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Posts Tagged ‘Property Lawyer Thailand’

28th July 2009

A little known fact: Thailand is one of the few countries not colonized by the British that gave serious thought to adopting the common law. Had Thailand opted to become a common law nation the legal system would probably look very different today. Thailand is a “Civil Law” country and as a result, Thailand Real Estate law and Thai Property regulations are promulgated through the Thai Civil and Commercial Code.

There are two property rights which are relatively uncommon in English speaking countries: the usufruct and superficies. These two legal mechanisms can provide a wide range of property rights to the person who employs them. The following is an explanation of these two legal concepts for those wishing to enjoy property rights in the Kingdom of Thailand.

A usufruct grants the person holding the usufruct with the right to enjoy the use of the land in Thailand. A usufruct can be extremely beneficial because it can be written in such a way that a foreigner can be granted lifetime enjoyment of property. That being said, should the foreigner decide to place structures upon his usufruct, then those structures may need to be abandoned if and when the usufruct comes to an end.

This is where a right of superficies comes into play. The Civil and Commercial Code of Thailand makes provisions regarding superficies, the law states:

When the right of superficies is extinguished, the superficiary may take away his buildings, structures or plantations, provided he restores the land to its former condition.

Therefore, a usufruct is a very useful legal instrument because it could allow a foreigner to have lifetime enjoyment of property, but the foreigner may lose his rights to his or her structures should the usufruct expire (either during his lifetime or upon his death). By utilizing a superficies a foreigner could better protect his or her interests with regard to a Thai usufruct.

It should be noted that the holder of both a usufruct and superficies can assign his or her rights in the provisions of an instrument like a Thai lease or rental agreement. Generally, a lease such as this would expire upon the death of the usufruct holder, but Thai courts have held that leases written upon usufructs shall remain binding past the date of the usufruct holders death. The leasee in that situation would be required to continue paying the originally agreed upon payments, but the payments would be made to the underlying land owner after the usufruct holder’s death. Keep in mind that this rule was made pursuant to a Thai Supreme Court decision. Since precedent is not binding in Thailand, this may not be a hard and fast rule.

For more information regarding this subject please see: Thailand Real Estate FAQ or Thai Condo law

(Please be advised: This is not legal advice it is a personal opinion. No attorney-client relationship should be inferred to exist between the writer and any reader of this post.)

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25th July 2009

Many Expatriates resident in the Kingdom of Thailand eventually come to the point where they wish to purchase property. In many cases, particularly in Bangkok, a Thai Condo will suit their needs perfectly. However, there are many people who do not wish to live in a Thai Condominium. These people often opt to purchase some form of Thai Real Estate.

One of the major problems that comes with purchasing Real Estate in Thailand is the de facto prohibition on foreign ownership of land in Thailand. Some people decide to use a Thai company to own land. This is possible although one needs to carefully construct the corporation so as not to violate the relevant laws regarding Thai “nominee shareholders.” Other less advisable methods are employed by foreigners to enjoy the benefits of property in Thailand. In some cases, a Thai spouse will put her name on the “Chanote” (Title Deed) while the foreign spouse actually pays for the property. This can be very disadvantageous because in transactions such as this the Thai Land Department will often require that the foreign spouse sign an affidavit explaining that the Thai property in question was not purchased with money provided by the foreign spouse and as a result the foreign spouse shall have no claim to the Thai property.

These type of disadvantageous scenarios create a situation where the foreigner’s interests must be protected while also remaining legal pursuant to the provisions of the Thai Civil and Commercial Code. In cases such as this, some foreign nationals opt to record a Thai lease. This instrument would provide property enjoyment rights for a maximum of 30 years. Another method that could be employed by a foreigner is the recording of a Thai Mortgage. This method would have the benefit of securing the foreigner’s monetary interest in the property. However, in many cases, the foreigner simply wants to have his interests in his home protected.  If this is the case then it may be best to bifurcate (split) the Title of the Real Estate.

Under Thailand Property Law there are ways of splitting the Thai Title Deed of a residential property. Basically, the foreign national could be designated as the Title holder of the physical residence (house) while the Title to the land remains in the name of a Thai national. By bifurcating the Title in such a way, the foreigner’s interests are better protected. That being said, it would probably be wise to contact a Thailand property lawyer to assist with creating the proper legal instruments as bifurcating Thai Title can be quite complicated and requires dealing with the Land Department of Thailand.

For more information please see property lawyer thailand or bangkok lawyer

(Please be aware: this piece is not legal advice. No lawyer-client relationship is formed by reading this blog post.)

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23rd July 2009

The government of the Kingdom of Thailand has erected many protectionist economic measures. One of the most prevalent legal restrictions imposed upon foreigners in Thailand is the de facto prohibition on land ownership under Thailand Real Estate Law. There is a common misconception that foreigners are not allowed to own land. Technically, this is not the case. In reality, the law states that a foreigner may purchase Thai Real Estate if he or she obtains approval from the Minister of the Interior of Thailand. As a practical matter, obtaining this approval is extremely difficult, if not impossible. The upshot of these restrictions is a virtual bar on foreign ownership of Thai Real Estate.

In Thailand, a freehold Title deed is known as a “Chanote.” Due to the aforementioned legal restrictions it is a virtual impossibility for a foreign national to obtain a Chanote for Thai property. That being said, some years ago the Thai government carved out a legal niche whereby a foreigner could obtain a Freehold Title to a Condominium in Thailand. This exemption is subject to certain conditions. First, the Condo must meet the definition of “Condominium” under the act which means that the paperwork for the building must be completely in order. Another very important aspect of this legislation is the fact that a foreign quota is imposed upon a condominium complex. The law states that foreign ownership may only account for 49% of a condominium’s total number of units. The other 51% must be set aside for those of Thai nationality.

This foreign quota provision can lead to a problem because Condos that are highly desired or in desirable areas are not available for foreign purchase. Further, it can be a great disadvantage to Condominium developers in Thailand because there is generally an income discrepancy between foreign and Thai property buyers. As a result, legal devices are sometimes utilized to circumvent the foreign freehold quota on a Thai condo.

For many years, the classic method of providing foreign control of Thai real property was through the use of a Thai Company to own land. In the recent past, the Thai parliament passed legislation which outlawed the use of “nominee shareholders” in ostensibly Thai companies to own real estate. This mechanism has been employed by Condominium developers to get around the freehold quota. Basically, the developer sets up a Thai company, sell the condo to the company, and then sells the company, that now owns an otherwise quota restricted condo, to a foreigner. As a result, the foreigner owns a company which owns a condo in freehold that could not be legally purchased outright. As with any corporate structure involving “nominees,” the use of nominees is prohibited, but the definition of “nominee” is left somewhat vague under Thai law. Specialized legal advice should be sought where corporate structures are utilized for property ownership.

For more on Special Exemptions under Thai law for foreigners please see Amity Company Thailand

(This article is not legal advice. For such advice contact a licensed lawyer. No Lawyer-Client relationship is formed by reading this piece.)

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