My Understanding of Farang Property Ownership - Comments, please!

[SDM0712]

“Please, use a better excuse.”

I need make no excuse to you or anyone else. As far I am concerned I will only work within the area that I am qualified to do so, so I will not offer legal advice.

Have a nice day.

SDM

[Khun Jean]

This whole 'debate' is very typical. I have had many over the years with so called agents, brokers, developers and yes even lawyers.

When confronted with some truths, tail between the legs and run.

Or sometimes even getting angry and accuse you of knowing not how things work in Thailand all the while unable to clearly define what actually is.

Unfortunately the only protection a potential buyer has is to gain knowledge and delay the buy until everything is clear and confirmed by at least another party that has no interests in the sale.

"Bring your own lawyer" preferably from another area that will be able to not be under the influence of local pressure and needs.

Unfortunately no new knowledge is learned after all this and that is a pity.

[Tapster]

@ KJ

I'd be really interested to hear your thoughts/opinions on the points in my post above..........

Do you know when the 30-year lease idea was first enacted?

Are the first leases coming to the end of their 30 years?

If so, have the 30-30-30 lease terms been tested yet?

I think this issue is very important and I haven't seen it mentioned anywhere in this thread.

If the land-registering authorities have started to deal with the second 30-year leases then is a consensus being reached?

Cheers,

Tapster

[rayongchelsea]

KJ is correct.

Others are misleading, of course there are things like special purpose vehicles, nominees etc..

But for 99% of us KJ is spot on.

I took legal advice back in 1987..it is consistent with what KJ has stated.

Why bring up the 30plus 30 crap in the first place..adds no credibility..

People like KJ should be applauded as his clarity on the matter and hopefully has enlightened others..

Don't muddy the waters please..

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[rgs2001uk]

For those of us able to read Thai, perhaps SDM could post in Thai the link to which he refers.

To return the 6500 miles to Thailand where even some of the most rudimentary translations from Thai to English are inaccurate to say the least is it really being suggested that we should read the English translation of a Thai legal document and draw a definite and absolute conclusion from that. Again, shear folly. Read the translation if you want, but use this as a basis to ask you lawyer questions/ Now that I agree with. But do not base your financial decisions on reading a Law in a second hand language.

KJ is spot on.

[Khun Jean]

The 30 year maximum leases are mention in TCCC Book 3 Section 540:

The duration of a hire of immovable property cannot exceed thirty years. If it is made for a longer period, such period shall be reduced to thirty years. The aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal.

If i remember correctly the TCCC was published in 1925 and been amended a few times.

There are a few prominent companies in Thailand that needed to renew their leases, so those leases were done at least 35 years ago.

That it did not went smoothly was expected.

Here is one: http://www.nationmultimedia.com/business/Central-ready-to-fight-over-lease-renewal-30031615.html

and http://nationmultimedia.com/2008/02/20/business/business_30065906.php

The 30+30+30 lease terms are tested as can be read in the mentioned articles. Those renawals were with the same party as the first 30 year lease. That is the advantage if one of the parties is the government or The Crown Property Bureau (CPB).

Most of the times though a lease contract is made with another individual or company and ownership of the leased land can change.

The renewals are then not enforceable anymore. If they are you might get a renewal but you can not get it at a price that was mentioned in a contract 30 years ago. It would be at current market prices. Effectively that would make that 30 year renewal impossible or not worth the costs.

This can be different in case you rented it as a company and make profit using the land.

Land registering authorities are not part of the renewal process.

They only register the 30 year lease, nothing else.

The government uses its authority to guarantee leases, otherwise commerce would be impossible.

All the clauses in a contract are only one on one with the other party.

Once land changes hands, by death of the owner, gifting it to children or family members or plainly a sale will render those clauses useless.

As it should!

