Integrity Legal

Posts Tagged ‘Thai Condo’

27th August 2011

It recently came to this blogger’s attention that the question of ASEAN economic integration may be a topic of discussion at an upcoming forum. In order to provide further insight it is necessary to quote directly from the official website of Asia One, AsiaOne.com:

BRUNEI – Just how close is Asean to becoming “One Asian”? That’s one of the main questions, executives, government leaders and members of civil society will tackle in the upcoming Asean 100 Leadership Forum, said Dato Paduka Timothy Ong (pic), Asia Inc Forum founder and chairman. As the convenor of the Asean 100 forum, Dato Ong hopes the forum will provide an avenue for people to agree, or disagree to “learn from each other effectively”. The One Asean question is one of two questions that Dato Ong finds important in order to help Asean businesses and leaders advance further. “Some people will say we are close, some will say we are not close, but no one will say we are already there. So how close are we and what do we need to do to get to ‘One Asean’?” The second question was made to be “slightly provocative”, where Asean 100 asked if the Philippines can be the next “Asian Tiger”…

The administration of this web log encourages readers to click upon the relevant hyperlinks noted above in order to read this insightful article in detail.

As frequent readers of this blog may be aware, there has been much discussion pertaining to the jurisdictions which comprise ASEAN (the Association of Southeast Asian Nations, Brunei Darussalam, Cambodia, Indonesia, Laos, Myanmar, Philippines, Singapore, Thailand, Malaysia, and Vietnam) especially regarding the future ASEAN Economic Community (AEC). In fact, there has been some speculation that a unified ASEAN visa scheme may be employed in order to streamline travel in the region, but such developments have yet to come to fruition. The future of ASEAN and Greater Asia is a matter of speculation for many, but there is reason to believe that the ASEAN economies will be robust in the coming years.

In matters pertaining specifically to the Kingdom of Thailand it recently came to this blogger’s attention that the amount of certain Condominiums in Greater Bangkok has apparently declined in recent months. For further clarity it is necessary to quote directly from the Property Report website, Property-Report.com:

The supply of new condominiums in Greater Bangkok has declined an estimated 10 per cent this year, while the number of new low-rise units is increasing, according to a report released by the Real Estate Information Center (REIC). Land allotment permits for low-rise units, excluding vacant land lots totalled 27,400 units in the first half of the year, up from 19,800 in the same period of last year. The increase in low-rise units is expected to equal the peak witnessed in 2005. According to the Bangkok Post, last year, low-rise permits totalled about 51,400 units, up from about 42,600 units in 2009. Meanwhile, the number of new high-rise housing construction permits in Greater Bangkok in the first quarter dropped to 260 buildings containing 1.51 million sqm from 302 buildings with 1.59 million sqm in the fourth quarter of 2010…

The administration of this web log encourages readers to click upon the hyperlinks noted above to read further.

Many foreign nationals in Thailand opt to purchase a Thai Condo since it may be possible to gain freehold title to such property. Such title is also referred to as Chanote Title in Thai. That stated, there are concerns among many foreign real estate purchasers regarding the conveyancing of such property so some opt to retain the services of an attorney in Thailand to assist with such an endeavor.

For information pertaining to legal services in Southeast Asia please see: Legal.

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5th August 2011

It recently came to this blogger’s attention that Economic Ministers from the jurisdictions which comprise the Association of Southeast Asian Nations (ASEAN) are set to meet in Indonesia over the upcoming weeks. Of especial importance, in this blogger’s opinion, is the fact that said meeting is set to include representatives from the United States of America and Russia. In order to shed further light upon these developments it is necessary to quote directly from the official website of The Nation, NationMultimedia.com:

Free-trade partners of Asean, in addition to the United States and Russia, will join Asean economic ministers for a meeting in Manado, Indonesia, next week with the aim of tightening economic integration. Indonesia will host the Asean Economic Ministers (AEM) meeting from August 9-13. Yanyong Phuangrach, permanent secretary at the Commerce Ministry, who will lead the Thai delegation to the meeting, said the main agenda was to forge closer cooperation among Asean member states and trading partners, mainly with FTA partners and the two economic giants – the US and Russia…

Readers are strongly encouraged to click upon the relevant hyperlinks above to read this important article in detail.

