're the one responsible spilling it. But sure enough I'll know better next time.

Cheers,

Bodhi

[PattayaParent]

The Thais are not the minority shareholders, they all know each other and own 51% of the company.

[Pacificperson]

How much would the spread between Thai ownership and foreign ownership be on a 3 million condo?

[Sophon]

How much would the spread between Thai ownership and foreign ownership be on a 3 million condo?

That's impossible to answer on a general level, as it would depend on how sought after the condo would be for foreigners and Thais respectively. Where I live the spread would be zero as foreign ownership accounts for far less than 50%, whereas for a condo in a "farang ghetto" the spread could be significant. I don't think it makes any sense to speculate unless you have a particular complex in mind.

Sophon

[Pacificperson]

How much would the spread between Thai ownership and foreign ownership be on a 3 million condo?

That's impossible to answer on a general level, as it would depend on how sought after the condo would be for foreigners and Thais respectively. Where I live the spread would be zero as foreign ownership accounts for far less than 50%, whereas for a condo in a "farang ghetto" the spread could be significant. I don't think it makes any sense to speculate unless you have a particular complex in mind.

Sophon

Yes, it would almost have to be a place where the farangs have bid up their share of the building. If the difference is large enough, on the order of 15-20%, it might make sense to arrange a 30 year lease on a "Thai" unit.

[pkrv]

How much would the spread between Thai ownership and foreign ownership be on a 3 million condo?

That's impossible to answer on a general level, as it would depend on how sought after the condo would be for foreigners and Thais respectively. Where I live the spread would be zero as foreign ownership accounts for far less than 50%, whereas for a condo in a "farang ghetto" the spread could be significant. I don't think it makes any sense to speculate unless you have a particular complex in mind.

Sophon

Purely out of interest what is a farang ghetto?

Edited March 10, 2011 by pkrv

[Sophon]

How much would the spread between Thai ownership and foreign ownership be on a 3 million condo?

That's impossible to answer on a general level, as it would depend on how sought after the condo would be for foreigners and Thais respectively. Where I live the spread would be zero as foreign ownership accounts for far less than 50%, whereas for a condo in a "farang ghetto" the spread could be significant. I don't think it makes any sense to speculate unless you have a particular complex in mind.

Sophon

Purely out of interest what is a farang ghetto?

I would have thought that would be self evident. The definition of a ghetto is "a part of a city occupied by a minority group", so a farang ghetto would be where that minority group consists of farangs.

Sophon

[pkrv]

How much would the spread between Thai ownership and foreign ownership be on a 3 million condo?

That's impossible to answer on a general level, as it would depend on how sought after the condo would be for foreigners and Thais respectively. Where I live the spread would be zero as foreign ownership accounts for far less than 50%, whereas for a condo in a "farang ghetto" the spread could be significant. I don't think it makes any sense to speculate unless you have a particular complex in mind.

Sophon

Purely out of interest what is a farang ghetto?

I would have thought that would be self evident. The definition of a ghetto is "a part of a city occupied by a minority group", so a farang ghetto would be where that minority group consists of farangs.

Sophon

And where exactly is that? -- it's certainly not where I live - there are apparently 50,000 Farang's owning condos in Bangkok a city of 10m. Only Thais can afford most of the units where I live.

Edited March 10, 2011 by pkrv

[Sophon]

And where exactly is that? -- it's certainly not where I live - there are apparently 50,000 Farang's owning condos in Bangkok a city of 10m. Only Thais can afford most of the units where I live.

And where exactly did I mention Bangkok? The issue is with condominium complexes where the majority of the units would be owned by foreigners if there were no restrictions. Since there is a 49% foreign ownership quota the remaining 51% would be less sought after in such complexes, which in turn would result in the price spread Pacificperson was asking about. Complexes primarily sought after by foreigners would logically be located in areas primarily inhabited by foreigners.

If only Thais can afford most of the units where you live, then your place is obviously not relevant to this discussion. In a condominium complex owned primarily by Thais there would be no price spread between units for Thai and foreign ownership, as all units put on the market could be sold to anyone - Thai or foreign.

Since Pacificperson were asking in general terms I also replied in general terms. But if you want specifics certain parts of Pattaya come to mind, but as I'm not an expert on Pattaya I don't know specific areas or condominium complexes. But I have seen posts here on TV about people in Pattaya having problems registering their unit under the foreign ownership quota.

