30 Year Lease Using A Thai Proxy Owner

[chiang mai]

I'm trying to understand the legality and implications of this scenario so any first hand knowledgable inputs are welcomed:

A farang friend and his wife own a house and land via a Thai company in which they had control of the voting rights. After a few years and because of an allied legal case, the Land Office caught sight of how the property was owned and gave them six months to change the ownership, out of a farang controlled Thai company and into something else - no problems with any of that.

A fairly well known lawyer in these parts put together the sale of the property, the repurchase of it by a Thai national (a proxy owner), a thirty year lease and an ufstruct back to the farang couple - tax was paid, papers were signed and the deal was done. But the lawyer also put together a series of documents that gave the farang couple (and not the proxy owner) complete control of the property along with a signed but undated letter stating that the proxy had agreed to sell their interest in the property, this for when the farang couple wished to sell and so as to avoid the possibility that the proxy might try to sell the property without permission.

Now, it all looks like it works well except that proxy ownership by a Thai national is illegal and as I understand it there is a witch hunt going on at present in the southern islands at least to weed out such offenders, hence, the subject is getting increased visibility. My interest in all of this is that I want to ensure that the Thai national is not exposed in this matter, the person is a very good friend who initially tried to help (for free) the farang couple out of a difficult situation but whom is now quite worried about his own position and has come to me for advice. My take on this is that the Thai national is exposed in that he never bought the property, does not have control of it and cannot sell it.

[jamescollister]

OP some of these schemes to avoid Thai land laws are criminal offenses and carry jail time. Thai lawyers are not held responsible for their advice and all the signed bits of paper in the world can not change the law.

Don't understand how he can be a proxy owner, he either owns the land or doesn't. who's name is on the charnote. Jim

[chiang mai]

OP some of these schemes to avoid Thai land laws are criminal offenses and carry jail time. Thai lawyers are not held responsible for their advice and all the signed bits of paper in the world can not change the law.

Don't understand how he can be a proxy owner, he either owns the land or doesn't. who's name is on the charnote. Jim

The Thai national's name is on the Channote but that person does not have any of the powers associated with ownership, that person cannot sell the land, extend the lease or anything other than simply be a name on the channote.

[jamescollister]

OP some of these schemes to avoid Thai land laws are criminal offenses and carry jail time. Thai lawyers are not held responsible for their advice and all the signed bits of paper in the world can not change the law.

Don't understand how he can be a proxy owner, he either owns the land or doesn't. who's name is on the charnote. Jim

The Thai national's name is on the Channote but that person does not have any of the powers associated with ownership, that person cannot sell the land, extend the lease or anything other than simply be a name on the channote.

Don't really follow, you can have a lease or other agreement that comes under the thai civil code registered on the back of the charnote and that's it.

Any other agreement or contract not covered under the civil code is just paper and has no standing. Jim

[chiang mai]

OP some of these schemes to avoid Thai land laws are criminal offenses and carry jail time. Thai lawyers are not held responsible for their advice and all the signed bits of paper in the world can not change the law.

Don't understand how he can be a proxy owner, he either owns the land or doesn't. who's name is on the charnote. Jim

The Thai national's name is on the Channote but that person does not have any of the powers associated with ownership, that person cannot sell the land, extend the lease or anything other than simply be a name on the channote.

Don't really follow, you can have a lease or other agreement that comes under the thai civil code registered on the back of the charnote and that's it.

Any other agreement or contract not covered under the civil code is just paper and has no standing. Jim

Except that, given an extreme scenario, if the Thai were to sell the property and his buyer were to try and take possession of the property, the farang owner would simply date the signed sale documents provided at the outset and claim ownership that had yet to be registered at the Land Office, horribly messy resulting in a civil suit at least I would imagine.

[jamescollister]

OP some of these schemes to avoid Thai land laws are criminal offenses and carry jail time. Thai lawyers are not held responsible for their advice and all the signed bits of paper in the world can not change the law.

Don't understand how he can be a proxy owner, he either owns the land or doesn't. who's name is on the charnote. Jim

The Thai national's name is on the Channote but that person does not have any of the powers associated with ownership, that person cannot sell the land, extend the lease or anything other than simply be a name on the channote.

Don't really follow, you can have a lease or other agreement that comes under the thai civil code registered on the back of the charnote and that's it.

Any other agreement or contract not covered under the civil code is just paper and has no standing. Jim

Except that, given an extreme scenario, if the Thai were to sell the property and his buyer were to try and take possession of the property, the farang owner would simply date the signed sale documents provided at the outset and claim ownership that had yet to be registered at the Land Office, horribly messy resulting in a civil suit at least I would imagine.

Yes it is gets messy when you try all these back door schemes, cherry picking laws etc. That's why that don't work, Thai civil and commercial code is not complex.

So let's look at what we have.

Farang buys land using a fake company, gets caught. Transfers the land to your friend. Your friend now owns this land.

Your friend signs a lease for the farang to use the land.

Friend can break that lease easily, one simple way would be how much rent is the farang paying or paid for the lease. Thai tax department can or maybe will deem a value of rent your Thai friend made as income and tax that income. Think there is even a clause in the civil code that addresses people being ripped off when leasing their land.

What can farang do, nothing. He can't go to court, land office or police saying I was involved in an illegal scheme to try and own land in Thailand, he is likely to end up in handcuffs.

Farang can live their his whole life as long as the land owner lets him.