In recent months there have been many positive developments in the ASEAN region as discussions pertaining to a possible unified ASEAN visa have been broached. Meanwhile, discussions pertaining to the South China Sea appear to have lessened some of the tensions between ASEAN members nations and China. However, as of yet, a final framework for dealing with the South China Sea has yet to be developed. As the ASEAN region continues to show further economic potential it stands to reason that geo-politically dominant economies will show increasing interest in the Southeast Asian region.

In news specifically related to the Thai Real Estate and Property markets, it recently came to this blogger’s attention that Singaporean and international real estate developers have noted their optimism regarding the Thai property market. In order to provide further elucidation regarding these developments this blogger is compelled to quote directly from the PropertyShowrooms.com website:

A Singapore property development company has decided to invest in a series of condominium projects in Thailand over the coming year. Speaking to Property Report, business development manager at Dalvey Developments Noel Goh described the Thai real estate sector as “a very attractive market with high growth potential”. “Moreover, property prices remain low when compared to neighbouring countries,” Mr Goh added…According to one Asian real estate expert, buyers from Hong Kong are increasingly being drawn to high-end properties in the Thai capital. Executive director for investment and project marketing at CB Richard Ellis Rebecca Shum told the Bangkok Post that the city is a “top-two destination for lifestyle” from the point of view of Hong Kong investors. She added that a rise in optimism about Thailand’s political and economic conditions is helping boost the luxury property market in the nation.

The administration of this web log encourages readers to click on the relevant hyperlinks above to read further from this article.

For many, the purchase of property in Thailand can be a cumbersome and somewhat confusing endeavor as Thai law on the subject has been described as rather complex and, in some cases, byzantine. This is especially true in cases involving foreigners wishing to purchase land in Thailand since there is virtually a de facto prohibition on foreign nationals purchasing Thai land. That stated, such a prohibition does not exist in the context of a Thai lease, Thai usufruct, or Thai condominium. In fact, pursuant to the Thailand Condominium Act, foreign nationals in Thailand may be permitted to purchase a Thai Condo so long as that proposed real estate holding comports with the relevant provisions of the Act. For this reason, and many more, some opt to retain the assistance of an attorney in Thailand to assist in conducting due diligence and conveyancing matters pertaining to Thai property.

For information related to legal services in the Kingdom of Thailand please see: Legal.

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30th April 2011

Over the years this blogger has seen large numbers of tourists flock to the Kingdom of Thailand as well as the neighboring nations of Laos, the Union of Myanmar (referred to by some as Burma), Malaysia, and the Kingdom of Cambodia. At the same time, this blogger has also witnessed the metamorphosis of some of these tourists into entrepreneurs by remaining in some of these countries (as well as other jurisdictions in Greater Asia such as Indonesia, Vietnam, China, Taiwan, Singapore, Hong Kong, South Korea, Nepal, Macau, India, and Sri Lanka; to name only a few) in a business context for many years and; for some, even decades or a whole lifetime. Whatever the circumstances of those Americans Resident Abroad remaining in the region of economies increasingly being labeled by both the mainstream and alternative media outlets by their affiliation with the Association of Southeast Asian Nations (ASEAN) one thing is clear: the economies of Asia are set to expand at an incredible rate by relative historical comparison. Therefore, it stands to reason that there are likely to be more Americans doing business in these jurisdictions. This state of affairs is occurring at a time when the potential of the internet and the World Wide Web first noted little more than a decade ago is beginning to become fully realized by businesses large and small. As e-commerce becomes an evermore ubiquitous facet of virtually every enterprise’s business strategy it is becoming more clear that many business functions are increasingly being performed by businesses of all sizes online and, in some cases, these businesses are even being maintained from an entrepreneur’s home.

