Questions about buying a condo in company name...

[homeseeker]

I as a foreigner currently rent a condo in Pattaya from a house agent. The one year lease(renewed several times) is in my personal name and that of the agent. I recently discussed the possibility of buying the condo. The actual owner is also a westener and I just learnt he bought the condo in a "company name". I assume because in the building where the condo is located the foreign owned quoto is used up.

It appears my suggested price is too low for the seller(according to the agent) so no deal.

However what I need to know is if per chance we can agree a price, if I bought the condo which I guess would involve me taking over the company then what if anything is the legality of my purchase?

If the current western owner has simply used the company ownership device to circumvent the 49% rule then surely he cannot pass on good title nor does he have it?

And is there any effect on the lawfulness of my rental lease that the actual owner holds the condo in a company name?

Glad to have any input and I realize this topic discussed before but there may be recent changes.

Thank you in advance.

Edited March 15, 2015 by homeseeker

[Langsuan Man]

There is really no reason to have or to purchase a condo in a company name

This of course is not true for houses, other than a long term lease or usefruct there is no other mechanism for a foreigner to "own" the property that a house is built on here in Thailand

The current owner can only sell you the company, which is an administrative action, and then you will own the company and all it's assets, including the condo

As far as the legality of your lease, it is legal for this foreigner's company to lease out it's property (the condo) and to be perfectly honest with you is none of your concern. The owner of the company can do whatever he want's with his property, in this case lease it to you, or sell the company to you

But as i said at the outset, there is currently many, many, condos in Pattaya in the foreign quota that, unless this particular condo has some great value to you, would be a much better deal.

Why waste your money on owning something that you really don't own, especially since there are fully legal alternatives. The company route is just a "loop hole" that is exploited by lawyers and builders to get around the restrictions of the 49/51 rule. Legal yes but also potentially problematic. Not to mention the hidden costs of having the company updated every year to stay legal, which will cost you between 15-20 thousand baht annually

Finally, if you do purchase a condo in the farang quota be aware that if you die your heirs will have to sell the condo to another foreigner ( who must bring the funds in from off shore) within one year or it will automatically return to the Thai quota. If you own the condo in a company name they can inherit the company with no more restrictions than you would have (ie. the loop hole)

Edited March 15, 2015 by Langsuan Man

[KittenKong]

Many condos are "owned" by foreigners in company name. The only likely reason for doing this is to circumvent the 49/51 ratio rules. Such company ownership structures seem dubious at best and outright illegal at worst. At some point some sort of official clamp-down seems likely to me.

Bear in mind that if you buy a condo-owning company the condo itself does not change hands. This means that you dont pay land tax on the sale, but it also means that you acquire any and all liabilities that the condo or the company may have. If I touched a company-owned property at all (which is as likely as finding a snowman on Pattaya beach) I would only do it by setting up another company and then buying the unit from the vendors company. At least that way I would avoid buying any of his liabilities.

Also bear in mind that although you may save a few percent on the land tax (your maximum saving would be half of about 6%) you will be paying lawyer fees and yearly accounting fees etc., and possibly some company winding-up fee in a few years time. These can add up fast.

[maidee]

is it not better to keep renting...what is the use of buying anything in thailand? before you know it , you get a new <deleted> neighbor that makes your life miserable ... if only renting than moving is an easier option

[dsfbrit]

I agree with Langsuan Man and KittenKong. I have a house/land in the company name, as it is the only way I can 'own' the land. It is a hassle having the company as I have to have the accounts prepared each year for 15000 baht. It is also 'illegal' so will probably come to a 'head' one day!!!

The company setup for a condo is obviously 'illegal' as well. It is circumventing the ownership percentage of the condo building with respect to foreign ownership. Why anyone would want the extra hassle and cost (ie of preparing the annual company accounts) by buying a condo in Pattaya via the company setup, when Pattaya is awash with condos you could own legally in your own name, is beyond me.

So leave this condo alone and maybe pay a little bit more for a condo in your own name.

