Urgent Advice Needed With Regard To Condo Purchase

[ChUcKyChUcKs]

Hi Guys!

Ok i have a dilemma...i have been goint to Thailand for many years and always love my time spent there, i have decided to purchase myself a Condo in Phuket for which i actually found the link for on Thai Visa.

It is being developed by an Australian company called Watsons and everything sounds like it's 100% legal but i have to be honest and say that i am a novice when it comes to buying property abroad.

I have paid my reservation fee of £1500 and i now have to pay a further £33,000 by tomorrow since the founds have been completed..i forgot to mention that the condo is 4.5m Baht.

Now i know that there are two possible ways for me to buy..Leasehold being 30+30+30 and i don't really like the idea of that because there are no guarantees that after 30 years the lease will be renewed.

So i have decided to go the company route...now i am still trying to get to grips with understanding all the legal guff that goes with this route and i had the sales and purchase agreement e-mailed to me just yesterday which i have to be honest scared the life out of me because there was so many pages to read.

As i browse through this forum quite a bit i have noticed people saying that the company route is illegal? so now i don't know what to think the guys at the condo development asked me to give 3 possible names for my company and they said to me that they had some on the shelf company already orginized waiting to be used.

I go to Thailand tomorrow for a month but i need to wire the money to the developers bank account before i go tomorrow in order to proceed with the purchase but i am very nervous because of all the bad press latley with regard to the company structure issues.

Can anyone give me some good sound advice about the company situation at the minute or any other info that you might think relavant.

Steve

The development is..

www.belairpanwa.com

[rcm]

Hi there,

You didn't give a lot of time for that really.....however my best advise is . Get in touch with Sunbelt Legal advisors.They are also Forum Sponsors here. Never heard anybody complaining about them.Here is the link Legal advisor

good luck,

rcm

[tominchaam]

I just have edited my post - after reminding myself that to lease a condo means you will own nothing but the leaseagreement. Before I compared to lease land and own the building which makes my reply different. Sorry - i wanted to be quick due to your hurry. But I was too quick.

I strongly recommend you not to pay any more money until you have been given legal advices in line what “RCM” just wrote. The leasing has its good and bad points – but to lease a condo??? Follow the Thai law from the beginning and do not make yourself a target is my advice – and give yourself time enough to make a decision you are likely to be happy with for a long time. Money can be transferred at any moment so that can not be a real problem unless they have already been sent .

The following was posted at Thai Visa earlier today. I think it gives good information about what it means to go the company route today. It is about land but in your situation the juristic person has filled up the 49% allowance for farangs so your situation is therefore simular to what the lawyer writes about.

I am an English lawyer working for a Thai lawfirm primarily dealing with farangs wanting to purchase property in Thailand. I have worked in Samui and currently in Pattaya for the same firm for just over a year.

The current situation as regards land transfers is as confusing to me as to anybody as the situation is still evolving in relation to the directives issued by the Ministry of Interior. and what seems acceptable to the land office and Department of Business Development (Company's Registry) one week can change the next.

When I first arrived here the "acceptable" way for foreigners to transfer land was with a 49% shareholding in a Thai majority shareholder company with the foreigner's shares being preferential shares with a voting power of 10 votes per share and the Thai's shares being ordinary shares with a voting power of 1 per share. The Thai shareholders were members of staff and consequently nominees.

Possibly because of the Prime Minister's involvement with the Shin Corp Company and the use of nominee shareholders, it seems that the government are intent on stamping out the use of nominee shareholders, hence the first directive that was sent to the land offices in May.

The first reaction to that directive was to transfer the land to a pure Thai company, again using Thai staff as nominees, and as soon as the land was transferred, re-structure thecompany to bring in the foreign director/shareholder.

This was acceptable for a while until the August directive to the DBD made it clear that any company with a proposed foreign director/shareholder would be required to provide evidence of the Thai shareholders income and personal investment into the company.

The current "acceptable" method, according to the DBD, and this has only been related to me by Thai staff who deal with company registrations, is to form a 100% Thai company as before, transfer the land, and then re-structure the company but with the foreigner only having 35% of the shares.

The foreigner still retains control of the company by virtue of voting power. (350 votes against 65) although in practice there would never be 'real' meeting of the company.