This phenomenon is interesting for this blogger to note from the perspective of an American who is resident in Bangkok, Thailand as the Thai shop-house business model of maintaining a residence and business premises within close proximity has lead to a thriving small business community in the vast metropolis that is Greater Bangkok. This thriving business community, coupled with many of the other positive factors associated with doing business in Thailand, has lead to a vibrant economy that remains conducive to further foreign investment by entrepreneurs and businesses seeking to derive economic benefits both in Thailand and throughout the Asian markets. Of possible importance to Americans resident abroad or those thinking of residing abroad are the issues noted above as well as those associated with ownership of Thai property or Thai real estate especially in the form of a Thai Condominium.

In Thailand, as well as throughout many jurisdictions in Asia, there are restrictions placed upon foreign ownership of real estate. Although there are provisions allowing for foreign ownership of Thai property in many cases it is difficult, if not impossible, for a foreign national to secure freehold title (referred to as Chanote title in Thailand) in Thai real property such as land. However, it may be possible for a foreign national in Thailand, such as an American Citizen, to conveniently secure freehold title to a Thai Condo if the provisions of various laws and regulations on this issue, such as the Thai Condominium Act, are adhered to. Meanwhile, a foreign national who owns a Condo in Thailand may be qualified to receive a Foreign House Registration Booklet (referred to as a Tabien Baan for Thais or a Foreign Tabien Baan, or Yellow Tabien Baan for foreign nationals). Taking the aforementioned factors into consideration, in conjunction with the fact that for American Citizens and American Companies in Thailand there may be benefits pursuant to the provisions of various legal instruments such as the US-Thai Treaty of Amity which may provide the privilege of virtually 100% ownership of a Company in Thailand with “National Treatment” for certain business undertakings, one is left with little doubt that there are tangible legal benefits which could be accrued to the favor of Americans resident in Thailand conducting business in the ASEAN region as well as the regions of Greater Asia. Therefore,  investing in what this blogger would refer to as a “Thai Pad” (which non-literally alludes to the IPad-like gadgets allowing for increasingly easy real time access to the internet as well as the exponentially beneficial combination of privileges accruing to owners of Thai property registered on a Yellow Tabien Baan in conjunction with the advantages which may be had for Americans resident abroad utilizing a Thai company certified under the US-Thai Amity Treaty) could prove to have been prudent by future analysts in both tangible as well as intangible terms.

For related information please see: US Company Registration.

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25th March 2010

This author recently came across a discussion of the forecast of the Thailand property market in 2010. For those who are not up to speed on the Thai property market, the year 2009 was not a particularly buoyant year for those in the Thailand real estate sector. This may be due to the fact that the overall economy around the world was not particularly vibrant. That being said, there are optimists who believe that 2010 will be a better year for Thai property.

There has been some talk in and around government circles about reforming Thailand property law. Some believe that a reform of Thailand real estate law would provide more economic efficiency and make foreign buyers (particularly commercial buyers) more amenable to purchasing land in Thailand or other forms of property in the form of Thai condos or houses.

To quote the website ThailandPropertyNews.com:

“The initiative of this government to reform property and land taxation with a view to creating fairness sounds positive, but it will only be possible to determine the effect on the property market once the details of the proposed legislation have been finalised. “So long as the new tax legislation is on a fair basis and the tax rate not so excessively high as to discourage investment, CBRE sees this reform as beneficial for the market,“ Ms. Aliwassa Pathnadabutr, Managing Director of CBRE Thailand said. An additional measure that CBRE urges the government to consider is the extension of the long lease term from the current 30 years up to a maximum of 90 years. This will help improve the market mechanism and make large-scale commercial projects viable which would not be feasible if such developments were freehold due to the high land cost or if they were on a 30-year lease due to the limits on lease terms. The extension of the lease term will also have a direct benefit for resort destinations such as Phuket and Samui where the property markets are primarily driven by foreign demand.”

It is interesting to note that some feel that an easing of the legal restrictions placed upon Thai leases would be a net benefit to the Thai real estate market. Currently, the Thai Civil and Commercial Code places restrictions upon the length of time that a Thai lease will remain enforceable in Thailand. There are exceptions, but currently, the enforceability period is 30 years or less. Providing foreign buyers with the option of obtaining a 90 or 100 year lease might cause an increase in demand for Thai property. It will be interesting to see how the government deals with these issues and what impact any legislative changes will have upon the Thai real estate market.