Going to a land office with the idea to register 3 consecutive 30 year leases will not be accepted as it is seen as circumventing the law. Sure it is a loophole, but if the land office does not accept it and does not register it then you do not have a 'real right' and those extra two 30 year leases are not made. Another reason it is not done is because taxes have to be paid. Taxes on a contract that starts 30 year in the future are impossible to calculate.

Currently the best way to use land is a usufruct. It can be for live, so this whole lease thing is obsolete anyway.

[Tapster]

Excellent KJ !

Message received and understood!

...........and very many thanks to all who posted.

I think I know as much about Thai property as any honest and well informed lawyer! ....and I will set up shop immediately!

But don't worry, I won't be giving advice, simply I'll point anyone to this thread!

If there's anything more said here, I'll happily read it, but now I'm going to give up the idea of 'buying' a house any time soon and investigate a long-term rental on a slightly 'westernised' Thai wooden house in Phuket - if I can find one.

I'm hoping for cheaper rent than a villa or house. I'll check out the situation while living in Thailand instead of gazing from Johannesburg.

BUT that subject is for another thread!!

[David48]

I can give you an agent’s answer on most of these points, although sceptics might say that is not especially useful (or even truthful!)

1. Generally true, the only exception I have heard about (but never experienced) if you are willing to invest 1 million plus USD you will be “ kindly” permitted to own up to one Rai (1600m2) of land in your own name. The company route (51% Thai owned) is coming under a lot of scrutiny at the moment, although still being used.

...

3. With the exception in my point 1 above, a non-Thai can never own Land in his own name. So in this case a Thai entity (Thai citizen or company) will own the land that the house/villa/townhouse is built on, and then lease the building to you.

What is the tenure position when a legally married couple with the property is in the wife's name ... and the wife dies and under the provisions of the will, the land is transferred into the Husband's name?

He has something like 12 months to dispose of the property.

For those 12 months (or the time up until he sells it ... which ever is the sooner) isn't he 'legally' owning it, under the provisions of the Thai Law as it relates to property?

Doesn't that contradict # 3 above?

Just asking like ...

EDIT ... definition of property for this post is one where there is a 'Land Component' ... not referring to a Unit purchase.

Edited November 8, 2013 by David48

[Khun Jean]

Everything can be repeated again and again as many posts and topics are made on TV.

I would suggest anyone to read at least (My order of preference)

http://www.samuiforsale.com/lease-law/#8

http://www.thailandlawonline.com/thai-real-estate-law/thai-land-law-land-code-act

http://thailaws.com has http://thailaws.com/index_thai_laws.htm (English) and the same in thai http://thailaws.com/index_thai_acts.htm

Those websites are the best resources i found. Most others and especially those of brokers and agents are often very wrong.

[SDM0712]

" investigate a long-term rental on a slightly 'westernised' Thai wooden house in Phuket - if I can find one.

I'm hoping for cheaper rent than a villa or house"

We don't really have much in the way of traditional wooden houses here but depending on the area 30/45,000 per month should get a decent 3/4 bedroom house with a couple bathrooms in a nice area. Kathu is one of the most popular expat areas closely followed by Chalong and Rawai. It depends what you want to be close to really. If you don't mind the shophouse kind of set up you should be able to get one of those for 15/20 in an expat area. However if you don't mind being in Thai estate in somewhere like Thalang you could get a small 2/3 bed house for as low as 12,000 a month.

S

[colinp]

Some questions on the leasehold subject:

If the house is in foreign name, the land is leased, what happens should the lease not be renewed? Specifically the ownership of the house.

I assume with most developers offering this leasehold arrangement that the land is in the name of the development company, what happens if this company folds? What if this company is no longer around in 30 years?

It seems to be people who buy with a 30 year lease may be 'older' and are thinking..."I won't be around in 30 years, why worry", but what happens then? The original leaseholder has passed, can the lease be transferred by inheritance?

There may be no answers to these yet, but an interesting subject and certainly shows how people will give false assurance.

