Buying Condo

[Jebhead]

Can someone explain to me the 51% / 49% rule about condo units. Is it true that at least 51% should be in Thai names? If a farang owned unit is sold to a Thai or vice versa where do they keep track of the percentages?

Does is make a difference in value when buying or selling if the name is in farang or Thai?

Any info much appreciated.

JH

[Jingthing]

It's a good question which I can't answer precisely, but I can say that in condos where the foreign owned segment is near or at the limit, the foreign owned condos are priced at a significant premium to the others, which in practicality means only another foreigner would usually be willing to pay the extra price.

[briley]

The Condo keeps the list of the percentage of the building that is foreign owned.

When a unit is bought they provide a list of all foreign owners and the percentage they own to the land registry. If the new purchase takes it over 49% foreign ownership then land registry will stop the sale.

As Jingthing says, once it is at 49% then Thai's can only sell to Thai's but foreigners can sell to anyone. So the Thai's do suffer from lower prices.

[Delight]

I agree with the earlier posts

However for Thai you can read Thai company.

This device is legal ,but it does circumvent the spirit of the Condo Act.

If the condo in question is in a Thai Company,then the MD will be a Farang with up to a 49% ownership of the Company. The fellow directors(51 % of ownership) will be Thai nationals.The Farang will never have met them.

The trick is that these Thais sign over all their voting rights to the Farang.

The Farang then has 49% on ownership ,but 100% of the power.

In practice these ratio reduce -Your profile is lower if you own say 35%

The new buyer buys the company. The condo just comes with it. The price will reflect the market price of the condo.

The legal process involves replacing his name as MD with yours.

I am not familiar with the money moving processes in such a deal. If you plan to exit Thailand with the proceeds from the future sale of the company-then this needs to be checked out.

The land registry office are not involved. As far as they are concerned nothing has changed. No transfer taxes are involved. Also if you are in trouble with the law for other reasons the authorities cannot take the property.You do not own it.

The down side is that you are required to organise an annual audit. Typically this is about 12000 Baht per anum.

After the Thai Coup in Sept 2006 the new goverment attempted to change the law such that a company where Farrang controls 100% of the vote , must be a Farrang company

That would have killed the housing /condo market stone dead. It failed to become the law

.Money counts

I suspect that it did spread alot of fear at the time. Before the current economic crisis the housing market died overnight in Farang towns such as Pattaya Phuket etc. Possibly now Farang have got used to leasing the land-That approach is perfectly legal and acceptable to Thai authorities. A good lawyer is essential iif you go down that route. Never lease directly from a Thai. When he dies -so does your contract. The family will be round asking you to move your house off their land.

The attitude to using a Thai company to purchase a condo has had no negative outcomes -the Farang is only a co owner of the land.

However there are other features of the Condo Act. If a Farang sells his condo which is in his name to a Thai ,thus increasing to Thai ownership ratio-That condo ratio can never go back to a 49%/51%

The original Condominium Act(1979) was introduced at the insistance of the IMF.

Thailand needed the money at that time-it was a condition of the loan .So the law was enacted . The Thai government hated it. All these nasty foreigners coming and living in Thailand.

I think that they hate it less now.

Hope this helps

[PattayaParent]

However there are other features of the Condo Act. If a Farang sells his condo which is in his name to a Thai ,thus increasing to Thai ownership ratio-That condo ratio can never go back to a 49%/51%

Where in the condo act does it say that if a foreigner sells his condo to a Thai it can never be sold to another foreigner?

[Delight]

However there are other features of the Condo Act. If a Farang sells his condo which is in his name to a Thai ,thus increasing to Thai ownership ratio-That condo ratio can never go back to a 49%/51%

Where in the condo act does it say that if a foreigner sells his condo to a Thai it can never be sold to another foreigner?

Apologies Apologies

To answer your question -It does not -Not that I can find anyway.

I was given this info several years ago by what at the time I believed to be trusted sources-Property agents etc

Thanks for drawing my attention to this error

[wpcoe]

Apologies Apologies

To answer your question -It does not -Not that I can find anyway.

I was given this info several years ago by what at the time I believed to be trusted sources-Property agents etc

Thanks for drawing my attention to this error

Perhaps you drew that conclusion from a situation where a building was already at the 49% for farang. If there were many units for sale and a farang-registered unit were sold to a Thai, then the 49% allocation would open for the next farang wishing to buy a Thai-owned unit. In essence, in that case, the unit for the farang-sold now Thai-owned unit would not be able to be easily sold back to another farang in the future.

I understand that happens frequently in popular buildings where the farang 49% is at the maximum limit.

[Darrel]

Perhaps you drew that conclusion from a situation where a building was already at the 49% for farang. If there were many units for sale and a farang-registered unit were sold to a Thai, then the 49% allocation would open for the next farang wishing to buy a Thai-owned unit. In essence, in that case, the unit for the farang-sold now Thai-owned unit would not be able to be easily sold back to another farang in the future.

I understand that happens frequently in popular buildings where the farang 49% is at the maximum limit.

