House in a company name with Thai nominees

[falang07]

As we already know, the only way to buy a house with land is in a Thai company name which requires a few (2 or 3?) Thai nominees (which is supposed to be illegal but I do not get it how on Earth could this be done without them, in some legal way, if the wife gets 12,000 THB per month and the house costs a few millions).

So my 1st question is simple. In case the law says nominees are illegal, what is the legal way? And my 2nd question: in case the government "finds out (I am not sure if one can find out something that is a generally well known fact)" about these "illegal" nominees, what can they do about it? My guess is a small fine? Thanks for any insight into this issue.

[jpinx]

This method is also used in other countries with similar laws - unlike UK and Ireland where anyone can buy the whole country

[andre47]

The legal situation in Thailand is clear.

Foreigners are not allowed to buy land. All constructions with companies and nominees are illegal. That means that it is possible that you loose all your money. You will not only pay a small fine because it is illegal to buy land and a fine can not make it legal.

You can rent the house up to 30 years.

You can find a lot of information here at TV about this problem.

[fletchsmile]

You can buy in your wife's name with a mortgage guaranteed by you. If you have a good job, with good income, work permit etc and are married then banks are prepared to lend to her guaranteed by you. When we bought this route my wife wasn't earning as she was a housewife looking after our young children. Mortgage had to be in same name as property.

You just balance it up by having other assets in your name only.

Back in the west as a married couple you tend to joint own assets like a home. Here just work with the system: some you own outright and some owns outright.

Cheers

Fletch

Edited August 16, 2013 by fletchsmile

[falang07]

Well, buying in her name with me being the guarantor does not make any sense. First of all, I do not want to pay a double price for the house (that is what comes out of a mortgage over several decades). Secondly, if I would serve as the guarantor, I would be liable to pay even if things go wrong so it does not provide me any protection at all.

Anyway, if I setup my company, isn't it "up to me" if I give shares to anyone I want? What is supposed to be illegal with this approach? I could even donate my shares to anyone, e.g. some good Thai monks. I think this would hold in any international court.

[canman]

Well, buying in her name with me being the guarantor does not make any sense. First of all, I do not want to pay a double price for the house (that is what comes out of a mortgage over several decades). Secondly, if I would serve as the guarantor, I would be liable to pay even if things go wrong so it does not provide me any protection at all. Anyway, if I setup my company, isn't it "up to me" if I give shares to anyone I want? What is supposed to be illegal with this approach? I could even donate my shares to anyone, e.g. some good Thai monks. I think this would hold in any international court.

You need to understand. Structuring a company to allow you to purchase a property is illegal. That being said people have been doing it for decades without any problem. That does not mean that tomorrow or next month they won't decide to crack down on this.

If that happens you do not have a leg to stand on, you will lose the property. Your reference to international courts is laughable, you do know what country you are in right?

[fletchsmile]

Well, buying in her name with me being the guarantor does not make any sense. First of all, I do not want to pay a double price for the house (that is what comes out of a mortgage over several decades). Secondly, if I would serve as the guarantor, I would be liable to pay even if things go wrong so it does not provide me any protection at all. Anyway, if I setup my company, isn't it "up to me" if I give shares to anyone I want? What is supposed to be illegal with this approach? I could even donate my shares to anyone, e.g. some good Thai monks. I think this would hold in any international court.

If you don't need financing then its easier still. Just give her the cash and buy in her name, and set aside an appropriate amount of assets in your name only to balance up. You sign a form to say its bought with her money

The reason a company is not a legal route is that in most cases (very few exceptions) foreigners cannot own land. Setting up a company with nominee shareholders with a view to circumventing a law on foreign ownership is what is illegal. That's the strict legal position. Your in Thailand so Thai law applies and international courts would hold up the local laws in this context - your chances of appealing to any international court and coming out successful are about as close to zero as you'll get.

Of course people do set up a company with nominees and hope to fly under the radar or rely on the authorities not bothering.

From time to time nominee structures and foreign ownership comes into focus. eg recent issues surrounding DTAC ownership, Thaksin etc

Fletch

[AnotherOneAmerican]

Well, buying in her name with me being the guarantor does not make any sense. First of all, I do not want to pay a double price for the house (that is what comes out of a mortgage over several decades). Secondly, if I would serve as the guarantor, I would be liable to pay even if things go wrong so it does not provide me any protection at all. Anyway, if I setup my company, isn't it "up to me" if I give shares to anyone I want? What is supposed to be illegal with this approach? I could even donate my shares to anyone, e.g. some good Thai monks. I think this would hold in any international court.