[Khun Jean]

The house is then from the landowner, unless you break it down, or move it. If the landowner likes it you could get some compensation for it if your lucky and the landowner is generous.

The lease is registered and is a 'real right' as such the new owner of the land has to honor it. Nothing else on the contract though as that was between the original parties. It is only the part that is registered at the land office that really counts.

The lease can not be transferred by inheritance. If that is your goal then include the one who will inherit it on the lease from the start.

[rayongchelsea]

The party with whom you may have a lease agreement can sell the land without informing the lessee.

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[iluvthailand]

It is human nature to want to "own" things. But what do you really own in the end but skin and bones?

Even in America..do you really OWN your house? Let's say it's all paid off and squared away. You're STILL left with the yearly property tax and fire insurance and water bill and electricity bill and a host of other bills.

In fact, whole industries and lots of people's livelihoods are based around the fact that you own that house. Don't let them down or else they'll be coming for ya. For instance, let's say you get all John Wayne Cowboy and decide f'ck it I'm not paying my property tax this year. Guess what six shooter? The "big man" will be knocking down your door soon enough and you'd better pray they don't be a'coming with guns drawn and helicopters hovering.

But let's not get carried away now. Let's take a smaller, less extreme example: My buddy bought a house. Even before he's moved in the furniture, the garbage company is already sending him the bill. He called them up and says "Hey, what up f'ckers! What if I don't want to sign up for garbage collection?" Guess what? The garbage company says "No go buddy. You HAVE to sign up or garbage service."

That's why I say it's fools gold to be chasing the dream of home ownership in Thailand, which has even worse conditions for homeownership. And do you blame them? They set it up to their advantage or else all these wealthy farangs will eventually own the whole country.

If you have money and want to invest it to your advantage, there are so many better ways to do it than in real estate in Thailand.

Oh hey, did I mention that "I Love Thailand!" ?

Edited November 9, 2013 by iluvthailand

[David48]

Cough ... anyone ?

I can give you an agent’s answer on most of these points, although sceptics might say that is not especially useful (or even truthful!)

1. Generally true, the only exception I have heard about (but never experienced) if you are willing to invest 1 million plus USD you will be “ kindly” permitted to own up to one Rai (1600m2) of land in your own name. The company route (51% Thai owned) is coming under a lot of scrutiny at the moment, although still being used.

...

3. With the exception in my point 1 above, a non-Thai can never own Land in his own name. So in this case a Thai entity (Thai citizen or company) will own the land that the house/villa/townhouse is built on, and then lease the building to you.

What is the tenure position when a legally married couple with the property is in the wife's name ... and the wife dies and under the provisions of the will, the land is transferred into the Husband's name?

He has something like 12 months to dispose of the property.

For those 12 months (or the time up until he sells it ... which ever is the sooner) isn't he 'legally' owning it, under the provisions of the Thai Law as it relates to property?

Doesn't that contradict # 3 above?

Just asking like ...

EDIT ... definition of property for this post is one where there is a 'Land Component' ... not referring to a Unit purchase.

[Khun Jean]

Legally owning it, then there is no time frame. It is transferred to the husband with the sell within a year condition.

If you were the freehold owner you would not need to sell within a year.

Because there is a contradicting (foreigners are not allowed to own) you are given time to rectify that position.

The other solution is to confiscate it or to ignore a will and transfer it to a Thai family member.

All in all not perfect but not too bad either.

Having a usufruct in place, would be better as even when you sold it or gave it away to someone else you would still be able to live there.

Prepare conditions so that you have choices is always good.

Edited November 10, 2013 by Khun Jean

[olfu]

Very disappointed by this thread.

I see some here screaming how smart they are by managing to go around the law instead be reasonable and state simple fact they are smart crooks.

Fact is we never own anything not in USA not in Thailand, we rent and its called fee simple and we rent and its called lease and sometimes we have the right to sell what we rent.

Cool down.

