Foreigners may own up to 49% of the units of a registered condominium development (and in some smaller developments within a municipal area, 100%). The development of international quality condominiums has started with some already completed. Within the next several years, the pace of high- and mid-end developments is going to accelerate rapidly.
A Thai spouse may now own land (until recently there were restrictions). He or she must prove that the foreign partner ("alien" in Thai legal language) has no legal claim to the money used for payment of the land. In the case of separation or divorce, the foreign partner has no rights to the land. In addition, the land cannot be willed to the foreign husband/wife or non-Thai citizen dependents when the Thai dies.
There are several official ways a foreigner might own land. The first requires a foreigner to bring in from overseas a minimum of 40 million Baht worth of cash. The second requires that the foreigner be associated with a Board of Investment approved project. In both instances, the property (1 rai or less - 1,600 square meters - see Thai Measures page) must be within a municipal area.
The usual way for a foreigner to occupy land in Thailand is through a leasehold contract, normally for a period of 30 years with two 30-year automatic extensions. There is some confusion here as to how this all really works, but by Thai law a rental agreement may only be made for 30 years. Both parties can contractually agree to renewals (usually signed at the time same time as the first 30-year lease), but the second and third contract cannot be registered at the Land Department. The current justification for this type of agreement centers on the interpretation that possession of the land is assured because of the property/buildings on the land under lease. (A foreigner may own the buildings on the land with full legal rights for them.) The argument is that the land owner cannot seize the buildings upon expiration of the lease as they are separate from the land. There is one serious qualification on these 30 year leases. If the owner dies or sells the land, the lease contract is no longer legally binding. There have not yet been any court cases to challenge this law.
This type of multi-term contract extension has been upheld by the courts, but in cases of conflict it may require court intervention to enforce the renewed Lease Contracts. This is an expensive and time consuming process where a foreigner is at a considerable disadvantage. The separation of land and building ownership and how this really plays out is also problematic. One can assume that there will be a lot of legal wrangling when 30-year leases come up for renewal, especially in cases where land ownership has changed and protection for the extension of leases has not been built into the sales agreement between owners. Looking down the road, one can foresee problems like the land owner blocking access to the buildings on the land if there is a conflict over the lease extension. Extreme care needs to be taken with the details covered and the security provided by any multi-term Lease Contracts.
To be legally enforceable, any lease for a period longer than three years must be registered at the Land Department. This requires the payment of a registration fee and stamp duty based on a percentage of the rental fee for the whole lease term. The original registered lease will remain in force even if the property is sold.
A foreigner can be a shareholder of a Thai Limited Company that owns land. For a company that buys and develops land, Thai law requires that the foreign ownership not exceed 49%. Since 25 May 2006, the government is enforcing a stricter application of the law to prevent Thai nominees holding land for a foreigner. Any company with foreign shareholders that buys land must now prove that the major Thai shareholder is also investing his/her own money in the land purchase, and any foreign shareholding over 39% will result in detailed scrutiny of the ownership. There is still considerable confusion as to how this actually works and some Provincial Land Departments have stopped all transfer of land where there are foreign shareholders.
Once a company is set up, the Articles of Association can no longer be changed so that a foreigner could be the only director of the company with the sole signature authority to commit or bind the company in any contractual dealings (such as buying or selling land and houses). This nominee type control is under serious challenge and for all practical purposes, this type of company set up will not be approved.
(Please Note: The explanations above are informed background information
and are NOT legal advice.)
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