The dilemma is how long this will remain the acceptable method, and how intent are the government in preventing foreigners owning land through the company method.

There has been significant downturn in the property market in Pattaya, although there are still foreigners buying land using this method. Whether it is safe remains to be seen.

There definitely seems to be a 'wait until after the election' attitude, but my own view is that foreigners may have to accept that if they want to own land, it will have to be on the 30yr lease basis, which is not without drawbacks as there is no law in place that requires a freeholder to renew the lease after 30 years, and more significantly, a lease dies whith the lessee and therefore the land cannot easily be inherited.

It seems that condos are getting more and more popular here!!

Edited August 31, 2006 by tominchaam

[ChUcKyChUcKs]

I just have edited my post - after reminding myself that to lease a condo means you will own nothing but the leaseagreement. Before I compared to lease land and own the building which makes my reply different. Sorry - i wanted to be quick due to your hurry. But I was too quick.

I strongly recommend you not to pay any more money until you have been given legal advices in line what “RCM” just wrote. The leasing has its good and bad points – but to lease a condo??? Follow the Thai law from the beginning and do not make yourself a target is my advice – and give yourself time enough to make a decision you are likely to be happy with for a long time. Money can be transferred at any moment so that can not be a real problem unless they have already been sent .

The following was posted at Thai Visa earlier today. I think it gives good information about what it means to go the company route today. It is about land but in your situation the juristic person has filled up the 49% allowance for farangs so your situation is therefore simular to what the lawyer writes about.

I am an English lawyer working for a Thai lawfirm primarily dealing with farangs wanting to purchase property in Thailand. I have worked in Samui and currently in Pattaya for the same firm for just over a year.

The current situation as regards land transfers is as confusing to me as to anybody as the situation is still evolving in relation to the directives issued by the Ministry of Interior. and what seems acceptable to the land office and Department of Business Development (Company's Registry) one week can change the next.

When I first arrived here the "acceptable" way for foreigners to transfer land was with a 49% shareholding in a Thai majority shareholder company with the foreigner's shares being preferential shares with a voting power of 10 votes per share and the Thai's shares being ordinary shares with a voting power of 1 per share. The Thai shareholders were members of staff and consequently nominees.

Possibly because of the Prime Minister's involvement with the Shin Corp Company and the use of nominee shareholders, it seems that the government are intent on stamping out the use of nominee shareholders, hence the first directive that was sent to the land offices in May.

The first reaction to that directive was to transfer the land to a pure Thai company, again using Thai staff as nominees, and as soon as the land was transferred, re-structure thecompany to bring in the foreign director/shareholder.

This was acceptable for a while until the August directive to the DBD made it clear that any company with a proposed foreign director/shareholder would be required to provide evidence of the Thai shareholders income and personal investment into the company.

The current "acceptable" method, according to the DBD, and this has only been related to me by Thai staff who deal with company registrations, is to form a 100% Thai company as before, transfer the land, and then re-structure the company but with the foreigner only having 35% of the shares.

The foreigner still retains control of the company by virtue of voting power. (350 votes against 65) although in practice there would never be 'real' meeting of the company.

The dilemma is how long this will remain the acceptable method, and how intent are the government in preventing foreigners owning land through the company method.

There has been significant downturn in the property market in Pattaya, although there are still foreigners buying land using this method. Whether it is safe remains to be seen.

There definitely seems to be a 'wait until after the election' attitude, but my own view is that foreigners may have to accept that if they want to own land, it will have to be on the 30yr lease basis, which is not without drawbacks as there is no law in place that requires a freeholder to renew the lease after 30 years, and more significantly, a lease dies whith the lessee and therefore the land cannot easily be inherited.

It seems that condos are getting more and more popular here!!

Thanks for the replys guys!

This is giving me a major headache..

Unfortunatley the developers are telling me that my reservation period is going to run out in a few days and so they are looking for me to make 1 of 2 decisions..

1.Make the next payment

2.Tell them to refund my deposit

I'm so confused because i don't want to miss the opotunity of a good investment..i don't want to look back in a few years if the development turns out ok and think i could have had a bit of that.

In the other hand i'm terrified that things will go tits up and i will loose all my cash.