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24th February 2010

A common method of land ownership in Thailand is through use of a Thai Limited Company. In many cases, a juristic person is incorporated to hold Thai property on behalf of the principal investors in the company.  Over the past three years the Thailand Real Estate market has been somewhat stagnant, but recently there seems to have been something of an upward trend in Real Estate transactions. This has resulted in the Ministry of the Interior raising the fees for land transactions, particularly with respect to land transactions executed on behalf of a corporation. To quote a Pattaya Times article promulgated on the website Thaivisa.com:

“‘A nationwide increase in land offices fees will go in effect on March 2,’ a spokeswoman for the Ministry of Interior announced in Bangkok. The fees for purchases and sales involving a Thai company limited which most foreigners use to buy land will go up from one percent to six and a half percent of appraised or contract value, whichever is higher. The head of the Chonburi Land Office, Director Vaiyavuth Surapruik, said, ‘In 2008 the fees were lowered to help the economy. This has stimulated the sale of properties. Since the fees were lowered almost two years ago there has been no slow-down in the number of transactions at the land office in Banglamung which services Pattaya so now fees will go back up in order to increase government revenues.’”

On the one hand, the recovery of the Thailand Property market is definitely a positive development, and hopefully a sign of an underlying upsurge in the overall Thai economy. This upswing in Thai property sales may also be indicative of an overall upward trend in the world wide economy. However, for those who are thinking of purchasing Thai property be it land or another form of Thai Real Estate such as a Thai Condo, this development will likely be viewed negatively as it will result in increased fees for the buyer or seller of Thai property.

This fee increase will also have an impact on individuals as the aforementioned article concluded:

“Property transfered between individuals will be charged three percent fees if owned for more than two years by the current owner. If owned less than two years the fee is higher, between five and six and a half percent.” [sic]

Property transfers between individual foreigners is probably as common, if not less common, than property transfer between corporations controlled by foreigners. That being said, under certain conditions a foreigner can own a Thai Condominium in freehold and therefore could be effected by these increased individual transfer fees.

For related information on this blog please see: Thailand Property Law.


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14th February 2010

The Treaty of Amity between the United States of America and the Kingdom of Thailand (US-Thai Treaty of Amity) allows American Citizens to own virtually one hundred percent of a Thai company. This can prove highly beneficial to American expatriates in Thailand who wish to conduct business. That being said, there are restrictions to the types of activity that an Amity Treaty Company can undertake. Most notable amongst the restricted activities are: land ownership, internal communications, internal transportation, fiduciary functions, and the liberal professions.

Under Thai law, there is a de facto prohibition placed upon foreigners when it comes to land ownership. This means that foreign nationals are not permitted to take freehold title to Thai property without first obtaining permission from the Thai Minister of the Interior. This prohibition is not all-encompassing as foreign nationals are permitted to take freehold title to Thai condominiums. However, the condominium complex must comport to the relevant provisions of the Thai Condominium Act. Most notable among the requirements in the Thai Condominium Act is the provision that a Thai condo complex must be primarily owned by Thai nationals, meaning that 51% of the Condo units must be owned by Thais while 49% percent of the units may be owned by foreigners.

In many cases, a condominium complex is owned by a company in Thailand. Some opt to own a condo in this way in order to make selling the condominium easier, while others initially purchase the condo indirectly through a corporate entity. In either case, the practice is technically legal. Although, use of so-called “nominee shareholders,” is illegal in Thailand and Thai authorities are increasingly on the lookout for corporate structures utilizing nominees. That being said, the definition of “nominee” is somewhat vague.

This leads us back to the issue of Amity Treaty Companies. Amity Companies are specifically precluded from ownership of Thai real estate pursuant to the provisions of the Treaty of Amity, while the Thai Condominium Act allows foreigners to own a Condominium outright. This begs the question: can an Amity Treaty Company own a Thai Condo in the same manner as a foreign natural person could? This author has not adequately settled this question in his own mind and welcomes any comments regarding this issue. The provisions of the Treaty of Amity preclude land ownership and although many believe that Condo ownership is simply ownership of a unit, the Chanote does pass title to an interest in the underlying land, so there would seem to be a compelling argument that a condo owner is something of a landowner and, if so, this practice would likely be precluded under the provisions of the Amity Treaty.

