Condo versus House. Buying witouth legal risks

[samsung99]

Hello Thaivisa experts

I do have plans to buy either a house or a condo to live in for as long as possible (My life expectancy is another 40-45 years).

I'm looking for some opinions on the legal situation only ( I already know that some of you advise against any purchase in Thailand, so no need to repeat here again)

My understanding and my conclusion on the Housing situation for foreigners:

You can only "buy" or lets better say lease a house for a total of 30 years. Those contracts for further 30+30 years will probably not be worth the paper which the contract is printed on as there will be many ways for the Thai Land owner to kick you out after 30 years anyway. So its up to a potential buyer to ask himself if he want to take that risk to loose his home after 30 years. I know of all the lawyers and developers telling you how safe those workarounds are, but as said I personally don't count on it.

-> If I will buy a house, then i plan to live in there for 30 years. I will save additional money to buy or rent a condo to spend the rest of my life in the condo or rented house. If it works out to stay for another 30 years I will see this as a Bonus but I won't count on that.

The good thing: You know in advance how much it costs you (Investment divided by 30 years = fixed rental price which is protected against inflation.

How is the situation when I buy a condo? Lets say off plan from a quality Thai developer?

1) How many years am I able to live in there by Thai law? 30 years as well or unlimited?

2) Do I own my condo forever (means as long as the building exists and does not fall apart?)

3) What if the majority of the condo owners decide to tear the building down (e.g because a developer wants to build another, newer, bigger and better condo project: Will my investment disappear at the moment they start tearing down the building or will I receive my part of the "agreed sales price to the new developer" of the land where my condo unit was built on?

If I loose the value of my condo as soon as the condo building falls apart then I don't see an advantage of buying a condo instead of leasing a House for 30 years.

A bit off topic: When I look at the "quality" of those skyscraper projects in Bangkok then I have doubts that many of their buildings will do it for more than 30 years anyway.

Thanks for clarification and opinions about the condo situation.

[Langsuan Man]

You can own a condo, so long as it it in the foreign quota, for as long as you want and it can transfer to your heirs or be sold to a foreigner or a Thai.

You can never own the land a house is built on. You can own a company that can own the land that you can build a house on and you can sell that company to another foreigner if you want to later on.

The maximum amount of a lease here in Thailand is 30 years and any promises of a longer period are false. Thus the value of your "holding" decreases every year until the 30th year when it will be valueless and you either tear down the house you built or let the owner of the property have it for free since it is on their land

You will probably have to pay all the 30 year lease money up front since the Thai landowner wants the money now, not over a period of 30 years. Not saying you can't find one that will do it that way, but most will not, despite what all the pundits tell you here on TV

The most important consideration, IMHO, is do you want to live in a condo or a house? Both have advantages and disadvantages but that is something only you can decide based upon your life style and comfort expectations

And finally I don't subscribe to your estimation that: When I look at the "quality" of those skyscraper projects in Bangkok then I have doubts that many of their buildings will do it for more than 30 years anyway

[djhotsox]

Buy the nicest condo you can afford. Rent it out.

Use the rental income to rent a house for yourself to live in.

You will save money on maintenance and upkeep of owning condo vs. home.

When you get older and don't want to deal with the upkeep a house entails, then move into your condo.

If your circumstances change in the future, say you tire of Thailand and want to spend summers in your home country, living out of your condo relieves you of the extra hassle of security of your property and belongings when out of Thailand.

Just thinking out loud......

[SDM0712]

As an agent myself I agree with your assessment, and really it is all a matter of how you view risk. If you want to buy a property to have in the same way we would in the West and to be able to pass this on when you die, and have absolutely no worries about your ownership, I would suggest you buy a condominium on a Foreign Freehold Title. You don't have to wait until the building has all been sold, it will have been certificated before you buy and the allocation set. You will however usually pay more for a Foreign Freehold condo in the same building when compared with an identical leasehold property. Usually between 500,000 and 1MB depending on the size and value.

Stephen

[isawasnake]

From what you say, I feel you should go the condo route, but as mentioned it really should depend on what you want also.