They tell me only i can make the decision, there are people interested in buying the condo and that is why they have to pressure me to make a decision.

Think i'm gonna go mad

[rcm]

I just have edited my post - after reminding myself that to lease a condo means you will own nothing but the leaseagreement. Before I compared to lease land and own the building which makes my reply different. Sorry - i wanted to be quick due to your hurry. But I was too quick.

I strongly recommend you not to pay any more money until you have been given legal advices in line what “RCM” just wrote. The leasing has its good and bad points – but to lease a condo??? Follow the Thai law from the beginning and do not make yourself a target is my advice – and give yourself time enough to make a decision you are likely to be happy with for a long time. Money can be transferred at any moment so that can not be a real problem unless they have already been sent .

The following was posted at Thai Visa earlier today. I think it gives good information about what it means to go the company route today. It is about land but in your situation the juristic person has filled up the 49% allowance for farangs so your situation is therefore simular to what the lawyer writes about.

I am an English lawyer working for a Thai lawfirm primarily dealing with farangs wanting to purchase property in Thailand. I have worked in Samui and currently in Pattaya for the same firm for just over a year.

The current situation as regards land transfers is as confusing to me as to anybody as the situation is still evolving in relation to the directives issued by the Ministry of Interior. and what seems acceptable to the land office and Department of Business Development (Company's Registry) one week can change the next.

When I first arrived here the "acceptable" way for foreigners to transfer land was with a 49% shareholding in a Thai majority shareholder company with the foreigner's shares being preferential shares with a voting power of 10 votes per share and the Thai's shares being ordinary shares with a voting power of 1 per share. The Thai shareholders were members of staff and consequently nominees.

Possibly because of the Prime Minister's involvement with the Shin Corp Company and the use of nominee shareholders, it seems that the government are intent on stamping out the use of nominee shareholders, hence the first directive that was sent to the land offices in May.

The first reaction to that directive was to transfer the land to a pure Thai company, again using Thai staff as nominees, and as soon as the land was transferred, re-structure thecompany to bring in the foreign director/shareholder.

This was acceptable for a while until the August directive to the DBD made it clear that any company with a proposed foreign director/shareholder would be required to provide evidence of the Thai shareholders income and personal investment into the company.

The current "acceptable" method, according to the DBD, and this has only been related to me by Thai staff who deal with company registrations, is to form a 100% Thai company as before, transfer the land, and then re-structure the company but with the foreigner only having 35% of the shares.

The foreigner still retains control of the company by virtue of voting power. (350 votes against 65) although in practice there would never be 'real' meeting of the company.

The dilemma is how long this will remain the acceptable method, and how intent are the government in preventing foreigners owning land through the company method.

There has been significant downturn in the property market in Pattaya, although there are still foreigners buying land using this method. Whether it is safe remains to be seen.

There definitely seems to be a 'wait until after the election' attitude, but my own view is that foreigners may have to accept that if they want to own land, it will have to be on the 30yr lease basis, which is not without drawbacks as there is no law in place that requires a freeholder to renew the lease after 30 years, and more significantly, a lease dies whith the lessee and therefore the land cannot easily be inherited.

It seems that condos are getting more and more popular here!!

Thanks for the replys guys!

This is giving me a major headache..

Unfortunatley the developers are telling me that my reservation period is going to run out in a few days and so they are looking for me to make 1 of 2 decisions..

1.Make the next payment

2.Tell them to refund my deposit

I'm so confused because i don't want to miss the opotunity of a good investment..i don't want to look back in a few years if the development turns out ok and think i could have had a bit of that.

In the other hand i'm terrified that things will go tits up and i will loose all my cash.

They tell me only i can make the decision, there are people interested in buying the condo and that is why they have to pressure me to make a decision.

Think i'm gonna go mad

Trust me this will not be the only opportunity to Invest money , but it is a great deal to loose all of that Money. Personally , i would rather "loose" the 1500 Pound by not being able to find a decision than a total of 4,5 mil THb . Another thing what looks a bit worrying to me is the "Time - pressure" Part. But maybe just my feeling...

rcm

[migrant]

I think the quote that tominchaam gave from the lawyer sums things up, especially this part

"There definitely seems to be a 'wait until after the election' attitude, but my own view is that foreigners may have to accept that if they want to own land, it will have to be on the 30yr lease basis, which is not without drawbacks as there is no law in place that requires a freeholder to renew the lease after 30 years, and more significantly, a lease dies whith the lessee and therefore the land cannot easily be inherited.

the lawyer says it all!!"

