Buying A House Via Company

[Guderian]

I should be completing the purchase of my first house here in around 2 weeks time. I'm buying the company that owns the house.

When we complete, I expect to get the keys and some papers relating to the house (the blue book, at least, but is there anything else?) and the company, but I am not sure what exactly I should expect? I'm sure it will all go very quickly on the day, and unless I have a check list with me I may miss something important. My lawyer will be with me, of course, but I'd still like an independent check.

So does anyone have a check list of what I should receive at the end of the transfer of shares and directorship? Thanks for any help.

[stgrhe]

It appears you are planning to go ahead with the purchase without proper legal advice. This can cost you dearly mate. Hire a lawyer to sort things out for you before proceeding.

[Guderian]

It appears you are planning to go ahead with the purchase without proper legal advice. This can cost you dearly mate. Hire a lawyer to sort things out for you before proceeding.

If you read what I wrote you will see that:

I should be completing the purchase of my first house here in around 2 weeks time. I'm buying the company that owns the house.

When we complete, I expect to get the keys and some papers relating to the house (the blue book, at least, but is there anything else?) and the company, but I am not sure what exactly I should expect? I'm sure it will all go very quickly on the day, and unless I have a check list with me I may miss something important. My lawyer will be with me, of course, but I'd still like an independent check.

So does anyone have a check list of what I should receive at the end of the transfer of shares and directorship? Thanks for any help.

[Khun Jean]

well. FIRST you build your checklist en then use that to check your lawyer who is just there to get some money from you.

He will not be accountable for anything he does, so it is ALL your risk and because of that it is you who have to know everything before you commit to a deal.

Remember with lawyers it is the 99% that make the 1% look bad.

The list for taking over a company is endless. That is why most sales are assets sale. No skeletons in the closet that way.

Edited December 2, 2011 by Khun Jean

[InterestedObserver]

Where to begin. Are the company accounts and taxes current including the 12.5% tax on house apprised rental income? Who are the Thai shareholders you will be in business with and how many shares do they own? Who controls the management and voting shares? Are there any encumbrances listed on the back of the land title deed (Chanote)? On and On the list goes. Kind of late if you don't already know the answers.

[Guderian]

I think you're missing the point of my question. My lawyer has already checked all those things. I simply want to know what I should expect to receive at closing.

[thaiwanderer]

I think you're missing the point of my question. My lawyer has already checked all those things. I simply want to know what I should expect to receive at closing.

Liability for undisclosed debts?

You are the one who's agreed to buy, your seller who has agreed to sell so how can we know what you've agreed?

Your lawyer should be able to tell you given they've checked everything.

Appears your curiosity is late.

More than a little confused by your question.

[InterestedObserver]

I think you're missing the point of my question. My lawyer has already checked all those things. I simply want to know what I should expect to receive at closing.

Have they? The point is, apparently you have no idea and are asking!

[seanog]

Blue Book

Building Permit

Chanotte

[InterestedObserver]

Blue Book

Building Permit

Chanotte

All of which have nothing to do with buying the company.

[Guderian]

Blue Book

Building Permit

Chanotte

All of which have nothing to do with buying the company.

So why don't you provide a helpful answer if you're such an expert?

[InterestedObserver]

Blue Book

Building Permit

Chanotte

All of which have nothing to do with buying the company.

So why don't you provide a helpful answer if you're such an expert?

I tried to but you said that your lawyer has "already checked all those things". Ownership of the house is not changing hands, only the company share certificate registration.

[Guderian]

Blue Book

Building Permit

Chanotte

All of which have nothing to do with buying the company.

So why don't you provide a helpful answer if you're such an expert?

I tried to but you said that your lawyer has "already checked all those things". Ownership of the house is not changing hands, only the company share certificate registration.

Yes, so what should I expect to get in the way of paperwork?

New share certificates?

All of the previous company accounts, or does the previous owner hang on to those?

Signed but undated letters of resignation from the new Thai shareholders?

Power of attorney to sell the all shares whenever I wish to?

Those are just obvious things that come to mind. I've every confidence in my lawyer, but I would still appreciate a full up-to-date check list. Anybody who has recently bought a house via the company route should know the answer.

[kimmy]

1. Obtain a copy of the title deed and house book

2. Is the land title and house held in the holding company's name?

3. Is a mortgage registered against the property?

4. Has building permission been granted? Obtain a copy.

5. Is the house to be transferred separately

5. Is there a sale and purchase agreement relating to the asset or is the asset to be transferred as part of the company buy out?