I don't really subscribe to this belief that you have about seeing where you will be in 30 years. I think people have a hard enough time seeing where they will be in 3 years, but if you are set on that, I would do my homework on the condo, and not worry about all that too much. Also, if you are going to be in a place for 30 years, you gotta consider it will probably pay itself off in 16 years or so. I just think you should buy good quality and decent location, and not worry too much what the condition will be like in 30 years, because you will never know.

I have been looking into more and more condos, and if you want a little advice, take a close look at LPN developments. They have really, really impressed me. I think they are a solid, no frills Thai developer that does a great job at a good price, although their locations are many times not the best.

[SDM0712]

Where did you want to live?

S

[samsung99]

@ All Thanks for your input. I currently live in Bangkok and tended to buy a home in a quiet Area of Pattaya.

IF I was able to buy land I would buy a Villa in a quiet Area of Pattaya, e.g mabprachan Area. I had a look at "The Vineyard" and "Amaya Hill" project. Amaya Hill sells for around 8MB and would still fit into my budget. But since I decided to leave my home country and live in Thailand with a Thai salary...spending a big chunk of my savings and pension funds on a 30 years lease...just doesn't make sense. I also know that a lot of those foreign developers are scam artists, but this seems to be an established company with some good references. Anyway, I wont follow this track due to my 30 year concerns.

@ djhotsox: The proposal to buy a Condo on Freehold (I prefer Bangkok), rent it out and rent a Villa for myself seems to be a smart alternative! Protected against inflation and a safe heaven to move in once I'm to old.

@ All What happens when your condo reaches End of Life before you will? Lets say I do have a freehold condo and the owners agree to sell the property e.g. for a new development. Am I right that the revenues of selling the plot of land will be split to the freehold condo owners ( split according to their share of sqm they hold in the condo building)?

[KittenKong]

When farangs "buy" houses in Pattaya they seem to do it by a company-name route rather than the leasehold route which seems to be more common elsewhere in Thailand. I dont know why, nor do I care. But if I was going to put money into a Thai house (and that is about as likely as snowfall on Jomtien beach) then I would rather buy a lease than buy a company. At least that way you know you have it for the duration of the first lease.

Those Mabprachan developments look nice enough on paper, but you should bear in mind that around that area there are untold kms of undeveloped land, all suitable for another similar development. If you just want something around that area, why not look for a distressed (ie real) farang vendor of an existing house and buy his company?

To me Bangkok is vastly over-supplied with condos. Pattaya is too (or will be within a year or so at best) but at least if you buy in the right area here (near the beach, on the bahtbus route) it should always remain fairly popular. I dread to think what those new developments in the swamps behind Jomtien 2nd Road will be like in 5 years time.

I've never heard of co-owners of a Pattaya building voting to sell the building for demolition in order to build another building. What would be the point when there is so much empty land around? And if by some unlikely chance they do do this, you will have your vote and you will get your cut. After all, as a co-owner you do own part of the common areas and land.

Personally I would be far more worried about the co-owners not voting for common fee increases and the building turning into a derelict slum as a result of lack of maintenance. No shortage of these in Pattaya. Just drive around with your eyes open.

[samsung99]

@ KittenKong

Agree with you. With a lease you know what you get...

Yes Mabprachan Are has loads of undeveloped land. There will be tons of new and similar developments in this Area. Good general advice to just check out a distressed vendor. But it gets more and more clear to me that buying a house is not the path I will go. But if i change my mind, i might look around the area again someday.

For me Pattaya Beach is not an Area to live my life. Too much weirdos, tourists, prostitution, crime, Russians.... As an investment it might be a good option if location is taken into consideration. For an investment maybe, to spend my life...no way.

I do prefer Bangkok or a quiet Area around Pattaya.

The lack of maintenance is an issue not only in Pattaya but also in Bangkok. As soon as the last unit is sold, they stop cleaning the pools, stop shutle service to the BTS, turn of Aircon in elevators and so on. Might be an even bigger problem in Pattaya out of well known reasons.