[Bpuumike]

Consider a house something you are prepared to walk (or fly) away from.

Absolutely, but have the money to fly away.

Wouldn't want to try and walk, especially with a couple of suitcases lol

[Bpuumike]

Legally owning it, then there is no time frame. It is transferred to the husband with the sell within a year condition.

If you were the freehold owner you would not need to sell within a year.

Because there is a contradicting (foreigners are not allowed to own) you are given time to rectify that position.

The other solution is to confiscate it or to ignore a will and transfer it to a Thai family member.

All in all not perfect but not too bad either.

Having a usufruct in place, would be better as even when you sold it or gave it away to someone else you would still be able to live there.

Prepare conditions so that you have choices is always good.

Yup have done exactly that.

If the wife or I die the property & land will pass on to her younger sister (age 41) who is 'married' but owns nothing.

[PattayaPhom]

A 30 year lease is exactly that, will be interesting to see if the so called renewels are honoured. See it for what it is, 30 years rent paid in advance, it suits some and others irt dosnt. OP dont take everything on here as Gospel, a little research will see that you are being told in 30 years you wont be able to afford to renew if prices and inflation continue as they have in the past 10 years but those same people will state that prices havnt increased and actually have decreased when it suits a different thread.

[Khun Jean]

What i see most is that when someone who 'buys' a house they spend a lot of their savings on it. Or even the money that became available selling real estate in their own country. Many are in their 50's. 30 years later when they are in their 80's i suspect that they are not able to pay the new term. Which if it is 30 years again would give them the right to stay until they are 110. Very unlikely they get that old.

Better to try to get a 10 year term and payment per month. But the most important point is, do you really want to be in that position when you are in your 80's? A risk that you become homeless.

Currently we are in the cooling down phase of a long property boom. Prices are already coming down but not much because inflation is such an insidious mechanism and keeps prices high. Even a plate Gaw Man Kai went from 20 baht to 35-40 baht.

In 30 years, who knows what prices will be, who knows what exchange rates will be. If you just take the last 100 years as a measuring stick you get around 4-5% rise in price every year. in 30 years time that adds to a lot.

Throw visa requirements in the mix and the whole retirement in Thailand is becoming a very risky thing to do.

Unless you have lots of money, but then the whole world is available to retire to.

[rgs2001uk]

A 30 year lease is exactly that, will be interesting to see if the so called renewels are honoured. See it for what it is, 30 years rent paid in advance, it suits some and others irt dosnt. OP dont take everything on here as Gospel, a little research will see that you are being told in 30 years you wont be able to afford to renew if prices and inflation continue as they have in the past 10 years but those same people will state that prices havnt increased and actually have decreased when it suits a different thread.

PP, we dont always agree, but I am with you 101% on this one.

As for house/land increases over the last 30 years I have already stated on here, I know areas in Bkk where house were bought for about 4/500 k, the same houses are now on sale for 5 million baht.

Most of the houses on sale need trashing, people buy them for the land only and do exactly that, build a new house.

By doing it this way its cheaper than buying on a new moo ban.

If we use the above as an example, farang signs a 30 year lease 30 years ago and pays upfront his 500k.

Tomorrow lease expires and farang is told it will cost him 5 million for another 30 year lease.

Brilliant stuff, you really couldnt make this up.

The people holding the lease must be pissing themselves all the way to the bank.

In all probability they invested nothing, now 30 years later they are in for another windfall.

[churchill]

A 30 year lease is exactly that, will be interesting to see if the so called renewels are honoured. See it for what it is, 30 years rent paid in advance, it suits some and others irt dosnt. OP dont take everything on here as Gospel, a little research will see that you are being told in 30 years you wont be able to afford to renew if prices and inflation continue as they have in the past 10 years but those same people will state that prices havnt increased and actually have decreased when it suits a different thread.