Some people think they are smarter than the average bear, but it is the real law that counts in the end. Why do you think so few of these deals get contested in court when they go wrong. Jim

[BlackPuddingBertha]

Except that, given an extreme scenario, if the Thai were to sell the property and his buyer were to try and take possession of the property, the farang owner would simply date the signed sale documents provided at the outset and claim ownership that had yet to be registered at the Land Office, horribly messy resulting in a civil suit at least I would imagine.

As I understand it, what is written on the chanote is the be-all and end-all of ownership. He who has his name on the chanote is the owner, and any transaction relating to the property doesnt become valid until the land office has registered it and altered the details on the chanote.

This is made even simpler in this particular instance in that the farang just cannot buy the land anyway, no matter how many pre-signed and undated bits of paper he has. The land office will not transfer any land into his name and that's all there is to it.

The Thai national's name is on the Channote but that person does not have any of the powers associated with ownership, that person cannot sell the land, extend the lease or anything other than simply be a name on the channote.

As far as I can see if his name is on the chanote then he has all the powers and rights and obligations of ownership and he can do what he likes with it, unless there is some sort of loan/charge written on the back of the chanote, and I dont think that such a charge has been mentioned here.

I should point out that IANAL (thank God) and that in the proxy's position I would be talking to a specialist, but probably not the bent one who did the original transaction.

[thaiwanderer]

Firstly the side letters / contracts may well not provide all or any of the farang’s intended consequences (power and control over the land) since enforcing it if the thai were to go bandit essentially involves admitting an illegal purpose – neither has clean hands here so the house of cards could fall any way and its the farang who has most to lose (though both technically could be jailed).

That’s not the issue here but is entirely relevant to persuading the farang to release the thai totally. If they refuse the thai may have to bite the bullet of likely lesser punishment and go see the land office and say ‘good intentions landed me in a pickle’ which as a last resort then set out to the farang should hopefully force them to release the thai.

For the farang they either need to find another kindly thai to commit an offence for free so they can have the house they want, use a professional proxy or use a more sophisticated company structure.

[chiang mai]

Many thanks to all who replied and supplied their thoughts/knowledge on this.

I'm not sure what sensible options the farang has if the current proxy/quasi owner moves out of the frame, if that move were made under the radar then a second quasi owner could be installed in order to keep the paper work stratight, that I would guess involves a sale/buy via the land office and the associated sales taxes to be paid. But I guess that if the LO gets sight of it all the farang would either have to sell and do a genuine lease back or put ownership into a genuine Thai company with Thai control.

Note to self: avoid getting involved in these types of games when buying real estate.

[Rancid]

The schemes come and just keep on coming, lawyers really can't be trusted as the other poster posited they are never held liable for their deeds.

Buy in your childs name is the most straight forward and legal (except a problem to sell before they are 20), if you don't have a child then get to work with some impregnation right now. Mind you I bought in my child's name after a divorce and getting sole custody which of course does help, as the ex Mrs Rancid is totally out of the picture. She did come sniffing once and I had the police temporarily arrest her via my lawyer on a techicality I set her up for, never saw her again. But hey farangs can never win here right? Extapolate all this and an idea may emerge if the gf agrees about sole custody. In the end you want everything to go to the kids when you croak it, this just does it way ahead of time.

[jamescollister]

The schemes come and just keep on coming, lawyers really can't be trusted as the other poster posited they are never held liable for their deeds.

Buy in your childs name is the most straight forward and legal (except a problem to sell before they are 20), if you don't have a child then get to work with some impregnation right now. Mind you I bought in my child's name after a divorce and getting sole custody which of course does help, as the ex Mrs Rancid is totally out of the picture. She did come sniffing once and I had the police temporarily arrest her via my lawyer on a techicality I set her up for, never saw her again. But hey farangs can never win here right? Extapolate all this and an idea may emerge if the gf agrees about sole custody. In the end you want everything to go to the kids when you croak it, this just does it way ahead of time.

Reality. I live out here out here, have over a 100 rai of land, 10 rai with national industrial zoning. Wife has PR in Australia, 2 kids born in Australia [Thai citizens ], a Limited Partnership company.

If things went bad I would be lucky to be allowed to keep the farang toilet.

If it happened in Australia, I wouldn't get the toilet.

That's life and all the schemes and back hander's will not change it. Jim

[thaiwanderer]

The schemes come and just keep on coming, lawyers really can't be trusted as the other poster posited they are never held liable for their deeds.

Buy in your childs name is the most straight forward and legal (except a problem to sell before they are 20), if you don't have a child then get to work with some impregnation right now. Mind you I bought in my child's name after a divorce and getting sole custody which of course does help, as the ex Mrs Rancid is totally out of the picture. She did come sniffing once and I had the police temporarily arrest her via my lawyer on a techicality I set her up for, never saw her again. But hey farangs can never win here right? Extapolate all this and an idea may emerge if the gf agrees about sole custody. In the end you want everything to go to the kids when you croak it, this just does it way ahead of time.

not sure what the biterness in the second paragraph adds to the thread - you feel better?

[NickPendrell]

Complex legal questions like this are not ones that you should be getting answers from random people on via a general forum.

You definitely need to find the best, most well-connected, real estate lawyer that you can possibly find to resolve this situation for you and tell you what is and is not possible (although if you ask two of them, you are still likely to get totally contradictory information).

[chiang mai]

Complex legal questions like this are not ones that you should be getting answers from random people on via a general forum.

You definitely need to find the best, most well-connected, real estate lawyer that you can possibly find to resolve this situation for you and tell you what is and is not possible (although if you ask two of them, you are still likely to get totally contradictory information).

I'm in information gathering mode and this is the first step in that process, you will note also from the OP that I am seeking this information on behalf a of another person who has asked me for advice and is well aware that I am not a lawyer.