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How to buy land in Thailand
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  1. #1
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    talking How to buy land in Thailand

    HOW TO...: Buy land in Thailand

    The Nation, Published on Nov 15, 2002

    Thai property law states that with a few exceptions – like a Board of Investment approval or suitcases full of money deposited in a Thai bank – foreigners are not allowed to own freehold land. They can only lease the land for a maximum of 30 years. But Thai law has many grey areas; in fact, it seems at times it has more grey areas than black and white areas.

    In 1999, the government lurched out of the 19th century to amend the property law to allow a Thai spouse (male or female) of a foreigner to buy land.

    Unfortunately it only lurched as far as the early 20th century. For the spouse to buy land, proof is required that the money used to purchase the land is legally the Thai partner’s, with no foreign claim to it. Get divorced or separated and the Thai “ex” gets to keep it all. Even if the Thai spouse dies, the foreigner has no claim to the land and there is nothing to stop the relatives from moving in (if they haven’t already) and booting you out.

    If you want a house to call your own without the prospect of your spouses’ relatives circling hungrily, this is not a good option.

    Most foreigners who “own” land and houses – as opposed to condos, which can be owned outright – go for a leasehold agreement of typically 30 years, with two prepaid 30-year renewals. The lease will include clauses that automatically allow freehold ownership if the laws of foreign ownership change in the future, and the right to sell and/or transfer the property.

    This gives you 90 years with strong backup, making it effectively ownership.

    Just to complicate things a little, while you can only lease land, all the buildings – either on the land when it was purchased, or improved or built by you after purchasing the land, are yours freehold. Technically this means that once the lease expires, the owner of the land must purchase the building(s) at an independently and legally valued price, or negotiate another lease period. God knows how that can work.

    The structure of a lease agreement needs to be watertight. But because this has become the preferred way of holding land in Thailand for foreigners, this type of lease agreement has become more or less a template, with add-ons to suit individual buyer’s needs.

    But don’t draw it up yourself. Get the advice of a lawyer versed in such things. And don’t sign anything or hand over any money until you fully understand and are happy with what’s written on the lease agreement.

    One thing you need to be aware of is the title status of the land you are purchasing. In much of upcountry Thailand, including favourite places to buy for foreigners like Phuket, Ko Samui, Pattaya and Hua Hin, most land has not been surveyed or has been dubiously titled.

    Land is titled depending on its survey status. Make sure of the land title before you buy – often prices vary greatly depending on the type title – or you might find someone else laying claim to your rai after just after you finish building your retirement home.

    “Chanott ti din” are title deeds with land accurately surveyed. If you have one, it gives you incontestable possession of the land. The most developed areas of provinces have these titles. But even in farang-friendly Phuket, for example, only 10 per cent of the land is under this title.

    As it stands, most “titles” around the country are “Nor Sor Sam” or “Nor Sor Sam Kor”. They are land title deeds in as much as clear records of ownership are maintained, and that they may be sold or leased, but they tend to be less accurately surveyed than Chanott titles.

    If purchasing Nor Sor Sam-titled land that lacks clearly defined physical boundaries, ask the owner to stake out the boundaries and then ask neighbouring landowners to confirm his work.

    And there are more. Sor Kor Nung, Tor Bor Tor Hoc, and Tor Bor Tor Ha are essentially squatter’s rights registered at the district office for a small fee. Unlike the Chanott and the Nor Sor Sam Kor, they cannot legally be sold, nor can you build on the land if you are stupid enough to buy it. So be a prudent foreigner and ignore the Sor Kors and Tor Bors.

    Oh yes, I almost forgot one: the Sor Bor Kor. These are true title deeds, accurately surveyed and pegged (like a Chanott). They can be mortgaged and developed. But the big but is they cannot be leased, sold or transferred.

    So, also ignore Sor Bor Kor.

    Chanott and the Nor Sor Sam Kor are the only titles over which a registered right of ownership or lease. Stick to them.

    Phil Macdonald

    The Nation

  2. #2
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    Why not have foreigners buy stock to land. I've seen this done on small islands off the east coast of Africa.

    A Thai company is set up to buy land. When a foreigner wants to buy land in Thailand, they go to this Thai company. A foreigner gives the Thai company the money to purchase the land, and the Thai company then issues 95% of the stock directly to the foreigner relating to the land which the foreigner wishes to purchase. (Known as "Stock to Title").

    1) The foreigner gets to live on the land as long as he wants.
    2) If the laws ever change, the foreigner can purchase the remaining 5% stock from the Thai company, and tranfer the title
    3) As the land appreciates, so does the stock.
    4) If the foreigner ever decides to sell the land, the Thai company simply has to sell it for him, and will give him 95% of cash received (buying back the stock).
    5) If the foreigner's thai spouse dies, the family cannot take over simply because the souse does not own the stock, the foreigner does.
    6) foreigner must pay all annual property taxes, otherwise, the thai company could force an early sale of the land.
    7) The Thai company makes money by receiving 5% of the value of land at the time of sale.

    Anyone out there with legal knowledge? Would this work?
    "Random Witty Comment"

  3. #3
    D80 Guest

    panic

    Well, I am from a legal background and pursuing a legal career. I am not so sure if the idea of shares will work. It sounds like full ownership will still not be possible even with the sort of scheme. For one reason, really, the Thai company will be owning the land 'on behalf of' the foreigner in effect. We can talk about the legal implication till the cows come home.... Basically, the purpose of Thai law prohibiting foreigner to buy land has its own reasons.

    From what I have talked to people involved, the rules are as they are because, rightly or wrongly, the authorities do not want foreigner to be able to own land in Thailand. They also do not want non-Thai national to be able to own property that easily either.