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26th October 2009

For those interested in purchasing property in the Kingdom of Thailand, Condominiums can be an attractive proposition. One of the major benefits of Thai Condo ownership is the fact that a foreign national is allowed to take possession of foreign freehold title to that particular piece of Thai Real Estate. In Thailand, foreigners are greatly restricted with regard to Thai property as they cannot own land outright. There are certain situations in which a Thai company can be utilized in such a way that a foreigner enjoys the benefits of land ownership, but these type of structures can be cumbersome and recently the Thai authorities have been cracking down on such entities.

Thai Condos provide the benefit of allowing the foreign national to be registered on the Thai Chanote (Title Deed). Further, by being the owner of a Condo in Thailand, the foreigner can apply to obtain a foreign Tabien Baan (house registration booklet) which can be a major benefit as this document is very useful in conducting legal and business transactions in the Kingdom of Thailand. Further, a Thai Condo owner may be able to enjoy some immigration benefits in the form of a Thailand visa as the owner can show that they are living in the Kingdom and contributing to the economy.

One notable issue that often arises in cases involving Thai Condominiums is the requirement that all funds used to purchase the Condo must originate from overseas. This requirement can be met by those earning an income in Thailand, but a great deal of paperwork must be submitted in order to use income earned in Thailand. An even more pressing issue, however, is that of capital flight after the future sale of a Thai Condo unit. The government of Thailand along with the Thai banks have promulgated policies in order to keep foreign capital in the Kingdom when that capital has been previously used to purchase Thai real estate. For example, if a foreigner in Thailand has a Condo unit and opts to sell it. The proceeds from the sale could be practically impounded in the sense that the Thai authorities will place many restrictions on sending said funds abroad. This situation can be averted throught prior planning. If one seeks the advice of a Thailand Real Estate lawyer, they could provide advice and strategies about how one can structure a Thai Condo purchase in such a way that the proceeds from a future sale can be moved abroad at a future point in time, should a sale even occur.

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16th October 2009

Escrows in Thailand

Posted by : admin

In 2008, the Kingdom of Thailand passed legislation that made escrows legal. An escrow is a relationship where two parties contract with a neutral third party to hold funds until the completion of some specified condition. Since the enactment of this legislation, escrows have become increasingly common in the context of Thai Real Estate and Thai property transfers. The reason for this increased usage is due to the many benefits that both parties can receive from utilizing a Thai escrow agent.

The following is an example of how an escrow agent can be utilized in a situation where a foreign national wishes to purchase property in Thailand:

If a non-Thai national wishes to buy Thai property and hold the property freehold, then the options are limited. One of the most popular methods of purchasing Thai Real Estate is to buy a Thai Condo. Under the Thai Condominium Act, a foreigner can hold the Thai Chanote (or Title Deed) of a Condominium provided the Condominium Complex has 49% or less foreign ownership. Once the buyer and seller agree to a price the two parties can agree on an escrow agent and place the funds in the escrow agent’s care. The escrow agent will often agree not to disperse the funds until the parties agree to do so.

An escrow can be an effective way for buyers to be assured that there will be not fraud or misrepresentation in a property transaction. A common occurrence in Thailand involves property developers taking money for Real Estate construction and then failing to complete the project. Another, less common, tactic utilized by unscrupulous operators is to sell interests in property that the seller does not actually own. Using an escrow agent in tandem with a Thai property attorney to conduct due diligence can help ensure that a property buyer is getting what they pay for.

Until relatively recently, Escrow agents were not permitted to operate under Thai law. As Thailand does not have a common law tradition, the ideas of trusts and equitable title are not present within the provisions of the Thai Civil and Commercial Code. That being said, the government in Thailand understood the need to protect buyers and sellers from fraud. The need for “honest brokers,” to hold Thai property purchase payments was self-evident. The recognition of the need for escrows and escrow agents is a credit to the foresight of the Thai authorities. Hopefully, this marks the beginning of a trend toward more consumer protection laws to protect Thai property buyers.