But

Buying with a home loan does overcome, rather neatly, that little document you have to sign at the land office, stating the property is purchased entirely using her money. As clearly the loan repayments are part of the marital joint assets. Even if you pay it off early.

Also

Home loan repayments are good for your marriage, it reminds her why she keeps you around on a regular basis.

"Any International court" has no jurisdiction in Thailand.

Edited August 16, 2013 by AnotherOneAmerican

[Naam]

Well, buying in her name with me being the guarantor does not make any sense. First of all, I do not want to pay a double price for the house (that is what comes out of a mortgage over several decades). Secondly, if I would serve as the guarantor, I would be liable to pay even if things go wrong so it does not provide me any protection at all. Anyway, if I setup my company, isn't it "up to me" if I give shares to anyone I want? What is supposed to be illegal with this approach? I could even donate my shares to anyone, e.g. some good Thai monks. I think this would hold in any international court.

just wait till the "law and order anti illegal land grabbing brigade" appears here with horror stories that if they catch you with a legal Thai company buying land then horrible things will happen as specified hereafter:

-your home and the land you bought will be confiscated without compensation,

-a court of law will sentence you to 25 years hard labour in an uranium mine located near the Cambodian border,

-should you survive that sentence you will be circumcised, your ears will be cut off and you will be given an old leaking rowboat to travel back to your home country. you will also receive a huge red stamp in your (by then invalid) passport "no admission to Thailand till next ice age!"

-your wife and daughters will be sold into slavery.

-the ambassador of your country will be expelled and diplomatic relations cut off.

to be continued...

[abrahamzvi]

You can buy in your wife's name with a mortgage guaranteed by you. If you have a good job, with good income, work permit etc and are married then banks are prepared to lend to her guaranteed by you. When we bought this route my wife wasn't earning as she was a housewife looking after our young children. Mortgage had to be in same name as property.

You just balance it up by having other assets in your name only.

Back in the west as a married couple you tend to joint own assets like a home. Here just work with the system: some you own outright and some owns outright.

Cheers

Fletch

You are absolutely correct. And if one doesn't trust one's wife absolutely, it is possible to add the husband's name on the back of the land deed, so that the property can not be sold without the husband's permission. We own a number of houses in Thailand, all in my wife's name - I do trust her without any "buts" ( we have been married for well over 20 years).

[kyrre]

What if the shareholderas are real. And not nominees shareholders.

If i buy a house in company name and me, my wife, and 2 children are real shareholders.
All money is the each shareholders alone by gift / other way.

[yoshiwara]

Government spokesmen have stated many times that legal stratagems designed to evade the intention of the law are frowned upon, so if you go ahead you take on some risk.

You want to take on that risk then go ahead, but stop scrambling around and around for a zero-risk solution.

The government is highly unlikely to be going around confiscating and fining existing falang house 'owners', but what they could do is overnight stop any new property transfers with the same ownership structure. Now who are you going to sell the house to?

[Naam]

What if the shareholderas are real. And not nominees shareholders.

If i buy a house in company name and me, my wife, and 2 children are real shareholders.

All money is the each shareholders alone by gift / other way.

ideal solution! but that does not mean that the "brigade" i mentioned above will not bombard you with their horror stories.

[Naam]

Government spokesmen have stated many times that legal stratagems designed to evade the intention of the law are frowned upon, so if you go ahead you take on some risk.

You want to take on that risk then go ahead, but stop scrambling around and around for a zero-risk solution.

The government is highly unlikely to be going around confiscating and fining existing falang house 'owners', but what they could do is overnight stop any new property transfers with the same ownership structure. Now who are you going to sell the house to?

the poster before you has a wife and two children (obviously all three are Thai citizens).

-why would he sell the house?

-but should the need arise to sell who or what will stop him to dissolve a legal company and sell house and land?

[AnotherOneAmerican]

Government spokesmen have stated many times that legal stratagems designed to evade the intention of the law are frowned upon, so if you go ahead you take on some risk.

You want to take on that risk then go ahead, but stop scrambling around and around for a zero-risk solution.

The government is highly unlikely to be going around confiscating and fining existing falang house 'owners', but what they could do is overnight stop any new property transfers with the same ownership structure. Now who are you going to sell the house to?

the poster before you has a wife and two children (obviously all three are Thai citizens).

-why would he sell the house?

-but should the need arise to sell who or what will stop him to dissolve a legal company and sell house and land?

If the kids are under 20, once they have shares in a company that owns a house, and the house is the companies only asset, the Thai children's court will stop the company selling the house.

