Selling "phony" Company Owned Houses & Condos

[Thaiquila]

Curious about this. Say a farang "owns" a house or condo via the now hot potato method of a phony company, and they now want to SELL.

What is the situation? In the past, I had the understanding they pretty much always would sell to another farang and include the company in the deal, so in effect, they were selling the company and its asset, the house or condo. Are such transfers even possible now (assuming any buyer would want it)?

So, how would these properties technically be sold now? Only to Thais? If the farang holds 49 percent of the phony company, will they usually be able to realize the full sale value of the property?

Edited June 8, 2006 by Thaiquila

[SunbeltAsia]

Curious about this. Say a farang "owns" a house or condo via the now hot potato method of a phony company, and they now want to SELL

What is the situation? In the past, I had the understanding they pretty much always would sell to another farang and include the company in the deal, so in effect, they were selling the company and its asset, the house or condo.

Are such transfers even possible now (assuming any buyer would want it)?.[/

Sure it would be possible. It could be a transfer of the shares with a share transfer agreement to indentify the buyer. The buyer should keep a portion of the funds to be held in escrow for a 6 month period to offset any potential liabilities such as tax.

It also could be a asset purchase with the house and land being transferred at the Land Dept. to a new buyer either a Thai company or a Thai national.

So, how would these properties technically be sold now? Only to Thais?)?.

Why to just Thais? the foreign buyer would get his shares and the new Thai shareholders would get their shares. The only difference is the the Thai shareholders would now be "real" and the company should start to be active.

If the farang holds 49 percent of the phony company, will they usually be able to realize the full sale value of the property?

All depends how the company by-laws were structured and the voting rights, etc.

www.lawyer.th.com

[Thaiquila]

Thanks, Sunbelt, so it sounds like the sale to Thais is a bit easier, because the asset can be sold without the company.

To sell to another farang, they new farang needs to set up a legit company. Is that really generably feasible for the average farang buying a house? Weren't the phony companies previously used just because they were so easy to set up? So, if this asssumption is correct, doesn't that mean a smaller demand from buyers, and possibly much lower prices for houses (and condos owned by companies)?

[SunbeltAsia]

Thanks, Sunbelt, so it sounds like the sale to Thais is a bit easier, because the asset can be sold without the company.

Easier would be the transfer of the shares to a Thais or Thais/ Foreigners.

To sell to another farang, they new farang needs to set up a legit company.

Or after due dilgence, just use the current company and now have Thai shareholders that can show income to pay for the shares and have the company be active.

Is that really generably feasible for the average farang buying a house?

If they have no desire to have some type of business such as import export, then a 30 year lease may be more feasible.

Weren't the phony companies previously used just because they were so easy to set up? So, if this asssumption is correct, doesn't that mean a smaller demand from buyers, and possibly much lower prices for houses (and condos owned by companies)?

Technically nothing has changed. The rules are the same except they are going after the foreign land developers. However it has became mass hysteria in the public perception that all Thai companies must be set up wrong. For the reason, not as many new buyers are looking to buy now. With this being low season, a seller would need to lower their price. After some time, it comes to past that the water is safe the prices will recover. It will take time some time.

But if someone wanted to sell now, IMHO, it would be a air pocket,as most buyers Thai or Foreign are in a "Just wait and see" mode.

www.lawyer.th.com

[Thaiquila]

Thanks for the excellent perspective, SB.

All in all, not the best time to sell, for sure.