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2nd October 2009

In Thailand, a major concern for expatriates, tourists, and permanent residents is banking. Many people need to set up Thai bank accounts in order to transact personal business in the Kingdom or for international financial purposes. Unfortunately, like many things in Thailand, setting up a Thai bank account can be somewhat difficult, especially for a new arrival trying to establish themselves. In Thailand, each financial institution has its own unique set of rules and regulations imposed upon those who wish to set up an account. Compounding this byzantine situation is the fact that rules and requirements depend upon the type of account one wishes to set up. Business accounts, Foreign Currency accounts, personal savings accounts, and checking accounts all have differing documentation requirements.

For those entering the Kingdom on a Thai visa exemption, opening a bank account in Thailand may prove difficult as many banks are now requiring that an applicant have at least a long term non-immigrant Thailand visa. Some banks take their due diligence efforts one step further and require that a prospective account holder provide a Thai work permit. The practice of requiring a Thai work permit seems to have become a common requirement for nearly all Thai banks in recent months.

There are others who wish to set up Thai corporate bank accounts in the Kingdom, these people are often either the Managing Director of a Thai company or they are thinking of setting up a Thai company. In either case, a great deal of documentation must be submitted in order to obtain a Thai bank account for a Thai corporation. Even where a corporate account can be established, a personal savings account may be necessary if one wishes to have a debit card. As a general rule in Thailand, banks will not issue debit cards for corporate checking accounts. Credit Cards are also notoriously difficult to obtain for corporations as well as individuals who are not Thai Citizens. It is possible to obtain a Thai Credit card, but in many cases the requirements are extremely stringent.

An issue ancillary to Thai banking is Thai mortgages. Obtaining a Thai mortgage can be very difficult for a foreigner. For those wishing to buy a Thai condo it must be remembered that funds for purchase must be brought into the Kingdom from abroad. How this requirement interacts with issues surrounding the Thai mortgage likely is dependent upon the unique facts of the situation.

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27th August 2009

In recent news the Thailand property market has been placed under increased scrutiny for fear that foreigners are using Thai companies as a way of owning land and thereby circumventing the de facto prohibition placed upon non-Thai citizens seeking to buy Thai real estate. In some cases, the Thai government authorities are forcing companies which are not in compliance to sell their Thai property.

In a recent edition of the Bangkok Post, the aforementioned phenomenon was reported on at length:

“If the investigation [by the land department] reveals that the firm holding the land have an illegal shareholding structure, the Lands Department will ask it to transfer the plots within 180 to 365 days.Recently, the Lands Department found a company in Phuket whose foreign ownership exceeded the legal limit. The firm had formerly registered with a legal ownership – with foreigners holding a 49% stake and Thais the balance. However, it later increased its capital, with foreign nationals taking up all new shares, making it ineligible to own land. After the department learned about this case, it took action to have the firm transfer the land it owned.”

The situation described above is the classic case of a scenario in which those operating the Thai company opted for the expedient route without making certain that the legalities were respected. There are ways in which Thai companies can own land, but they must be carefully structured in order to comport to the laws of the Kingdom of Thailand. That being said, one should not try to set up any type of corporate device purely for the purpose of getting around the laws of the Kingdom of Thailand.

It remains to be seen whether this increased scrutiny will continue, but those wishing to acquire property in Thailand ought to be aware that there are other perfectly legal methods of acquiring interest in Thai real estate. Long term Thailand leases can be a benefit to those wishing to acquire a leasehold. For those who insist upon obtaining a freehold title to a piece of Thai property, foreigners are entitled to take freehold title to a Thai condo. However, there have been regulations passed recently which place more restrictive legal definitions upon what is considered a “condo.”

There is also a very specialized property instrument known as a usufruct, which allows the usufructuary to hold a lifetime usage right in the structures located upon a designated piece of property. Some people opt to split the title to a house from the title to the land. This can be very difficult, but has been done when executed by professionals.

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