My Mother is thinking of selling a property in Phuket , She has 22 years left of the current 30 with the usual 30+ 30 and has been informed that a new 30 lease will be granted to any buyer , plus 30/30 ...

Sorry I know no more details at this stage as we have to meet and confirm when she visits from the UK in January

But that is how it should be ..I think .

[rayongchelsea]

Who is granting the new lease ?

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[falkan]

A 30 year lease is exactly that, will be interesting to see if the so called renewels are honoured. See it for what it is, 30 years rent paid in advance, it suits some and others irt dosnt. OP dont take everything on here as Gospel, a little research will see that you are being told in 30 years you wont be able to afford to renew if prices and inflation continue as they have in the past 10 years but those same people will state that prices havnt increased and actually have decreased when it suits a different thread.

My Mother is thinking of selling a property in Phuket , She has 22 years left of the current 30 with the usual 30+ 30 and has been informed that a new 30 lease will be granted to any buyer , plus 30/30 ...

Sorry I know no more details at this stage as we have to meet and confirm when she visits from the UK in January

But that is how it should be ..I think .

i feel sorry for her, because no one will buy a house on a 22 years lease hahah

after 30 years you are out if you not put down some money again!

[Arkady]

Many thanks to all contributors!!

@Khun Jean:

I can't get a cigarette paper between the definition of Usufruct and Superficies!

It looks like Usufruct applies only to a building on the land and Superfices can apply to a building or anything else on the land (eg. chicken farm/rubber plantation).

If I have it right, these property rights confer greater security than an agreement in a contract to allow a foreign spouse to inherit the remaining term of the lease, because they aren't ended by the death of the landowner or the sale of the land, but only by the death of the 'lessee' of the property.

But still, neither agreement can be inherited by a foreign spouse, it seems, so there's no greater security there.

Please fill in the blanks if I'm missing something important.

@everyone:

If you own a house on this 30-year lease and you want to sell it after ten years, are you selling only a 20-year lease or will the owner of the land start another 30-year lease with the new owner?

There seems to be a form of co-ownership. If a couple could co-own a property would this not allow the surviving spouse to continue with the lease. Does anyone know anything about this?

Co-ownership is described at the bottom of the page in this link:

http://www.thailandlawonline.com/thai-real-estate-law/1298-1366-real-estate-rights-and-ownership#1356

Usufructs generally apply to the land and buildings on it,. whereas superficies applies to a structure only. To register ownership of a superficies, you should also have a 30 year lease or usufruct on the land or the Land Dept can't register your ownership of structure you have no access to.

Company route is hard to do since the Interior Ministry started issuing guidelines in 2006 requiring Land Offices to investigate and land transfer applications that looked as if they might be on behalf of foreigners trying to violate the Land Code. You also have a the burden of maintaining the company.

30 year leases in Thailand really suck and personally I wouldn't consider this form of residential property "ownership". It is a contract between two parties and no tradable or inheritable asset is created. If the lessee dies, it is terminated. If the lessor dies or the sells the land, the new owner may not consider himself bound by the lease.

Options to extend leases by one or more 30 year tems on expiry of the initial 30 year term, as sold by farang wide boy estate agents in tourist resorts, are only civil agreements and cannot be registered at the Land Dept as a binding obligation. The only redress would be suing for financial damages in the civil court, assuming that the original lessor and less are still both in existence. So these "options" are a completely worthless con trick.

The examples of joint ownership you have cited are not comparable because they apply to joint ownership of property, not joint leasing of property. In the case of a business partnership, the partnership is automatically dissolved in Thailand, if one of the partners dies. The business is personal to the original partners and the diseased partner's share cannot simply be re-assigned to some one else and let the business carry on. So I am not sure what the implications are in the case of a couple leasing a property jointly for 30 years. You would certainly need an agreement that specified survivorship but, there again, that could not be registered at the Land Office and the surviving spouse might also have to seek redress in the civil court, if the lessor decided that the lease terminated on the death of one of the signatories and the Land Dept agreed with him.