[KittenKong]

For me Pattaya Beach is not an Area to live my life. Too much weirdos, tourists, prostitution, crime, Russians.... As an investment it might be a good option if location is taken into consideration. For an investment maybe, to spend my life...no way.

When I mentioned near the beach I was thinking more of Jomtien beach, though the popularity part applies just as well to Pattaya itself for those who like it.

[lemoncake]

One should also consider some other factors.

If buying a unit, you are limited to what you can do in terms of renovations, animals etc

You may also end up with crappy neighbors

Naturally same applies to living in the house, but at least in the house you are further way, say if they are playing the music.

Also in a condo, you may end up being next to a noisy tourist.

You may purchase a great condo with a nice view, only to be totally blocked off in years time by a new development.

[samsung99]

@Lemoncake

Your right, a house gives you more space, more freedom and usually less problems with noisy neighbors.

Check out the buildings next to your dream condo and you can guess how long it takes until a new and even taller condo will block your view. If there are just older houses or even an empty lot in front of your condo then it wont take that long until they build something bigger on it. If you have a newer building in front of you it might enjoy the view much longer. Favorite things in front of your condo, shopping mall, river, BTS station, new less tall condo building...

[James Dyson]

If you need any help, try hiring a reputable real estate lawyer. There are many situations in which you cannot handle the real estate problems by yourself. So it is better to hire any lawyer. If you dont need a lawyer, try a trial lawyer. I did this when there was a problem with my property. I hired a lawyer form GCY law firm in Toronto since I’m settled there.

[FiftyTwo]

The real risks are that Thailand has no 'rule of law', 'planning laws', and you have no 'right to reside in Thailand'.

So if a police operated crack den opens on one side of you, an all night Karaoke bar opens on the other side and then you are blacklisted from the country after annoying the wrong person, what happens to your property then?

[Khun Jean]

If you want land take a usufruct. No 30 year limit as it can be for life.

Resale will be difficult if not impossible, but if you want something for longer then 30 years a usufruct will give you that.

I think the biggest risk is that you want to move in 10 years, being able to sell is very important.

Buy a condo, it will be freehold and you can sell it at any time you want, For what price no one knows.

[samsung99]

If you want land take a usufruct. No 30 year limit as it can be for life.

Resale will be difficult if not impossible, but if you want something for longer then 30 years a usufruct will give you that.

I think the biggest risk is that you want to move in 10 years, being able to sell is very important.

Buy a condo, it will be freehold and you can sell it at any time you want, For what price no one knows.

Usefruct is indeed an interesting option. Wondering why so few people opt for it.

You might not be able to sell it, but at least you can rent it out untill you die...

[Langsuan Man]

If you want land take a usufruct. No 30 year limit as it can be for life.

Resale will be difficult if not impossible, but if you want something for longer then 30 years a usufruct will give you that.

I think the biggest risk is that you want to move in 10 years, being able to sell is very important.

Buy a condo, it will be freehold and you can sell it at any time you want, For what price no one knows.

Usefruct is indeed an interesting option. Wondering why so few people opt for it.

You might not be able to sell it, but at least you can rent it out untill you die...

They don't use it that much because the Thais don't like to sell it that way. They want their money right away, not over a long period of time. And the usefruct will most likely have a clause that you can't rent out the property (sub let), just like you can't will it to your heirs. The reason it will not be saleable is because the person who gave you the usefruct has to approve a transfer, and why in the world would they ?

[Khun Jean]

The main reason is that lawyers do not make the same amount of money on a usufruct as on a lease.

Much more paperwork is needed for a lease.

A usufruct is just a few hundred baht on a standard document from the land office.

[johnnyk]

The main reason is that lawyers do not make the same amount of money on a usufruct as on a lease.

Much more paperwork is needed for a lease.

A usufruct is just a few hundred baht on a standard document from the land office.

Can a usufruct be structured with clauses to allow sale or rental? I'm a seller wondering if this would make usufruct an even more attractive option.