[PattayaPhom]

As an agent I would only sell company owned to a Thai. Answer to your question ...No.......unless it is in a condominium with a waiting list but even then would think twice

[elgordo38]

is it not better to keep renting...what is the use of buying anything in thailand? before you know it , you get a new <deleted> neighbor that makes your life miserable ... if only renting than moving is an easier option

I agree please read another posting here on a gambling den opening up next door. I live in a condo and have for some time. Neighbors come and go some good some bad noisy. Yes I would buy a condo here but only if I won first prize in the Super Lotto otherwise no. You sound rather complacent living in the same place for a number of years but this taking over his company thing could be a nightmare. With all these supposed problems attached he also wants more money. Again look around town. In the end stay away from buying unless your loaded. I imagine condo's do not come cheap where you are located. Good Luck to you anyways. Think of relocating to Chiang Mai condo's cheaper here and a good selection of new ones.

[khunPer]

Keeping property in a Thai limited company is not without additional expenses for accountant, annual statement and some company tax.

Furthermore taking over a limited company – and yes, you save transfer fee and seller saves little tax at Land Office – you need an experienced accountant or lawyer of yours to read the annual statements and check the company (due diligence), so you know what liabilities you take over; however in some places it’s an often used method selling a company holding property, instead of the property.

You have to take into consideration, that you legally only owns up to 49 percent of the Thai limited company – who are the other 51 percent...?

And have the company been brought up to present level with clearing all previous proxy shareholders (that was an often used set-up, where just some Thai names were added as owners of the 51 percent shares)...?

And do the company has any other activities, than holding one only condo and leases it out to the major shareholder (which can be a problem, for the future legality of the company)...?

That may be cheaper and prospectively easier, if you buy a condo within the 49 percent limit allowed for foreigners to hold...

[CapeThai]

The problem is its ILLEGAL and surely just a loop hole. You can take the risk to loose it all when the Government finally decides to crack down on the guilty

[Delight]

In 2007 a government Bill proposed that if a company had a foreign director and that if this director held the control,then that company had to be a foreign company.

The Bill was defeated

Given this ,does anybody out there actually truly believe that the Thai government will actually stop the 'Company' approach .?

Bear in mind that 'Money makes the world go round'

[KittenKong]

...does anybody out there actually truly believe that the Thai government will actually stop the 'Company' approach .?

Yes, I do believe that they will do it just as soon as they think it may be to their advantage.

I also believe that they will happily discontinue easy and cheap retirement extensions just as soon as they think they no longer need the forex they provide.

[bangkoklawyer24]

Don't worry. Everything is well. It is always aa good idea to acquire real estate through a company. All over the world lawyers will advise you not to expose yourself directly to the land/condominium unit, but to put a company in between. It gives you much more flexibility, is a tax shelter and gives you more options for your succession planning.

[KamalaRider]

If you buy his condo with company, you'll need to close books every year as well as have an accountant.

This will cost you money.

The bad part is, if you don't have an active company, no real business making money, they could forfeit your ownership by the government exterminating the company and fining you.

Now, I haven't heard about anyone this happened to, but personally, I NEVER rely on chance when a lot of money is on stake.

There's one other way to do it , I think, and that's to have the company as a condo rental company and rent it out to yourself (dangerous have I heard).

Check up with a lawyer before you do anything.

Edited March 15, 2015 by KamalaRider

[KittenKong]

Don't worry. Everything is well. It is always aa good idea to acquire real estate through a company. All over the world lawyers will advise you not to expose yourself directly to the land/condominium unit, but to put a company in between. It gives you much more flexibility, is a tax shelter and gives you more options for your succession planning.

Crikey.

If that's really what lawyers advise I'm glad I buy my properties without asking them anything.

[mrfaroukh]

There are many who buy in company name, but it is much more difficult to sell it if you ever want to. I also heard in news that someone in army has said that this kind of transaction according to some law is prohibited and they can always stop this as if no transaction has ever happened. I am not very sure may be i have misunderstood it. But I will never buy in company name.

[hhgz]

Rather than assume why the condo is in a company name, why not ask? If a company owns an asset which it wants to sell, it's not a requirement to buy the entire company. You only buy the asset. Too, it's possible to change the name of the Managing Director, without altering the form or structure of the company.