Bottom line is, if you are concerned about ownership, only buy freehold condos. If you are happy to rent long term on the understanding that this is a 30 year lease which might not even last that long in a flaky jurisdiction where everything is stacked against foreigners, go ahead. If you must have a house, rent one and put your hard earned cash to work in assets you really own and can generate income you can use to pay the rent.

[Razzler1973]

A foreigner can own the freehold on a condominium but only if 51% of the units in the development are already owned by Thai nationals.

May seem like a stupid question and I have read that basically condos are 100% Thai at the start and then each unit sold counts towards the 'non-Thai' bit (if they are, in fact, not Thai) but who actually monitors this? Is it an ultra strict ruling or quite loose?

If there was 100 units and it was actually 50/50 is that a big issue?

Also, what happens if you get in and everything is ok in terms of numbers and then suddenly Thais buy up places from farang, for instance to the numbers sway, you have to move? (I realise may not be realistic to happen but wondering)

[colinp]

A foreigner can own the freehold on a condominium but only if 51% of the units in the development are already owned by Thai nationals.

May seem like a stupid question and I have read that basically condos are 100% Thai at the start and then each unit sold counts towards the 'non-Thai' bit (if they are, in fact, not Thai) but who actually monitors this? Is it an ultra strict ruling or quite loose?

If there was 100 units and it was actually 50/50 is that a big issue?

Also, what happens if you get in and everything is ok in terms of numbers and then suddenly Thais buy up places from farang, for instance to the numbers sway, you have to move? (I realise may not be realistic to happen but wondering)

Correct, at the beginning a brand new condominium would be considered Thai owned, in reality it will normally be company owned (the development company, Sansiri etc.). The Juristic office have to supply documents to the land office to ensure the 49% quota for foreigners is available on transfer of ownership to a foreigner. I would say ultra strict but this is Thailand...

See above, the foreign quota can't go above 49%. Also I think its available space nit units so it the condominium totaled 1000 sq.m. only 490 sq.m. can be foreign owned but this would need to be confirmed.

Thais can own 100% of the building, it is only a foreign quota that is rigid to 49%. If the foreign 49% is full the land office will not allow a foreigner to hold the freehold title.

There are condominiums where I am that have been so popular with foreigners that the developer will give an immediate 10% discount if the condo is registered in a Thai name!

[Arkady]

A foreigner can own the freehold on a condominium but only if 51% of the units in the development are already owned by Thai nationals.

May seem like a stupid question and I have read that basically condos are 100% Thai at the start and then each unit sold counts towards the 'non-Thai' bit (if they are, in fact, not Thai) but who actually monitors this? Is it an ultra strict ruling or quite loose?

If there was 100 units and it was actually 50/50 is that a big issue?

Also, what happens if you get in and everything is ok in terms of numbers and then suddenly Thais buy up places from farang, for instance to the numbers sway, you have to move? (I realise may not be realistic to happen but wondering)

Correct, at the beginning a brand new condominium would be considered Thai owned, in reality it will normally be company owned (the development company, Sansiri etc.). The Juristic office have to supply documents to the land office to ensure the 49% quota for foreigners is available on transfer of ownership to a foreigner. I would say ultra strict but this is Thailand...

See above, the foreign quota can't go above 49%. Also I think its available space nit units so it the condominium totaled 1000 sq.m. only 490 sq.m. can be foreign owned but this would need to be confirmed.

Thais can own 100% of the building, it is only a foreign quota that is rigid to 49%. If the foreign 49% is full the land office will not allow a foreigner to hold the freehold title.

There are condominiums where I am that have been so popular with foreigners that the developer will give an immediate 10% discount if the condo is registered in a Thai name!

You correct in saying that the foreign ownership limit applies to the usable area in the building, not the number of units. Buying in a Thai name in a resort area might mean that you could never sell it, if that is an issue.