6. Obtain original signed directors' resignation forms;

7. Obtain a signed appointment of director form(s);

8. Obtain minutes of directors' meeting authorizing the resignations and sale of the company and the asset;

9. Obtain signed directors' warranty forms.

10. Are any of the proposed incoming directors subject to an undischarged bankruptcy order in any jurisdiction?

11. How many Thai shareholders are registered?

12. What is the share distribution?

13. What percentages of shares are held by foreigners?

14. Obtain signed share transfer forms from all shareholders;

15. Do you want to replace the existing Thai shareholders with new shareholders?

16. Is there a detailed share transfer agreement?

17. How are the shares and the asset to be valued? Are the shares sold for the same par value as registered with MOC?

18. Is the asset to be valued separately?

19. Is the company registered for tax and vat?

20. Have financial balance sheets been filed with the MOC?

21. When was the last audit carried out?

22. Have minutes of the AGM been filed?

23. Are there any employees of the holding company?

[thaiwanderer]

Yes, so what should I expect to get in the way of paperwork?

Whatever you and the seller have agreed.

There are so many variables its like asking us what's in your pocket (and getting annoyed when we point this out).

[JohnC]

Dont forget the company stamp! very important bit of kit! Accounts, tax certificate, plus Chanote proving ownership of the land, plus Tor Ror 14 (blue book) . Whilst you are buying a company the paperwork for any house / land is also important.

[Tompa]

I don’t understand why anyone would buy a house via a Thai company - using a nominee company to hold land on behalf of a foreigner is illegal in Thailand! Lawyers will always try to circumvent this through legal loopholes, and while a foreigner might never be prosecuted or loose their property is it really a chance worth taking?

[InterestedObserver]

I don't understand why anyone would buy a house via a Thai company - using a nominee company to hold land on behalf of a foreigner is illegal in Thailand! Lawyers will always try to circumvent this through legal loopholes, and while a foreigner might never be prosecuted or loose their property is it really a chance worth taking?

A revision to the business law is pending. It would basically count voting rights (shares) when determining whether or not a company is Thai or foreign owned. No more minority shareholders with preferential shares loophole. it will be interesting if and when they find the cojones.

[thaiwanderer]

I don't understand why anyone would buy a house via a Thai company - using a nominee company to hold land on behalf of a foreigner is illegal in Thailand! Lawyers will always try to circumvent this through legal loopholes, and while a foreigner might never be prosecuted or loose their property is it really a chance worth taking?

A revision to the business law is pending. It would basically count voting rights (shares) when determining whether or not a company is Thai or foreign owned. No more minority shareholders with preferential shares loophole. it will be interesting if and when they find the cojones.

Thought we agreed there was no such real loophole. For the purposes of foreigner's attempts at benefcial use and effective control the current laws are a sufficient prohibition - IF enforced (which is the rub).

The change you mention would make bluffing poor legal advice in this particular area a little harder.

[Nip]

I think you're missing the point of my question. My lawyer has already checked all those things. I simply want to know what I should expect to receive at closing.

Trusting lawyers in Thailand can be very dangerous. I trusted two and learned this to my cost. Any purchase in Thailand carries risks. And dont expect your lawyer to point them out to you. You are blindly entering into an agreement hence asking for advice here. Let the buyer beware. You can find everything you need to know is on the internet. Do your homework... There are no short cuts...

[Nip]

I don’t understand why anyone would buy a house via a Thai company - using a nominee company to hold land on behalf of a foreigner is illegal in Thailand! Lawyers will always try to circumvent this through legal loopholes, and while a foreigner might never be prosecuted or loose their property is it really a chance worth taking?

According to a Consul in Phuket the Thai authorities view is that 'Leases' by non Thai nationals are considered to be an attempt to circumvent Thai law and don't hold water. I believe there are 7 cases in Samui at the moment where foreigners who bought land there are under threat of loosing the land on this basis. I guess the same could apply to foreigners purchasing property through a company?

[Tatsujin]

You might want to read up on the current laws and regulations, a Google will find them easily enough, but this should help to get you started:

http://www.samuiforsale.com/knowledge/overview-property-law-thailand.html

http://www.samuiforsale.com/knowledge/land-holding-company-structure.html

A few key points:

1. Setting up a company with the purpose to circumvent the laws prohibiting foreign ownership of land or condominium exceeding the foreign ownership quota has an illegal purpose and this structure will in court be deemed void pursuant to sections 150 and Section 172 of the Civil Code and its ownership on behalf of the foreigner is illegal or unlawful.
   
2. Foreigners are restricted from using Thai nominee or proxy shareholders partners in the company. The use of nominees by foreigners is illegal and will lead to unlawful foreign land ownership or unlawful engagement in protected businesses under the Foreign Business Act.
   
3. The foreigner will be a director of a Thai Limited company and will thus be obliged to fulfill his duty as a director, comply with the Foreign Business Act and Alien Employment Act. A foreigner acting on behalf of a company without a work permit could be prosecuted and deported out of Thailand.
   