[jacko45k]

You must consider that if you wish to resell this condo, you can only do so to a Thai or another foreigner willing to accept the company ownership method, or willing to put it into a Thai wife's name. Hence a limited market.

You can own a condo outright, and most will prefer this, as you should.

[Langsuan Man]

Rather than assume why the condo is in a company name, why not ask? If a company owns an asset which it wants to sell, it's not a requirement to buy the entire company. You only buy the asset. Too, it's possible to change the name of the Managing Director, without altering the form or structure of the company.

Changing the Managing Director is all you do when you "buy" the company that was set up specifically to "own" the property (that's where the tax savings lie)

The OP already reported that he was told by the "agent" who is handling the rental and possible sale that the condo is owned via a company. I seriously doubt if the agent is going to take too kindly to the OP trying to contact the owner directly to ask a question already asked and answered

[Langsuan Man]

You must consider that if you wish to resell this condo, you can only do so to a Thai or another foreigner willing to accept the company ownership method, or willing to put it into a Thai wife's name. Hence a limited market.

You can own a condo outright, and most will prefer this, as you should.

And don't forget that if you sell it later on to a Thai that it will cost you approximately 50,000 THB to legally close the company, which you must do

One more reason not to purchase a condo via a company

[trogers]

There is really no reason to have or to purchase a condo in a company name

This of course is not true for houses, other than a long term lease or usefruct there is no other mechanism for a foreigner to "own" the property that a house is built on here in Thailand

The current owner can only sell you the company, which is an administrative action, and then you will own the company and all it's assets, including the condo

As far as the legality of your lease, it is legal for this foreigner's company to lease out it's property (the condo) and to be perfectly honest with you is none of your concern. The owner of the company can do whatever he want's with his property, in this case lease it to you, or sell the company to you

But as i said at the outset, there is currently many, many, condos in Pattaya in the foreign quota that, unless this particular condo has some great value to you, would be a much better deal.

Why waste your money on owning something that you really don't own, especially since there are fully legal alternatives. The company route is just a "loop hole" that is exploited by lawyers and builders to get around the restrictions of the 49/51 rule. Legal yes but also potentially problematic. Not to mention the hidden costs of having the company updated every year to stay legal, which will cost you between 15-20 thousand baht annually

Finally, if you do purchase a condo in the farang quota be aware that if you die your heirs will have to sell the condo to another foreigner ( who must bring the funds in from off shore) within one year or it will automatically return to the Thai quota. If you own the condo in a company name they can inherit the company with no more restrictions than you would have (ie. the loop hole)

When a company leases it's condo, it is liable to pay withholding tax. Unpaid taxes attract a penalty fine.

Should you take over the company, you also take on such liabilities.

[WorkingTourist]

Don't worry. Everything is well. It is always aa good idea to acquire real estate through a company. All over the world lawyers will advise you not to expose yourself directly to the land/condominium unit, but to put a company in between. It gives you much more flexibility, is a tax shelter and gives you more options for your succession planning.

Crikey.

If that's really what lawyers advise I'm glad I buy my properties without asking them anything.

I think bangkoklawyer24 is talking about an anonymous offshore company, not a Thai company where majority of the shares are held by Thai straw men.

The anonymous offshore company is indeed a common setup when buying property because it can be used for money laundering and tax evasion, although it might often be justified as “succession planning”.

[jinners]

is it not better to keep renting...what is the use of buying anything in thailand? before you know it , you get a new <deleted> neighbor that makes your life miserable ... if only renting than moving is an easier option

If you take that logic further, then nobody anywhere, would buy. Just in case you get a bad neighbor. How ridiculous.

I understand the benefits of renting and so moving, if such an event happens, I also understand many people rent because they have funds coming in, via pension or shares etc. but don't have the cash funds necessary to purchase in this non mortgage environment.

But what about the benefits of reducing your monthly overhead massively once you do own? I, as an owner, pay under 1000 baht PM for water and electric, and also have very low community fees. That's it! The rest is disposable income.

