Property purchase in company name

[Harrykrabi]

The property I am proposing to buy is a house presently owned by a Canadian and held in a company.

It is suggested that the easiest mode of transfer is to re structure the company removing the Canadian and inserting myself (or another farang) in his place. Thus avoiding a trip to the Land office.

Does anyone know if this is usual practice, if there are any pifalls and likely cost ?

If the deal is done this way then at what point does money change hands (as usually a bag of cash or a cashiers chq is handed over at the Land office in exchange for the new Chanote) ?

Would the actual chanote need to be aletered in any way ?

If theres anyone out there who has done this recently your input wd be very much appreciated.

[Delight]

You are correct. It is a simple matter of a change of the name of the M .D of the company. The land office is not involved.

My friend recently carried out such a transaction. The money was handed over just as the name transfer occurred.

Easy and cheap.

You will have to ensure that the houes is debt free prior to the money being handed over .A job for your lawyer.He /her may suggest that 100,000 baht is paid one month after you move in.( just an idea)

[gmac]

I was under the impression that companies created purely for the purchase of property were not legal. I certainly would not consider buying a house in this manner.

[Delight]

I was under the impression that companies created purely for the purchase of property were not legal. I certainly would not consider buying a house in this manner.

I understand that you are correct.

Recently I asked an on line lawyer why the practice still existed -un abated.

His response-'Money makes the world go around'

In the OP's case it is an exisiting company -not a new one. Suspect that this could be less dodgy

[johnnyk]

Due diligence is key. Make sure the company has no debts, back taxes or liens against it.

Might cost a few thou but peace of mind is priceless.

Edited September 30, 2013 by johnnyk

[Langsuan Man]

I was under the impression that companies created purely for the purchase of property were not legal. I certainly would not consider buying a house in this manner.

Your impression is incorrect. One has to define legality before you make a blanket statement like this. It is legal for a company to own a house or property in Thailand. It is legal for a farang to own a company in Thailand so long as Thais own 51% of that company. A farang can be a Director of a Thai Company so long as Thais own 51% of this company

This question comes up all the time here at TV, and so far not one reported incident of a farang being forced out of a company owned house has ever been presented here. With the exception of a foreign motorcycle gang being forced to give up some land in Phuket several years ago

[falang07]

It is safe and will be, and unless you own a beach front land in Phuket this way, no one really cares since you pay the taxes, so the government is happy, too.

[rayongchelsea]

I was under the impression that companies created purely for the purchase of property were not legal. I certainly would not consider buying a house in this manner.

Your impression is incorrect. One has to define legality before you make a blanket statement like this. It is legal for a company to own a house or property in Thailand. It is legal for a farang to own a company in Thailand so long as Thais own 51% of that company. A farang can be a Director of a Thai Company so long as Thais own 51% of this company

This question comes up all the time here at TV, and so far not one reported incident of a farang being forced out of a company owned house has ever been presented here. With the exception of a foreign motorcycle gang being forced to give up some land in Phuket several years ago

Really.

That is contrary to legal advice I obtained in 1989 and again by company lawyers of a large international firm I worked for in 1995.

I think it is called intent. I think it's called nominees..

Btw, this company route became popular in the early 2000s being promoted by an overseas company as a vehicle for house purchase and was very vague in its description.

Stop with the nothing's happened..you are in Thailand..time horizons can be long..they will sort this out..don't underestimate them.

Anyway so much expense involved with annual accounts, audit fees...

If people want to take that route it is upto them, but don't give them the impression it is without risk..

[Harrykrabi]

Thanks everyone for their valued input, keep the comments and suggestions coming ..............

[rayongchelsea]

My real problem with the Company route is not in its available works rounds or not, is that when you go to sell you are invariably limiting yourself to who will buy.

Most company owned properties appear to be in areas for farangs predominately so excluding most of the population...if u sell to Thai they don't want the company , so generating significant taxes and closure costs..

Just offer a real low ball offer to justify the company solution.

Good luck.

I missed a real good opportunity about 8 years ago simply because I didn't like the company scenario..probably was a good buy on reflection because of the exchange rates, current sales value etc..

