At the time of writing, foreign citizens cannot buy land in Thailand, just apartments or condominium units. It is possible to buy a whole building with apartments or condos, but the land on which the building stands cannot be purchased by a foreigner. There are also restrictions as to how many condo or apartment units a foreigner can own in a building, at present no more than 40% of the whole number of units.
Units are sold with 30-year renewable leases. The buyer must register these at the Land Office and can take an option to renew the lease contract indefinitely, each time for a 30-year period. Unfortunately, these lease renewals cannot be registered and cannot be effectively transferred to a purchaser of the property. It is also not possible at the moment for the lessee (without the lessor’s consent) to either sell, transfer or sublease their interest in the property.
But these are drawbacks for private individuals – buying as a private limited company makes it possible to own land and having a greater say in what happens to a property. The private limited company must have mixed Thai and foreign ownership. The share of the foreign ownership must be no more than 49%.
Such a private limited company can be controlled by the foreign individual shareholder by using a legal power of attorney from the Thai shareholders. This puts control of the company back into the hands of the foreign director/s. It is also possible to assign greater voting rights to the foreign partner or partners to give them a controlling interest. Law firms in Thailand can set up such a private limited company.
There is another route that circumvents the restrictions and that is by investing at least 40million Thai Baht (ca. 1.1 million US dollar) in a Board of Investment approved project, usually an infrastructure project. After making the investment, the foreign investor is then allowed to purchase up to 1,600 square metres of land.
Buying a Thai Property
Since the real estate sector is still largely unregulated, it is safer to use the services of an English-speaking Thai lawyer rather than relying on the services of estate agencies. You will need two documents – your passport and an Exchange Control Form, if you are buying as a private individual. If buying as a private limited company, you will also need the following documents:
a notorized copy of your company’s articles of incorporation
a notorized copy of your company’s memorandum of association
a Notaries’ certificate confirming the above
a list of the shareholders in both English and Thai
minutes of any directors’ meetings held with a resolution to purchase the property
letters of advice concerning the specific signatures/signature of all involved in the purchase
power of attorney, if you are not going to be present throughout the transactions and have appointed a lawyer to represent you
a letter confirming you are free of debt
a letter confirming you are the foreign co-owner
notorized copies of IDs of all authorized director/s
title deed for the apartment or condominium unit you are purchasing
a notorized copy of the house registration of the authorized director/s
Before parting with any money for the 10% deposit or signing any agreements, you or your lawyer will have to conduct due diligence. Your lawyer can do a caveat search and verify the property’s condition before your negotiations go any further. Once this has been done and the vendor accepts your offer, the seller’s lawyer will prepare a purchase agreement, which should include which party pays the legal fees, taxes and transfer fees. Your deposit becomes due upon signing the purchase agreement.
Your deposit is non-refundable, unless the vendor is the one who negates the deal and withdraws. Should this happen, the seller must pay you double the amount to compensate you. Closing the deal takes between 30 to 60 days, which includes the exchange of contracts and paying the remainder of the balance for the property. Only when these have been finalised will the title deeds be submitted to the Land Department for registration and payment of government duties.
The registration fee is usually around 2% of the value of the property, while estate agents fees can be anything from 3% to 5% of the property’s value. In addition, there’s 0.5% stamp duty to pay on the assessed or declared value of the property, whichever is the higher amount.
Article by Maria Thermann on behalf of Propertyshowrooms.com
Source:: Property show rooms