[Khun Jean]

Any clause added to a standard usufruct will make it less strong when SHTF. Those clauses are personal between the two parties and if one of those parties change (like when you sell, or when the owner sells his land, or dies) those clauses are not transferred to the new parties.

You can rent out the land, but for 3 years or shorter periods only. Because registering a usufruct and a rental agreement on the same piece of land is impossible.

[bkmbkk]

I am looking to buy a piece of land and build a villa.

I have rented many years and previously bought property for ex´wife (not my name on anything)

So far so good - but I would like to have my own now.

I really do not like the lease option, as I would not buy a property where there where (say 10 year)s left on land lease.

I see only the company way as an option if I also shall be able to sell in the future.

I understand it is illegal to hold land that way.

If I do it company style, I am basically waiting for the government to discover my "crime" - if they do / or want to.

[Langsuan Man]

I am looking to buy a piece of land and build a villa.

I have rented many years and previously bought property for ex´wife (not my name on anything)

So far so good - but I would like to have my own now.

I really do not like the lease option, as I would not buy a property where there where (say 10 year)s left on land lease.

I see only the company way as an option if I also shall be able to sell in the future.

I understand it is illegal to hold land that way.

If I do it company style, I am basically waiting for the government to discover my "crime" - if they do / or want to.

No, you are basically waiting for thousands of lawyers, accountants, and more importantly The Ministry of Commerce, Department of Business Development, to admit that the company system is illegal and kill the goose that brings in billions of Baht on an annual basis

[JesseFrank]

I am looking to buy a piece of land and build a villa.

I have rented many years and previously bought property for ex´wife (not my name on anything)

So far so good - but I would like to have my own now.

I really do not like the lease option, as I would not buy a property where there where (say 10 year)s left on land lease.

I see only the company way as an option if I also shall be able to sell in the future.

I understand it is illegal to hold land that way.

If I do it company style, I am basically waiting for the government to discover my "crime" - if they do / or want to.

No, you are basically waiting for thousands of lawyers, accountants, and more importantly The Ministry of Commerce, Department of Business Development, to admit that the company system is illegal and kill the goose that brings in billions of Baht on an annual basis

You don't have to be a rocket scientist to know that the company route IS illegal.

A Thai company can not be set up to solely own a real estate, by law the company needs to have revenue.

To comply with that rule the accountant will each year add fake income and expenses on the balance sheet, which as far as I can understand is illegal.

[Langsuan Man]

I am looking to buy a piece of land and build a villa.

I have rented many years and previously bought property for ex´wife (not my name on anything)

So far so good - but I would like to have my own now.

I really do not like the lease option, as I would not buy a property where there where (say 10 year)s left on land lease.

I see only the company way as an option if I also shall be able to sell in the future.

I understand it is illegal to hold land that way.

If I do it company style, I am basically waiting for the government to discover my "crime" - if they do / or want to.

No, you are basically waiting for thousands of lawyers, accountants, and more importantly The Ministry of Commerce, Department of Business Development, to admit that the company system is illegal and kill the goose that brings in billions of Baht on an annual basis

You don't have to be a rocket scientist to know that the company route IS illegal.

A Thai company can not be set up to solely own a real estate, by law the company needs to have revenue.

To comply with that rule the accountant will each year add fake income and expenses on the balance sheet, which as far as I can understand is illegal.

Show me one instance of anyone losing their property or spending time in jail over your understanding of what is illegal !

[SDM0712]

"

Show me one instance of anyone losing their property or spending time in jail over your understanding of what is illegal"

As an estate agent here this is a very common conversation I have. Since I am not a lawyer I prefer to refer buyers to get professional and qualified advice (Will ignore any comment from KJ that says I should offer unqualified legal advice).

However as someone involved in the property world I have never heard of anyone losing their property over either the company scheme or multiple lease scheme. As a buyer do your research and make an informed decision which will be based on your attitude to risk. But I suggest that any lawyer you contact for advice is linked or known neither to someone/company/agent that you are trying to buy from.

SDM

[JesseFrank]

I am looking to buy a piece of land and build a villa.

I have rented many years and previously bought property for ex´wife (not my name on anything)

So far so good - but I would like to have my own now.