Just a thought!

[khunPer]

1) The Thai shareholders shall have an income or funds to buy/obtain their shares, and proof it. Thai partner and/or Thai child/children may be able to be gifted shareholders. You need advise from your lawyer about this, as rules often change. You may (as foreign shareholder up to 49%) be able to possess “preferred shares”.

2) You may have a warning from the authorities, giving you some time to bring the shareholders in accordance with the Law. If not, the company will probably be forced to sell the land within a certain period of time (6 to 12 month, otherwise the authorities will sell it/take it), pay the taxes, and dissolve the company. May vary over time and from province to province – check with your lawyer.

[Naam]

Government spokesmen have stated many times that legal stratagems designed to evade the intention of the law are frowned upon, so if you go ahead you take on some risk.

You want to take on that risk then go ahead, but stop scrambling around and around for a zero-risk solution.

The government is highly unlikely to be going around confiscating and fining existing falang house 'owners', but what they could do is overnight stop any new property transfers with the same ownership structure. Now who are you going to sell the house to?

the poster before you has a wife and two children (obviously all three are Thai citizens).

-why would he sell the house?

-but should the need arise to sell who or what will stop him to dissolve a legal company and sell house and land?

If the kids are under 20, once they have shares in a company that owns a house, and the house is the companies only asset, the Thai children's court will stop the company selling the house.

Just a thought!

why would a court stop the sale if the children receive the proceeds pro rata to the shares they hold?

[Naam]

the "anti-house brigade" has been activated... as forecasted

[parallaxtech]

As Naam said, don't let anybody scare you, and As KhunPer said, go see an attorney. You will find a whole slew of ways to own the land or control the company that holds the land. You can also research it on TV: 75% of Koh Samui land is owned by foreignors, 90% of the beachfront of Phuket is owned by foreignors, etc. I'm sure the Thai government would go after the billions of dollars of land held by foreign nominee companies before they would ever even hear about your small investment so go get the proper legal advice and relax. The Thai government already knows that only foreignors would pay these ridiculously inflated prices for land, anyway. Also, remember "in God you trust," not In wife you trust!

[bangkokstick]

Before they catch you they have hundreds thousand to catch and certainly some more interesting, so don't worry.

[falang07]

Thanks for the insights, seems like the Thai company way is the way to go for me, too. I would use real shareholders and 49% of preferential shares. Anything goes wrong (yes, I trust the wife today (well, for 100% I trust only myself, and even that only sometimes subject to alcohol level in the blood, etc. :-), but what if she dies before me? I do trust her family less than 50%, unfortunately...), it can be sold and I would still get at least 49% (I suppose that a secret agreement can be arranged than I would get the full amount, too). So it is much better than nothing if bought in the wife's name.

[kyrre]

Well the TV "anti-house brigade" dont scare me....

To state my story stright... The shareholders are 3 Thais and 2 Farangs. Where me and my daughter from before own 49% and My wife, here daughter from before and a cusin owns 51%. The other shareholders beside me and my wife hold 1% so as gifted shareholders it should be enough.

And i dont think you have to go to court to sell if both guardian parents of both children are signing for the children. As we had to do to give them the shares in the first place.

The opstacle here is that if we are not agreeing, then it would be more of a hassle as eighter can stop a sale due to the need of guardian signing on both sides.

But then as a company you should pay rent to the company and taxes as the company is supposed to have activities...

[doublephil]

Just a few ideas from my experience.

It is well worth using an experienced lawyer to register a new company - because they will be "well connected" at the appropriate government offices and will ensure everything goes smoothly - for a fee of course. Currently 20,000 baht would be reasonable fee - I have recent experience in both Chiang Mai and Phuket.

Also I strongly recommend that you make your shareholding 39% or less. Current regulations don't require any investigation of the Thai shareholders' financial status and ability to actually buy the shares - if the foreigner's shareholding is under 40% - but such matters must be investigated if the foreigner's shareholding is 40%-49% - but not always happens - especially if you have a good lawyer doing everything.

I own land with a Thai company - and I have been through a number of lawsuits - started by my Thai ex-wife which dragged the land ownership issue and the question of nominees through the courts on several occasions - and the
question of nominee Thai share holders was held to be irrelevant on each occasion because my shareholding was under the 40% level as stipulated in the regulations and thus there is no legal requirement for the Thai shareholders'
financial status or involvment to be investigated or approved.