I also have property in a company name (house) my annual accounts are way less then the 15-20k spouted on here

[Langsuan Man]

When a company leases it's condo, it is liable to pay withholding tax. Unpaid taxes attract a penalty fine.

Should you take over the company, you also take on such liabilities.

Only if the lease is registered at the Land Office, other wise there is no public record of the lease. Or possibly if the renter tries to claim the rental as a business expense but this is not very common

[trogers]

When a company leases it's condo, it is liable to pay withholding tax. Unpaid taxes attract a penalty fine.

Should you take over the company, you also take on such liabilities.

Only if the lease is registered at the Land Office, other wise there is no public record of the lease. Or possibly if the renter tries to claim the rental as a business expense but this is not very common

Or reported by a pissed off tenant.

[AsianExport]

On 3/15/2015 at 9:44 AM, Langsuan Man said:

There is really no reason to have or to purchase a condo in a company name

This of course is not true for houses, other than a long term lease or usefruct there is no other mechanism for a foreigner to "own" the property that a house is built on here in Thailand

The current owner can only sell you the company, which is an administrative action, and then you will own the company and all it's assets, including the condo

As far as the legality of your lease, it is legal for this foreigner's company to lease out it's property (the condo) and to be perfectly honest with you is none of your concern. The owner of the company can do whatever he want's with his property, in this case lease it to you, or sell the company to you

But as i said at the outset, there is currently many, many, condos in Pattaya in the foreign quota that, unless this particular condo has some great value to you, would be a much better deal.

Why waste your money on owning something that you really don't own, especially since there are fully legal alternatives. The company route is just a "loop hole" that is exploited by lawyers and builders to get around the restrictions of the 49/51 rule. Legal yes but also potentially problematic. Not to mention the hidden costs of having the company updated every year to stay legal, which will cost you between 15-20 thousand baht annually

Finally, if you do purchase a condo in the farang quota be aware that if you die your heirs will have to sell the condo to another foreigner ( who must bring the funds in from off shore) within one year or it will automatically return to the Thai quota. If you own the condo in a company name they can inherit the company with no more restrictions than you would have (ie. the loop hole)

 

 

Thank you for your message, I am looking for a new condo just built and found many ads selling in company name ? What is the reason to sell in company name a brand new condo (just finished construction) as the foreign quota couldn't be reached yet ? Thanks.

 

 

 

 

 

[Langsuan Man]

The farang quota could have been sold out prior to the condo even being started or finished so your statement about the foreign quota "couldn't be reached yet" is not valid

 

And the reason for selling in a company name is based supply and demand;  only 49% are in a farang name and thus cost more so the builder's profit is greater for those units

[KittenKong]

3 hours ago, AsianExport said:

Thank you for your message, I am looking for a new condo just built and found many ads selling in company name ? What is the reason to sell in company name a brand new condo (just finished construction) as the foreign quota couldn't be reached yet ? Thanks.

 

If you dont fully understand all the ins and outs of company name property ownership in Thailand I strongly suggest that you stay well away from it.

 

Company name units can be extremely difficult to re-sell, hence the large number of ads you are seeing.

 

Buying a farang name resale unit in a building in which the farang quota is fully sold out means that there should be at least some demand for it if you want to resell it one day.

[blackcab]

1. Because it suits the developer.

2. Because people will actually buy it without doing their homework first.

3. You zombied a 1.5  year old thread. 

[Delight]

 The major benefit of controlling a condo via a company relates to inheritance

 

Transferring the control of a Thai company(whilst you are still alive) to a relative is easy and cheap-whereas bequeathing  a foreign owned company   to a relative is easy but can be  expensive.(for your relative)

[trogers]

15 hours ago, AsianExport said:

 

 

Thank you for your message, I am looking for a new condo just built and found many ads selling in company name ? What is the reason to sell in company name a brand new condo (just finished construction) as the foreign quota couldn't be reached yet ? Thanks.

 

 

 

 

 

 

Just ask around for the answer to this question: Is it illegal for a foreigner to set up a company with Thai nominees just to hold real estate?

 

Money spent on an illegal activity is lost...