[SDM0712]

This set up is what lawyers like to call an "Ownership Structure ", is extremely common and I have come across it in many of our sales. As has been referred to here quite correctly the basis of the set up is that it must be at least 51% Thai owned. However where the set up is technically illegal is that if it can be proven that the Thai shareholders are there purely to allow the set up of a Thai company that they have no control of and have no funds to satisfy the legal financial requirements, then they are what are referred to as " Nominees" and the practice of setting up a Thai company with nominee shareholders is most definitely illegal.

Having said that I have never heard of a case being prosecuted and I have many many clients that own properties in this way for hundreds of millions of baht in some cases. It also makes it very simply to change ownership by the method referred to here already and does not allow the Land Department to be creative about transfer costs!

I wouldn't be overly concerned but would recommend legal advice be taken. Happy to recommend a lawyer if it's any help.

Stephen

[colinp]

Question on company ownership: When a company is created often there are only 1/2 signatorys (?), so a foreigner (49%) and 3 thais (51% / 3) have a company but only the foreigner has the right to sign on the companies behalf. That foreigner would needed to have signed something in the land office at the original purchase, if a foreigner then buys the property and the original foreigner is removed and new inserted do they not need to prove they are the new signatory at the land office?

I may have got this all wrong/confused myself

[SDM0712]

Question on company ownership: When a company is created often there are only 1/2 signatorys (?), so a foreigner (49%) and 3 thais (51% / 3) have a company but only the foreigner has the right to sign on the companies behalf. That foreigner would needed to have signed something in the land office at the original purchase, if a foreigner then buys the property and the original foreigner is removed and new inserted do they not need to prove they are the new signatory at the land office?

I may have got this all wrong/confused myself

Hi Colin

As an agent I come across this, but for the technical side would suggest you contact a lawyer (and happy to suggest one if you wish).

I think the first thing you need to differentiate is the difference between control and ownership. As an extreme example if you owned 1% of a company, but that 1% was composed of the only voting share (with 99% non-voting), you would not have majority ownership, but you would have control, and that is what is important. The 49/51 ratio is only the minimum requirement under Thai Law anyway; it could be 60/40 for example. The important point is that at least 51% must be in Thai hands.

To answer your question, in my experience, the property itself is never sold, and nor is the company. However the person with the controlling shares (who has the most voting shares rather than shares themselves) merely resigns and a new director is appointed and the shares change hands. In doing so control of the company is passed to the new director/shareholder and any asset owned by the company which in this case is the house. So in essence, the house is not sold or transferred and thus no reason for the Land Department to be involved. If required of course there is no reason why the company cannot sell the house to an individual.

As in all cases I strongly recommend that anyone considering a purchase consults an experienced lawyer before committing to any purchase to discuss legalities, taxes, transfers and the like.

Regards

Stephen

[denby45]

I was under the impression that companies created purely for the purchase of property were not legal. I certainly would not consider buying a house in this manner.

Your impression is incorrect. One has to define legality before you make a blanket statement like this. It is legal for a company to own a house or property in Thailand. It is legal for a farang to own a company in Thailand so long as Thais own 51% of that company. A farang can be a Director of a Thai Company so long as Thais own 51% of this company

This question comes up all the time here at TV, and so far not one reported incident of a farang being forced out of a company owned house has ever been presented here. With the exception of a foreign motorcycle gang being forced to give up some land in Phuket several years ago

Really.

That is contrary to legal advice I obtained in 1989 and again by company lawyers of a large international firm I worked for in 1995.

I think it is called intent. I think it's called nominees..

Btw, this company route became popular in the early 2000s being promoted by an overseas company as a vehicle for house purchase and was very vague in its description.

Stop with the nothing's happened..you are in Thailand..time horizons can be long..they will sort this out..don't underestimate them.

Anyway so much expense involved with annual accounts, audit fees...

If people want to take that route it is upto them, but don't give them the impression it is without risk..