I really do not like the lease option, as I would not buy a property where there where (say 10 year)s left on land lease.

I see only the company way as an option if I also shall be able to sell in the future.

I understand it is illegal to hold land that way.

If I do it company style, I am basically waiting for the government to discover my "crime" - if they do / or want to.

No, you are basically waiting for thousands of lawyers, accountants, and more importantly The Ministry of Commerce, Department of Business Development, to admit that the company system is illegal and kill the goose that brings in billions of Baht on an annual basis

You don't have to be a rocket scientist to know that the company route IS illegal.

A Thai company can not be set up to solely own a real estate, by law the company needs to have revenue.

To comply with that rule the accountant will each year add fake income and expenses on the balance sheet, which as far as I can understand is illegal.

Show me one instance of anyone losing their property or spending time in jail over your understanding of what is illegal !

That was not the point I was making. The point is that the practices as described in my post, and which is practiced in 99% of the cases, is against the Thai law.

If the government takes action or not against it is a completely different matter. There are also every day thousands of motorists that jump red traffic lights, but I can't point to any cases where the police took action.

Fact is that already a few times in the not so distant past, a government official has commented that they will take action soon, because they say it's illegal.

Because there hasn't been any action so far doesn't make it legal.

Edited January 9, 2014 by JesseFrank

[bkmbkk]

I get it and that's why I am struggeling to decide if or not to buy.

A condo is out of the question as I am not good at apartment life.

I saw a few month ago an add that said stand alone houses sold as condos ?

Did not check it out but now wondering if this is a new way around ownership of land(house ?

[Langsuan Man]

I get it and that's why I am struggeling to decide if or not to buy.

A condo is out of the question as I am not good at apartment life.

I saw a few month ago an add that said stand alone houses sold as condos ?

Did not check it out but now wondering if this is a new way around ownership of land(house ?

Condo is a condo and any scheme to sell stand alone houses as condos is once again taking an advantage of the loophole that allows house ownership and is nothing new

Taking advantage of a loop hole is not in of itself illegal and there are armies of lawyers and accountants that devote their entire careers in exploiting these loopholes. Not just here but in every country that levies taxes and makes laws

I am so sick and tired of the red light jumping or prostitution is illegal argument that is always brought up when posters are challenged to provide proof of the illegality of the company structure of owning a house here in Thailand. They can't , so they always fall back on this mixing of apples with oranges type of reasoning

Do you own research if you don't want to live in a condo. Talk to people who do own a house in a company name and ask if they are kept awake at night worrying about the gestapo coming in the middle of the night to evict them from their homes

As i sip my evening cocktail off my open back deck overlooking my Koi pond, watching the beautiful sunset and the cranes coming home for the night, the last thing on my mind is whether or not my house is legal or not

[JesseFrank]

Taking advantage of a loop hole is not in of itself illegal and there are armies of lawyers and accountants that devote their entire careers in exploiting these loopholes. Not just here but in every country that levies taxes and makes laws

I am so sick and tired of the red light jumping or prostitution is illegal argument that is always brought up when posters are challenged to provide proof of the illegality of the company structure of owning a house here in Thailand. They can't , so they always fall back on this mixing of apples with oranges type of reasoning

I am so sick and tired of people claiming that the past is a guarantee for the future .

A loophole in a law is what it is, a loophole, which can been taken advantage of until the time comes that the loophole is closed.

By the way, what is happening with 99% of the farang companies that are set up to own a real estate isn't a loophole, it is plain illegal .

Claiming fake revenue on a balance sheet, is making false declarations and is punishable by the law.

As i sip my evening cocktail off my open back deck overlooking my Koi pond, watching the beautiful sunset and the cranes coming home for the night, the last thing on my mind is whether or not my house is legal or not

You must live in a very special location, probably even not in Thailand, as cranes are very rare in Thailand.

By the way, from someone with an attitude that it's the least of his worries if his multi million Baht property is legal or illegal, I would avoid any advice he gave me .

Edited January 10, 2014 by JesseFrank

[Langsuan Man]