Unfortunately.

Also like rcm says there are lot's of opportunities there.

[bkkmadness]

You need to contact one of Sunbelts lawyers and get some proper legal advice here. Don't be pressured (common sales technique) into buying the condo and risk 4.5 million baht without that advice otherwise you may certainly live to regret it.

I have paid my reservation fee of £1500 and i now have to pay a further £33,000 by tomorrow since the founds have been completed..i forgot to mention that the condo is 4.5m Baht.

Now i know that there are two possible ways for me to buy..Leasehold being 30+30+30 and i don't really like the idea of that because there are no guarantees that after 30 years the lease will be renewed.

So i have decided to go the company route...now i am still trying to get to grips with understanding all the legal guff that goes with this route and i had the sales and purchase agreement e-mailed to me just yesterday which i have to be honest scared the life out of me because there was so many pages to read.

Why have you waited until the day before you have to pay them the 33 K to ask about this? Have you only just been informed yourself that it needs to be paid immediately?

Also am I completely missing something here as I thought as a foreigner and because its a condo and not a house with land he could just buy it outright in his name?

Edited August 31, 2006 by bkkmadness

[number6]

I'm so confused because i don't want to miss the opotunity of a good investment..i don't want to look back in a few years if the development turns out ok and think i could have had a bit of that.

In the other hand i'm terrified that things will go tits up and i will loose all my cash.

They tell me only i can make the decision, there are people interested in buying the condo and that

Walk away sure try to get your deposit back but consider it learning life - we have others intersted - tell them fine give me my deposit back etc - it stinks believe me

u dont want to miss an oppertuinity I just saw 2 lovely condos in chiang mai i mean nice asking 1 mill baht and i will buy if 800,000. I paid 3.6 mill my condo in BKK and its worth it

Do research unless u know what your doing your not going to be wondering did i miss something you will be kicking yourself for wasting 4 mill or whatever instead of small deposit

talk to sunbelt sure but up to you dont even tihnk about giving them more money

as they say 1 born everyday dont be one of them

but up to u

[Charma]

Why have you waited until the day before you have to pay them the 33 K to ask about this? Have you only just been informed yourself that it needs to be paid immediately?

Also am I completely missing something here as I thought as a foreigner and because its a condo and not a house with land he could just buy it outright in his name?

I am guessing that the developers have already sold the Farang allocation of apartments in this development. They are now looking for the OP to take the risk of using a company registration or a lease. At least they are not leaving it for a last minute scramble to the land office for all the investors to fight over who gets full ownership!

Not sure about the lease side of things. Who do you go to in thirty years time to ask for an extension? God knows who will hold control of the block and land by then?

I reckon there are quite a few condo developments that may not stand up to close government scrutiny if any sort of clampdown was started in the future there. But you still hear people on this forum talking about buying a condo as if it was a rock solid investment.

[briley]

Don't buy it - especially if you can get your money back

Sounds far to fishy to me

[popshirt]

Don't buy it, even if it doesn't sound fishy. Wait until the dust settles on this issue. Until then, possibly after the election, NOBODY knows.

[Thaiquila]

The main advanatage of a condo in Thailand is the option to buy it in your foreign name. Condos owned in foreign names are worth more than condos owned through dodgy loopholes. I would back out, and if you want to buy a condo, buy one in your own name.

Edited August 31, 2006 by Thaiquila

[bkkmadness]

Why have you waited until the day before you have to pay them the 33 K to ask about this? Have you only just been informed yourself that it needs to be paid immediately?

Also am I completely missing something here as I thought as a foreigner and because its a condo and not a house with land he could just buy it outright in his name?

I am guessing that the developers have already sold the Farang allocation of apartments in this development.