If you want to have more financial security over the money for the house purchase there are extra steps to take which will give you greater peace of mind - just in case. If you are supplying the money for the house purchase from another country, make sure you have a Thai bank account in your name and make sure that all the money for the house purchase goes through that account. When the company you have registered buys the property, make a loan agreement
between you and the company and use a lawyer to make sure it is legally binding. In that way - you have a legal right to sue the other shareholders if they decide to sell the house without telling you. It does not necessarily mean you would get all your money back - but it gives a legal basis for trying to get it back.

To be even more financially secure - have the loan registered at the Land Registry and it will be noted on the Title Deeds (Chanote) - just in the same way that a bank would be so registered if you took out a mortgage loan from the bank. You need the evidence from your bank to prove that it was your money that came from overseas to do this. I have done this myself - and feel reasonably confident - it is a strong deterrent for anyone thinking about cheating you because
by doing this the land ownership can not be legally transferred to anyone else without showing proof to the Land Registry office that you have received the repayment of the loan in full.

[yoshiwara]

Government spokesmen have stated many times that legal stratagems designed to evade the intention of the law are frowned upon, so if you go ahead you take on some risk.

You want to take on that risk then go ahead, but stop scrambling around and around for a zero-risk solution.

The government is highly unlikely to be going around confiscating and fining existing falang house 'owners', but what they could do is overnight stop any new property transfers with the same ownership structure. Now who are you going to sell the house to?

the poster before you has a wife and two children (obviously all three are Thai citizens).

-why would he sell the house?

-but should the need arise to sell who or what will stop him to dissolve a legal company and sell house and land?

There is nothing currently stopping the company selling the property and then dissolving the company or transferring it to any member of his family of legal age.

However I was pointing at potential risks (whatever risk %age one wishes to assign) whereby there is a potential shutdown of the legal formulations currently in place.

Until now not an issue in practice and to date

[AnotherOneAmerican]

why would a court stop the sale if the children receive the proceeds pro rata to the shares they hold?

Because in Thailand parents (and anyone else) aren't allowed to sell children's assets without the courts permission.

The courts generally refuse, if asked.

[AnotherOneAmerican]

And i dont think you have to go to court to sell if both guardian parents of both children are signing for the children. As we had to do to give them the shares in the first place.

Giving to children is not a problem.

Selling their assets is a problem, and you won't be selling until they are both 20 years old.

[davejones]

This method is also used in other countries with similar laws - unlike UK and Ireland where anyone can buy the whole country

It also means that many British people can get more money when they sell their property, because overseas buyers often pay more than local buyers. If someone owns a property, I don't see what right any government has to stop you selling it to anyone. It's your property but the government gets to say who you can and can't sell it to. Ridiculous. Britain has this right, as is a big reason why it's more prosperous than countries that have protectionist policies. If Thailand opened up it's property to everyone, they would have a huge amount of investment, which would help the whole country.

[davejones]

The legal situation in Thailand is clear.

Foreigners are not allowed to buy land. All constructions with companies and nominees are illegal. That means that it is possible that you loose all your money. You will not only pay a small fine because it is illegal to buy land and a fine can not make it legal.

You can rent the house up to 30 years.

You can find a lot of information here at TV about this problem.

You can rent a house for 100 years i you want.

[kyrre]

The legal situation in Thailand is clear.

Foreigners are not allowed to buy land. All constructions with companies and nominees are illegal. That means that it is possible that you loose all your money. You will not only pay a small fine because it is illegal to buy land and a fine can not make it legal.

You can rent the house up to 30 years.

You can find a lot of information here at TV about this problem.

You can rent a house for 100 years i you want.

The only leagaly rent periode that are protected by law is 30 years and can be registered at land office. Any other agreement is soly between two parts. If i is the owner and rent to you on a 100 year contract i still can sell the land/house and the new owner is only responsible for the registered reminding 30 years.

[davejones]

Government spokesmen have stated many times that legal stratagems designed to evade the intention of the law are frowned upon, so if you go ahead you take on some risk.

You want to take on that risk then go ahead, but stop scrambling around and around for a zero-risk solution.

The government is highly unlikely to be going around confiscating and fining existing falang house 'owners', but what they could do is overnight stop any new property transfers with the same ownership structure. Now who are you going to sell the house to?

the poster before you has a wife and two children (obviously all three are Thai citizens).

-why would he sell the house?

-but should the need arise to sell who or what will stop him to dissolve a legal company and sell house and land?

They might want to sell the house for lots of reasons - to move to a different area of Thailand, to move to a bigger house, to move to a smaller house, etc. People move for all sorts of reasons.