Please try to read and respond to what I have written rather than what you believe I was thinking.

Sophon

[Pacificperson]

Where there are artificial price differences, there are often possibilities for some sort of arbitrage. Such as buying a long term lease of a unit with a Thai owner instead of buying a foreign registered unit. The two condo units would basically be very similar, but they could have significantly different prices.

[PattayaParent]

How much would the spread between Thai ownership and foreign ownership be on a 3 million condo?

Take a look at the Nova websites to see the difference in prices for Thais and foreigners for the same units as an example.

http://www.thecliffpattaya.com/thecliffpattaya.html

http://www.novaoceanview.com/nova_ocean_view.asp

[PattayaParent]

I would have thought that would be self evident. The definition of a ghetto is "a part of a city occupied by a minority group", so a farang ghetto would be where that minority group consists of farangs.

Sophon

And where exactly is that? -- it's certainly not where I live - there are apparently 50,000 Farang's owning condos in Bangkok a city of 10m. Only Thais can afford most of the units where I live.

So assuming Sophon's definition is right then everywhere is a Farang Ghetto because Farangs will always be in the minority.

[Sophon]

I would have thought that would be self evident. The definition of a ghetto is "a part of a city occupied by a minority group", so a farang ghetto would be where that minority group consists of farangs.

Sophon

And where exactly is that? -- it's certainly not where I live - there are apparently 50,000 Farang's owning condos in Bangkok a city of 10m. Only Thais can afford most of the units where I live.

So assuming Sophon's definition is right then everywhere is a Farang Ghetto because Farangs will always be in the minority.

It's not my definition but that of Consise Oxford Dictionary. And I think it's pretty clear that they are referring to an area where a group of people, who although they are a minority group in the country, in that particular area they make up a significant part of the population and maybe even the majority.

Are you saying that there are no areas of a city in Thailand where the majority of the inhabitants are farang? Since the definition doesn't state any necessary size of the area to qualify as a ghetto, then the size could reasonably depend on the context the word is used in, and in this case we are talking about condominiums. So an area with a few condominium complexes or even one large complex such as one or more of the View Talay condominiums in Pattaya could reasonably be classed as a ghetto.

Remember we are not talking about who are owning the condominiums but rather who are living in them.

Sophon

[pkrv]

I would have thought that would be self evident. The definition of a ghetto is "a part of a city occupied by a minority group", so a farang ghetto would be where that minority group consists of farangs.

Sophon

And where exactly is that? -- it's certainly not where I live - there are apparently 50,000 Farang's owning condos in Bangkok a city of 10m. Only Thais can afford most of the units where I live.

So assuming Sophon's definition is right then everywhere is a Farang Ghetto because Farangs will always be in the minority.

It's not my definition but that of Consise Oxford Dictionary. And I think it's pretty clear that they are referring to an area where a group of people, who although they are a minority group in the country, in that particular area they make up a significant part of the population and maybe even the majority.

Are you saying that there are no areas of a city in Thailand where the majority of the inhabitants are farang? Since the definition doesn't state any necessary size of the area to qualify as a ghetto, then the size could reasonably depend on the context the word is used in, and in this case we are talking about condominiums. So an area with a few condominium complexes or even one large complex such as one or more of the View Talay condominiums in Pattaya could reasonably be classed as a ghetto.

Remember we are not talking about who are owning the condominiums but rather who are living in them.

Sophon

Sorry Sophon you are not exactly stating where these Ghettos exactly are, we could respond to such a precice answer regardless of city. And BTW the term Ghetto has another horriffic meaning, it speaks of slaughter of humanity on a massive scale, too.

Edited March 12, 2011 by pkrv

[Pacificperson]

PattayaParent

Thanks for the info. It looks as if it is 15-16% in your example.

[PattayaParent]

PattayaParent

Thanks for the info. It looks as if it is 15-16% in your example.

I'd previously been told by an estate agent that the premium for a foreign owned quota condo is 1 million Baht.

Friends who have looked for condos have always been offered a discount for putting the exact same condo in a company name.

I've seen some developers allocate the less desirable and cheaper condos to Thai / company ownership and the better and more expensive ones to foreign ownership.