Is there only a certain amount of farang owned condos in a particular development then? The whole lot can't be owned by farang? So their putting the dude through the dodgy company route to get him to purchase. Sounds well dodgy. OP heed the advice on this thread, get a good lawyer (and of course not one the condo company recommends!).

[ChUcKyChUcKs]

Guys!!

Thanks for all the replys

I was just under the impression that straight ownership in my name was not an option as not a lot of Thai's would buy into this type of condo as i feel it is more aimed at the western market..

I have looked at other condo's between the 1-2 million baht price range but they are always small old looking compared to something like this which 106 sq m.

I emailed the company earlier and told them how i was feeling with regard to the company issues, i even gave them the Thai Visa news link that relates to this topic.

I was simply told that they have invested heavily in this project both in name and in money, all their company structures are set up properly by a reputable appointed law firm based in Phuket.

I'm still undecided...Sunbeltasia please advize me!!!

[migrant]

Why have you waited until the day before you have to pay them the 33 K to ask about this? Have you only just been informed yourself that it needs to be paid immediately?

Also am I completely missing something here as I thought as a foreigner and because its a condo and not a house with land he could just buy it outright in his name?

I am guessing that the developers have already sold the Farang allocation of apartments in this development.

Is there only a certain amount of farang owned condos in a particular development then? The whole lot can't be owned by farang? So their putting the dude through the dodgy company route to get him to purchase. Sounds well dodgy. OP heed the advice on this thread, get a good lawyer (and of course not one the condo company recommends!).

Borrowed from a legal site

CAN A FOREIGNER LEGALLY OWN A CONDOMINIUM UNIT IN THAILAND?

Answer: Any non-Thai who has legally entered into Thailand may have a freehold ownership over a condominium unit, constructed on a land of less than 5 rai, of certain projects in municipal jurisdictions of the Kingdom, such as Bangkok, Pattaya, and Phuket. However, condominium units owned by a foreigner shall not exceed 49% of the total space of the condominium project. Other restrictions are applicable. A non-Thai owner of a freehold condominium unit may transfer a property to other foreigners. If you wish to buy a condominium in Thailand, there are certain points of which you should be aware before choosing your new property:

[Thaiquila]

The size of your individual unit is irrelevant. The percentage of foreign ownership in the building is the issue. 49 percent OK for foreign ownership. Obviously, you are not in the 49 percent. Your condo company also sounds like it is giving you a snow job. BAIL!

[backflip]

I suggest that you bail out, too. Not because of the company, the development, or the laws of Thailand - it's because you don't understand either what you're trying to do or need to do. You should have posted much earlier than "the day before you need to make a decision".

[Gary A]

There are still many condo units that can be owned freehold in your own name. I have no idea why anyone would want to go the bogus company route when you have the option to legally own the unit. If there are no units available that can be owned freehold, keep looking.

[jbowman1993]

I agree. Walk away from this deal. You can purchase a condo in your name, with less hassle.

And then you own the property!!! Leasing is bulls**t.

[bkkmadness]

I was just under the impression that straight ownership in my name was not an option as not a lot of Thai's would buy into this type of condo as i feel it is more aimed at the western market..

Where did that impression come from, surely the company you are spending your money with would have explained the full situation to a newbie investor such as yourself. They didn't? Wonder why!

I have looked at other condo's between the 1-2 million baht price range but they are always small old looking compared to something like this which 106 sq m.

I think its like someone else said, you shouldn't invest because your not even sure how to legally in this country. I'd go further to say if your not aware on how to legally invest in condos here then (with all due respect) I'd say you are not in the position to judge what is a good investment and what is not. Large and new is not the only criteria you should be looking at I would have thought.

I emailed the company earlier and told them how i was feeling with regard to the company issues, i even gave them the Thai Visa news link that relates to this topic.

I was simply told that they have invested heavily in this project both in name and in money, all their company structures are set up properly by a reputable appointed law firm based in Phuket.

So they didn't address your issue or concerns then, just told you how much they invested in their firm and told you how they were a legal firm.

Migrant, thanks for the information regarding foreign ownership on condo projects, I'm starting to understand why they suggested the dodgy company route to the OP now.

Put your money back in your pocket this time, ask for your deposit back and look into this situation some more before trying another investment. There's plenty of condos out there going for good prices, and quite rightly as everyone else said, the main advantage is you can own them in your name 100%.