4. The company must comply with the law and money should pass through the company books, shareholder meetings must be held, minutes of meeting prepared, and yearly accounting must be filed or the director could be liable for fines and even removal from the register of companies.
   
5. The company formation must have a legitimate business purpose which are stated in the company objectives registered with the Business Registration Department and be considered active. A dormant company can be removed from the register for companies.
   
6. The company structure is not immune for future changes in the law or stricter enforcement of existing laws.
   

[Langsuan Man]

Tatsujin

One citation or reference of prosecution please since you are so good at Googling

I'll even except one report of one Land Office refusing to transfer property to a limited company, since you are so positive of your research

[Tatsujin]

Tatsujin

One citation or reference of prosecution please since you are so good at Googling

I'll even except one report of one Land Office refusing to transfer property to a limited company, since you are so positive of your research

A little hard as they tend to be in Thai only and not always reported anyway. Up to you tho how you go about doing things, if your Lawyer says you are good to go and you trust him, go for it. Just don't say you weren't warned when there are problems further down the line because for dam_n sure you'll have absolutely no comeback on the Lawyer front.

I'll point you to some more reading:

http://www.pricesanond.com/knowledge/real-estate-in-thailand.php

Edited December 4, 2011 by Tatsujin

[Tatsujin]

A few more bits of light reading from here on TV:

@Langsuan Man - I noticed your posting at the bottom of this thread (). You are right, there are a lot of people involved in "illegal" activity, you included from the sounds of it. Just cos everyone does it doesn't make it legal. And if (when) they do decide to make a fuss over it on one of their regular crackdowns, you won't have a leg to stand on.

[ivowatson]

Indeed this will be very interesting (and frightening for some) but UNTIL (and if) that revision actually takes place, preference shares are completely legal and the perfect way to own the land if the company complies with all the requirements.

I don't understand why anyone would buy a house via a Thai company - using a nominee company to hold land on behalf of a foreigner is illegal in Thailand! Lawyers will always try to circumvent this through legal loopholes, and while a foreigner might never be prosecuted or loose their property is it really a chance worth taking?

A revision to the business law is pending. It would basically count voting rights (shares) when determining whether or not a company is Thai or foreign owned. No more minority shareholders with preferential shares loophole. it will be interesting if and when they find the cojones.

[Langsuan Man]

A few more bits of light reading from here on TV:...................

@Langsuan Man - I noticed your posting at the bottom of this thread (). You are right, there are a lot of people involved in "illegal" activity, you included from the sounds of it. Just cos everyone does it doesn't make it legal. And if (when) they do decide to make a fuss over it on one of their regular crackdowns, you won't have a leg to stand on.

Don't quote me out of context. The term a lot of illegal activity was referencing all the lawyers, accountants, land office officials, amphur's and developers not the end users (owners)

And I ended that thread with the statement:

If you want to rent a house or live in a concrete pill box of a condominium then listen to the TV experts, otherwise, Carpe diem

[thaiwanderer]

A few more bits of light reading from here on TV:...................

@Langsuan Man - I noticed your posting at the bottom of this thread (http://www.thaivisa....ominee-company/). You are right, there are a lot of people involved in "illegal" activity, you included from the sounds of it. Just cos everyone does it doesn't make it legal. And if (when) they do decide to make a fuss over it on one of their regular crackdowns, you won't have a leg to stand on.

Don't quote me out of context. The term a lot of illegal activity was referencing all the lawyers, accountants, land office officials, amphur's and developers not the end users (owners)

And I ended that thread with the statement:

If you want to rent a house or live in a concrete pill box of a condominium then listen to the TV experts, otherwise, Carpe diem

Personally I fully applaud anyone seizing the day as long as they understand what they are doing.

Interesting distinction you make between

those often with the most personal interest, whose involvement causes the illegality and who are holding the hot potato being blameless

......and everyone else?

[Gary A]

Put me directly in the gloom and doom camp. No matter how you try to circumvent the system, it is illegal for a farang to own a property other than a condo in this country.

Sooner or later some politician is going to decide to go after these illegal companies. Since the company owner must pay a lawyer and accountant in addition to government taxes,there is likely a lot of pressure to allow it to continue.

Since I like to sleep at night, I'll avoid any farang company formed to own a property. It's better someone else and not me. Buy a condo in your own name and sleep well.

[vpi78]

Put me directly in the gloom and doom camp. No matter how you try to circumvent the system, it is illegal for a farang to own a property other than a condo in this country.

Sooner or later some politician is going to decide to go after these illegal companies. Since the company owner must pay a lawyer and accountant in addition to government taxes,there is likely a lot of pressure to allow it to continue.

Since I like to sleep at night, I'll avoid any farang company formed to own a property. It's better someone else and not me. Buy a condo in your own name and sleep well.

Spot on, good advice Gary.

But it will be ignored by many ... to their misery, but hey that is Darwanism at a basic level.