I also want to purchase property through this route and have done some investigations. I wanted to buy something around 8-10 million and had actually narrowed it down to a few properties. Then I decided it is just too risky. There is one lunatic Thai (forgot the name) who is promoting the confiscation of the land and the deportation of anyone who has circumvented the law using Thai nominees. The whistle blower will receive 20% of the proceeds. There is a reason the lawyers and agents are no more sourcing Thai nominees on your behalf when setting up these types of company. As far as the existing companies are concerned I of course don't know what will be down the road. This is Thailand and you can never rely on sensible decisions and things to not change for the worst. I could probably live with the loss of capital but would certainly not be happy with the deportation.

Den

[SDM0712]

Hi Den

It's always an interesting subject and like the others here have never heard of case being brought to Court. But when you say you had considered to " purchase a property though this route " bear in mind that in "this route" as you say, you would not be purchasing any property. All you would be purchasing would be the minority shareholding of a Thai company that happens to own as one of its assets a house, which the company would then lease to you for 30 years, and then extend after that time. The fact the your minority shareholding would have control of the company would mean that you control the assets of the company, ie the house, but never own it.

As I understand matters it is not the non-Thai that has broken the Law, it is the Thai nominee shareholders who would have lied about their own level of capital placed into the company. It is quite legal for a non-Thai to own up to 49% of a Thai company so I can't really see where the non-Thai would have broken the Law. But this is Thailand and as we say in the UK "it's down to the Judge on the day",

It is worthy of note however that this method of property possession has been used for many years and I am quite sure a case has never been brought. Perhaps the Thais like billions of other countries currency being exchanged for baht. If a case is ever brought the verdict will become case law and a bench mark for future cases and perhaps that is the exact reason why it never has been brought.

For anyone that wants to buy and wants their names listed directly as owners the only way is to buy is a Condominium certified under the Condominium Act (otherwise known as a Foreign Freehold)

Regards

Stephen

Edited October 27, 2013 by SDM0712

[yankee99]

My real problem with the Company route is not in its available works rounds or not, is that when you go to sell you are invariably limiting yourself to who will buy.

Most company owned properties appear to be in areas for farangs predominately so excluding most of the population...if u sell to Thai they don't want the company , so generating significant taxes and closure costs..

Just offer a real low ball offer to justify the company solution.

Good luck.

I missed a real good opportunity about 8 years ago simply because I didn't like the company scenario..probably was a good buy on reflection because of the exchange rates, current sales value etc..

Company selling to thai = thai selling to thai in regards to taxes. Why would you think its more?

[johnnyk]

There are two classes of shares - ordinary and preference shares. In the west they are sometimes called preferred shares which means they have more voting power and get their money before ordinary shareholders if the company is wound up, sold or goes bust.

The terminology in Thailand is the opposite so "ordinary" shares are the ones with more voting power.

Here's how it works with a company capitalizsd at 1 million baht, for eg.

600,000 "preference" shares are issued at 1 baht each and having one vote each.

400,000 "ordinary" shares are issued at 1 baht each but having 10 votes each.

Control rests with the holder of the "ordinary" shares.

Samesame in many western countries which is how crooks like Conrad Black, Bernie Ebbers and Dennis Koslowski gained control and looted companies. Perfectly legal structure.

Edited October 27, 2013 by johnnyk

[KittenKong]

It's always an interesting subject and like the others here have never heard of case being brought to Court.

Early days. Thailand has barely started applying many of its laws.

As I understand matters it is not the non-Thai that has broken the Law, it is the Thai nominee shareholders who would have lied about their own level of capital placed into the company.

It is quite legal for a non-Thai to own up to 49% of a Thai company so I can't really see where the non-Thai would have broken the Law.

Complicity? Even without that the farang would be seen as the instigator of all the illegality (having provided all the money) and the Thais would probably be looked as unwitting pawns.

It is worthy of note however that this method of property possession has been used for many years and I am quite sure a case has never been brought.

Like I said, early days.

[mikeinphuket]

Can a child at 10 years old with a thai passport be the main share holder 51% of the thai company and me as his father still be the 49% shareholder in a thai company to avoid paying yearly fees to Thais I don't even know in my thai company just to own a condo in Thailand

It's a ridiculous situation as should I die I would want him to have the condo anyway !

Funny how Thais can buy in my country but I can't buy in there's

Hardly fair really is it