It seems most unlikely that a Thai would want to pay the farang name premium simply to lose it the second he buys the condo. Never seen a (decent) building yet where Thai or company name units for sale dont outnumber farang name units for sale. Surely a Thai would just buy one of the cheaper Thai or company name units. I would, in his shoes.

[Darrel]

once it is at 49% then Thai's can only sell to Thai's but foreigners can sell to anyone. So the Thai's do suffer from lower prices.

That depends on your point of view. I would say that Thais benefit from lower prices. And also a much more stable market.

High property prices are just palaces (or high-rises ) made of sand and in the end they may well turn round and bite you in the bum, as many have discovered all over the world.

[Jebhead]

The people at the condo buildng are not involved with the sale in any way shape or form, it's a private sale that keeps them out the loop. I think the only place that may have a chance of noticing the balance of farang / thai owned units will be the land office where the names on the deeds are changed.

This will not affect me anyway, farang to farang sale, i was just curious how it worked. Obviously better to keep it in farang name.....

I recently looked at a condo, name in farang price 7M, name in thai price 5M!!!!

JH

[PattayaParent]

The people at the condo buildng are not involved with the sale in any way shape or form, it's a private sale that keeps them out the loop. I think the only place that may have a chance of noticing the balance of farang / thai owned units will be the land office where the names on the deeds are changed.

This will not affect me anyway, farang to farang sale, i was just curious how it worked. Obviously better to keep it in farang name.....

I recently looked at a condo, name in farang price 7M, name in thai price 5M!!!!

JH

Except that they will have to issue the 'free of debt' notice to the seller and will have to produce the Thai / Farang percentage confirmation for the land office.

[Jebhead]

The people at the condo buildng are not involved with the sale in any way shape or form, it's a private sale that keeps them out the loop. I think the only place that may have a chance of noticing the balance of farang / thai owned units will be the land office where the names on the deeds are changed.

This will not affect me anyway, farang to farang sale, i was just curious how it worked. Obviously better to keep it in farang name.....

I recently looked at a condo, name in farang price 7M, name in thai price 5M!!!!

JH

Except that they will have to issue the 'free of debt' notice to the seller and will have to produce the Thai / Farang percentage confirmation for the land office.

So the percentage of units is kept by the condo management? Is this still required if the sale is Thai to Thai or Farang to Farang as the balance of units will not change?

Is a "free of debt" notice still required if the seller has the original chanote or is this proof enough that there is no outstanding debt?

Is the land office that building opposite Lotus in N Pattaya? ( condo in Pratumnak )

Thanks

JH

[PattayaParent]

The people at the condo buildng are not involved with the sale in any way shape or form, it's a private sale that keeps them out the loop. I think the only place that may have a chance of noticing the balance of farang / thai owned units will be the land office where the names on the deeds are changed.

This will not affect me anyway, farang to farang sale, i was just curious how it worked. Obviously better to keep it in farang name.....

I recently looked at a condo, name in farang price 7M, name in thai price 5M!!!!

JH

Except that they will have to issue the 'free of debt' notice to the seller and will have to produce the Thai / Farang percentage confirmation for the land office.

So the percentage of units is kept by the condo management? Is this still required if the sale is Thai to Thai or Farang to Farang as the balance of units will not change?

Is a "free of debt" notice still required if the seller has the original chanote or is this proof enough that there is no outstanding debt?

Is the land office that building opposite Lotus in N Pattaya? ( condo in Pratumnak )

Thanks

JH

The condo management must produce the percentage confirmation for all sales.

Free of debt related to debt to the condo management, not debt on the unit (eg. mortgage)

The land office is along Soi 17

[pauljones]

The condo juristic person has a list of thai/foreign owners with the percentages.

In our building, the management had it all screwed up.

[trogers]

The condo juristic person has a list of thai/foreign owners with the percentages.

In our building, the management had it all screwed up.

The certified letter to the land office for every title transfer application includes the latest list of Thai and Foreign owners with their sqm holdings. Just simple mathematics is needed to check the percentages.

The only way things get screwed up are units held by companies, and the companies are bought by foreigners and sold by Thais as such transfers of ownerships need not be declared to the condo management.

Edited March 20, 2011 by trogers

[Jebhead]

The people at the condo buildng are not involved with the sale in any way shape or form, it's a private sale that keeps them out the loop. I think the only place that may have a chance of noticing the balance of farang / thai owned units will be the land office where the names on the deeds are changed.

This will not affect me anyway, farang to farang sale, i was just curious how it worked. Obviously better to keep it in farang name.....

I recently looked at a condo, name in farang price 7M, name in thai price 5M!!!!

JH

Except that they will have to issue the 'free of debt' notice to the seller and will have to produce the Thai / Farang percentage confirmation for the land office.

So the percentage of units is kept by the condo management? Is this still required if the sale is Thai to Thai or Farang to Farang as the balance of units will not change?

Is a "free of debt" notice still required if the seller has the original chanote or is this proof enough that there is no outstanding debt?

Is the land office that building opposite Lotus in N Pattaya? ( condo in Pratumnak )

Thanks

JH

The condo management must produce the percentage confirmation for all sales.