    This is partly because (they argue) the exchange rate and the dramatically different economic development between Thailand and most Western countries make it way too easy for anyone from a developed country to buy land in Thailand. They could come in and buy land far and wide for a fraction of what it would have cost them normally in their own country. One of the fear is that this will effect agriculture which is one of the main economic activities in Thailand. If most land is foreign owned, then it is likely for Thailand to lose more and more money. This may also effect other areas (i.e. manufacturing, property rental etc.)A kind of 'economic colonisation', they believe.

    Also, there is something to do with nationalistic attitude as well. The idea that 'Thai land' belongs only to 'Thai people' is still strong. Unfortunately for most foreigner, this does not make it easy to live in the kingdom in a long term.

    I have heard of numerous conplaints about this law and how it should be changed. I don't entirely agree with the law at present that prohibit foreigner from really legally owning land. I am also quite concerned about the (pretty much) non-existing immigration policy for foreigner in Thailand. But I don't really think things will change too quickly either (look at the law on spouse of foreigner-that has only been changed very recently!).

    The main point of this law is, really, to keep Thai land Thai-owned and depriving foreigner of really legally owning any of it. The leasehold law was passed with quite a bit of difficulty. There were loads of opposition voiced from some groups of Thai people saying that the government is selling 'our Thai land' to 'foreigner'. (I got this from Thai discussion paper/ webboard) These people think a 90 year lease is pretty much a sale of the land as far as they are concerned.

    All the information given here I've got from discussing the issue with respectable lawyers and people in the legal profession in Thailand. So, treat it with some caution as it is in essence an analysis of the system.

    I have been intersted in this for a while since I too am with a foreign partner and would like to see something done to this obsolete law. It is very difficult to consider coming to live in Thailand LEGALLY when the law makes it so hard to get these basic things done.

  4. #4
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    I think what you said earleir:

    Quote Originally Posted by [b
    Quote[/b] ]Also, there is something to do with nationalistic attitude as well. The idea that 'Thai land' belongs only to 'Thai people' is still strong.
    ...that is the real reason that foreigners cannot own land in Thailand. Agriculture, manufacturing, and other aspects directly effecting the gross domestic product of Thailand can be worked out. In regards to foreigners buying land, any foreseen problems dealing with Economics can be solved. However, the attitude that "Thai land is only for Thai people" is something that cannot be changed over night. It's just how the citizens feel, and so long as they feel that way, I really don't think that the laws will change.

    I would agree with a law which would allow a Thai/Non-thai married couple to purchase a limited amount of land in the name of the Non-Thai national for living and business. Of course, there would have to be some form of clause which would state something like "in the event of a divorce prior to having children, the land under a non-thai nationals name must be sold." This would keep foreigners from getting married to, and immediately divorcing a Thai partner in order to purchase Thai land.
    "Random Witty Comment"

  5. #5
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    I think some foreign people have bought land themselves in the name of their company which they have majority ownership. Previously, by law, Thai nationals had to have majority ownership of a company but that has now changed.

    You might find this previous post useful:

    How to set up your own business in Thailand

  6. #6
    D80 Guest

    panic

    It is true that a foreigner can buy land in Thailand through his/her company that he/she set up. This is because a company has got a legal personalty which is regarded in the eyes of law as separated from the foreigner who sets the company up on the first place. Therefore 'the company' can trade and own property (including land) like a person. The company must ne incorporated in Thailand and must be considered a 'Thai' company (must have shareholder ratio of 7/1 being Thai/foriegner). There are other rules & ways to do it which one can find out over the net.

    However, there is a limit to how much land a company of this sort can buy. I don't think it is that much, from memory alone. Also a foreigner cannot buy land and then engage in most agricultural activities like fisheries, farming, cattle husbandry etc etc.

    It's just a bit too complicated at the moment. I agree that the law is there because of nationalistic attitude more than anything else. But I also think there are some economic implications to it as well (even when the alleged 'problem' can practically be solved).

  7. #7
    D80 Guest

    panic

    Just read Sawatdee's post again. I didn't know the law has chnaged to such an extent that a Thai majority is not required anymore. I have only been doing some research on this a few weeks ago and the Thai/foreigner ratio of 7/1 still seems to apply (??!??). I guess lots of web sites still have not updated their info yet.

    If the law has changed, that will be quite interesting. I have heard of changes being proposed for a while but did not know they have already done it.

    Thanks! I learn something new everyday!

  8. #8
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    D80,

    For private limited companies the company needs 7 shareholders at all times. However, they can all be non-Thai.

    If you have Adobe Acrobat Reader, then I really think you should read this document from the Ministry of Foreign Affairs in Thailand. It's pretty much up to date. The information regarding the change of the 7/1 format is on page 2.

    Furthermore, a short summary of amendments regarding foreigners owning residential land is located on page 52. It basically states that foreigners investing in the area of 40 million baht in Thailand may be permitted to purchase one rai of residential land in Bangkok.
    "Random Witty Comment"

  9. #9
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    Gor Gai

    Quote Originally Posted by [b
    Quote[/b] (Chai @ Mar. 27 2003,01:53)]It basically states that foreigners investing in the area of 40 million baht in Thailand may be permitted to purchase one rai of residential land in Bangkok.
    Oh, so that is what was referred to in the first post when it said:
    Quote Originally Posted by [b
    Quote[/b] ]...with a few exceptions – like a Board of Investment approval or suitcases full of money deposited in a Thai bank – foreigners are not allowed to own freehold land.
    That's good to know. Now all I need is to find my piggy bank to get out the spare change!

  10. #10
    Pemasil Guest
    This is good information.

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