[skippybangkok]

Yes, confusd me why you went to all the trouble about company / leases when you can won in ur own name

[Sunbelt Asia]

Guys!!

Thanks for all the replys

I was just under the impression that straight ownership in my name was not an option as not a lot of Thai's would buy into this type of condo as i feel it is more aimed at the western market..

I have looked at other condo's between the 1-2 million baht price range but they are always small old looking compared to something like this which 106 sq m.

I emailed the company earlier and told them how i was feeling with regard to the company issues, i even gave them the Thai Visa news link that relates to this topic.

I was simply told that they have invested heavily in this project both in name and in money, all their company structures are set up properly by a reputable appointed law firm based in Phuket.

I'm still undecided...Sunbeltasia please advize me!!!

Without knowing all the details, it sure sounds like a "no go" reco from us. Why?

1. You are not setting up the company to own a business but being advised to circumvent the 49% ratio of units owned by foreigners. The cost to make this a real business and everything else involved will be much more expensive than just buying it in your name.

2. You would leave a "smoking gun" by setting up a 100% Thai company and transfer the shares in your name later after the condo was registered.

3. If you are willing to buy a condo, why buy a place that requires a company to buy it? Find a development that has less than the 49% of the units sold to foreigners.

4. Your resale value will be lower by using a Thai company rather than finding a location that when you sell the condo, the foreigner can put it in their name.

5. You’ll find there is always a “good deal” everyday. Don’t be pressured.

www.sunbeltasiagroup.com

[steveromagnino]

For what it is worth, I don't think this is a great unit to buy.

For resale, your best hope is HK and Singaporean money. And our research shows they want afternoon sea view sunsets.

That's why there is a premium on the opposite coast.

Then... you are going to probably be built out, as the slope around that area is not so steep; maybe not straight away but at some stage. Only developments like the heights can avoid problems as the site is so steep, that they can look right over the top.

Lastly, at 100m+ away from the beach, I think you will find that this ends up being a 'ok development in an ok location' of which there are going to be billions shortly, thanks to all the foreign money driving developments on every available spot. If you are hoping to rent the place out, tourists are not probably going to want to rent in such a location.

I'd suggest. Wait. Save your dosh. Then bring your money over as the baht continues to slide against the major foreign currencies.

And go for a better location, even if the unit is smaller.

Get in early and you will be within the 49%.

[bkkmadness]

I'm guessing we don't need to do a poll on this one then.

edit. Since the company your involved in is aware of this thread, I wonder why they don't pop on here to explain their business practices to us.

Edited September 1, 2006 by bkkmadness

[ThaiBob]

I have looked at the project Website. I haven't been to Phuket for several years but I thought the other side of the island was the more desireable (beautiful beaches, sunsets).

[cclub75]

I suggest that you bail out, too. Not because of the company, the development, or the laws of Thailand - it's because you don't understand either what you're trying to do or need to do. You should have posted much earlier than "the day before you need to make a decision".

I totally agree.

The time pressure and the fact that actually you didn't make up your mind... yes you should step back.

And then, start all over the process, and also take time to understand the rules regarding real estate in Thailand.

[pgrin]

Had a look at the website. Under instructions for foreigners to buy condos in Thailand it does not even mention the 49% rule(the only way a farang should even think about buying a condo in Thailand) but instead jumps right in to "The Company Route" and makes it sound like its as easy as getting a library card.

Bel Air Penwa

I assume this means all of the farang set aside is used up but they should at least mention it. This is misleading at best.

P

[The Skipper]

Why do people buy these places that are not even built yet?

They never look like the brochure.

This is Thailand. Use your head.

[Dragonman]

Who is the Contract with? Land and Condo owners? As far as I am aware Watson Property of WA are Marketing, fund raising, project management, etc., but work on behalf of Investment clients. Normally guaranteeing x% profits quickly, hence the rush for money in advance.

Having worked in Property Law & Development for 30 years, I must agree with The Skipper. I would always sell an unbuilt Condo unit, I would never buy one.

[Thaiquila]

An especially appealing prospect when a condo is basically AIR rights rather than LAND rights anyway. Anyone know the term vaporware?