Free of debt related to debt to the condo management, not debt on the unit (eg. mortgage)

The land office is along Soi 17

Thanks for the info, Soi 17 where?

JH

[PattayaParent]

A on this map

Edited March 20, 2011 by PattayaParent

[Jebhead]

A on this map

What map?

JH

[Delight]

However there are other features of the Condo Act. If a Farang sells his condo which is in his name to a Thai ,thus increasing to Thai ownership ratio-That condo ratio can never go back to a 49%/51%

Where in the condo act does it say that if a foreigner sells his condo to a Thai it can never be sold to another foreigner?

I recently asserted that:

'If a Farang sells his condo which is in his name to a Thai , thus increasing the Thai ownership ratio-That condo ratio can never go back to a 49%/51%'

This was challenge by 'PattayaParent ' who asked me to quote the specific part of the Condo Act that stated this .

I could not satisfy that challenge and

and duly retracted and apologized.

It has the potential to remain a false statement, because it is not detailed in the Condo Act

However:

Consider this scenario:

A condominium has condos sizes ,small ,medium and large.

A Farang sells his large condo to a Thai Person

This causes the ratio to shift to say:

40% Farang /60% Thai.

In this case , any of the existing Thai owners can sell to a Farang.

Selling to Farang such that it is registered in a Farang name will typically attract a higher price. This is of interest to Thai sellers.

This opportunity did not exist before this latest transaction .

The Condo Act is only concerned with a breach of the 49% rule and does not deal with this specific scenario.

I have spoken with experts in this field.

They advise me that the decision is with the Land Office .

The land office have the discretion .

In practice anecdotal evidence suggests that the Land office determine that the next condo to be sold by a Thai in his/her name to anybody will remain in a Thai (or Thai Company).

Thus in this case the 49%/51% is not restored and the 40% Farang /60% Thai will be the future norm for this building.

This status will remain until another farang sells to Thai person-in which case the ratio in favour of the Farang concession will further reduce.

Q Has anybody got evidence which contradicts this stated Land office determination?

[Darrel]

Consider this scenario:

A Farang sells his large condo to a Thai Person

Interesting scenario but have you ever heard of this happening?

Why would any Thai person buy a Farang-name condo when he could buy a Thai-name one for less?

[Delight]

Consider this scenario:

A Farang sells his large condo to a Thai Person

Interesting scenario but have you ever heard of this happening?

Why would any Thai person buy a Farang-name condo when he could buy a Thai-name one for less?

The simple answer to your question is' no.'

But what do I know ?

All I do know is that you can never assume the motives of buyers.

-Maybe they had to have the condo in question for emotional reasons -not financial reasons ..Maybe buying opportunities in our hypothetical condo were rare.

However my post was asking precisely the question that you have asked of me and the subsequent long term impact of Thai/Farang ratios

[wpcoe]

Surely a Thai would just buy one of the cheaper Thai or company name units. I would, in his shoes.

Why would any Thai person buy a Farang-name condo when he could buy a Thai-name one for less?

Ohhhh, I don't know. How about some absurd unbelievable reason like the farang was selling a desirable unit? A corner unit, a unit on the "cool side" of the building, on a high floor, or some such.

Maybe for *you* price is everything, and you "would just buy one of the cheaper Thai or company name units," but perhaps some folks -- including Thais -- do have other criteria and standards. Just a wild & crazy concept I'll throw out for consideration.

[PattayaParent]

I have spoken with experts in this field.

Which bar was that in?

[Delight]

I have spoken with experts in this field.

Which bar was that in?

There was no bar involved.

Believe me I did get to (via other Thais professional ) to a top legal Expert.

But the choice is yours. You can beleive me or you and your cynicism can elect not to

Either way ,I do not care

[Darrel]

Ohhhh, I don't know. How about some absurd unbelievable reason like the farang was selling a desirable unit? A corner unit, a unit on the "cool side" of the building, on a high floor, or some such.

Maybe for *you* price is everything, and you "would just buy one of the cheaper Thai or company name units," but perhaps some folks -- including Thais -- do have other criteria and standards. Just a wild & crazy concept I'll throw out for consideration.

Actually I'm a very fussy property buyer. Price is NOT everything for me (in fact it's way down the list) but what I have noticed is that there is always another better unit for sale in the same building or the one next door (and often for much less, especially if it isnt in farang name).

I will bet a large sum that Thai buyers would know this, and would not pay over the top for a unit in farang name. They might buy a farang name unit in a building where the name comes with no premium, and these buildings certainly exist, but of course if the farang quota isnt full then there is no problem with any farang buying any unit.

I suppose that a very wealthy Thai might just buy a particular 20Mb unit in a particular building if he had so much money that he reallly didnt care what he paid, but that would be in some very particular circumstances, and certainly not in the run of the mill type building that one sees every day, with units at 2, 3, 5, 7Mb. And even there, no matter how good that particular farang name unit is, there will probably be another unit on the same floor with the same view that is in Thai name.

I have never come across this happening though and I doubt that anyone else here has either. I anyone has I would like to hear the details.