Integrity Legal

Posts Tagged ‘Thai Real Estate’

9th December 2009

Wills are testamentary instruments used to state one’s intentions after one’s death. Generally Wills come up in the context of property distribution following an individual’s death. In Thailand, both foreign nationals and Thai Citizens die, leaving Thai property in the form of Thai Real Estate and/or assets. In many cases, the family of the deceased will read the Will, have it process through probate, and have the assets distributed in the manner set forth in the codicils of the Will.

A Living Will is a slightly different instrument. To quote Wikipedia:

“[The Living Will] was first proposed by an Illinois attorney, Louis Kutner, in a law journal in 1969. Kutner drew from existing estate law, by which an individual can control property affairs after death (i.e., when no longer available to speak for themselves) and devised a way for an individual to speak to his or her health care desires when no longer able to express current health care wishes. Because this form of ‘will’ was to be used while an individual was still alive (but no longer able to make decisions) it was dubbed the ‘living will.’

A Living Will usually provides specific directives about the course of treatment that is to be followed by health care providers and caregivers. In some cases a living will may forbid the use of various kinds of burdensome medical treatment. It may also be used to express wishes about the use or foregoing of food and water, if supplied via tubes or other medical devices. The living will is only used if the individual has become unable to give informed consent or refusal due to incapacity. A living will can be very specific or very general. An example of a statement sometimes found in a living will is: ‘If I suffer an incurable, irreversible illness, disease, or condition and my attending physician determines that my condition is terminal, I direct that life-sustaining measures that would serve only to prolong my dying be withheld or discontinued.’”

The website Thaivisa.com, in conjunction with The Nation Newspaper, are reporting that the Thai government has preliminarily approved a proposal to allow living wills in Thailand:

“The Cabinet Tuesday gave the green light to living wills. Under the draft decree, health professionals will honour a dying patient’s wish to forego treatment during the terminal stage if it can only prolong life. The draft prepared by the National Health Commission Office will now go to the Council of State for review.”

It will be interesting to see how this legislation progresses through the various official agencies. Living Wills can provide a means and method for transmitting one’s wishes in the event of misfortune. This author hopes that this legislation will receive positive treatment by those with authority to change the law.

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12th November 2009

For many people living in Thailand, the prospect of owning property would be considered highly beneficial. Unfortunately, Thai law places great restrictions upon foreign nationals who wish to purchase property. That being said, no such restrictions are placed upon those who wish to lease Thai real estate.

In Thailand, the Civil and Commercial Code provides for leases of varying lengths of time. A lease’s enforceability is based, in part, upon the length of the lease. For example, a common misconception among many foreigners is based upon the idea that a lease can be unrecorded and enforceable for a period exceeding 3 years. However, this is not the case as parties to a Thai lease exceeding 3 years must record the instrument upon the Chanote (Title Deed) in order for a subsequent court to enforce the provisions agreed therein.

In Thailand, the longest lease that one can practically obtain has a duration of 30 years. A novel approach to acquiring what amounts to a longer lease would utilize multiple 30 year leases in which the date of lease commencement coincides with the end of the prior lease. For example, one could acquire a 30 year Thai lease that begins in 2010. Then acquire another 30 year lease to the same property, only this lease does not come into effect until the day after the prior 30 year lease is expired in 2040. As a result of these efforts, the leasee would effectively have a lease that runs for sixty years, but in reality, the applicable Thai laws have been adhered to because the 60 year lease period is the product of two legal leases each for no more than 30 years.

Although this type of legal configuration may be possible in theory, these types of staggered lease agreements, like any legal construct in Thailand, may not be practically feasible as the officers at the Thai land department may not accept the documentation and thereby could preclude this legal instrument from being recorded on the Chanote. Each Thai land office interprets the rules and laws differently. Therefore, retaining experienced counsel in the form of a Thai attorney to assist in recording leases and other property instruments may be beneficial to a foreigner in Thailand as the attorney could assist in facilitating the recordation of a rarely seen legal instrument.

Another issue that may be of interest to foreigners is the use of a Thai usufruct. A usufruct allows a foreigner to retain lifetime rights of use in the underlying Thailand property. Therefore, this type of instrument can act as a sort of “lifetime Thai lease,” as the beneficiary of the usufruct could use the Thai property until his or her death. It should also be noted that different rules apply to those looking to purchase a Thai condo because it may be possible for a Foreign national to purchase a Thai Condo in freehold.

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17th October 2009

The law of trusts has been a component of the common law system for many years. Under the common law system the idea of title was bifurcated into legal title and equitable title. Under this system, one could hold legal title to real estate or property while equitable title was held by another. This made it possible to circumvent legal mechanisms such as probate or avoid certain types of taxation. Many Expats who originate in common law countries mistakenly believe that this concept can be applied in Thailand. Unfortunately, Thai law does not codify the idea of trust law and as a result business and property structures should probably not be based upon such concepts.

In England many years ago, two courts came about to deal with civil and criminal issues. At first there were the courts of law where cases could be heard. However, there were many instances where the courts of law could not effectively deal with some matters. Therefore, a Court of the King’s Conscience was established and certain cases were resolved in this “court of equity.” Trust law evolved from this bifurcation of equity and law. One could hold equitable title in the court of equity, but not hold legal title in the court of law. Often, the result was to the advantage of the holder of equitable title because it allowed him to enjoy the benefits of the property without the burdens of legal ownership (most notably taxation). In countries where the common law system became the law of the land, these principles of equitable and legal title were passed on. As a result, in many common law countries today, the idea of nominee shareholders is a commonly accepted method of maintaining control of a business or property interest. Also, controlling a trust that owns land is a common method of lawfully avoiding taxes.

In countries that did not adhere to common law principles, the notion of equitable and legal title is somewhat foreign and often not recogized as a legitimate method of property ownership. In Thailand, which utilizes a civil code legal system, trusts and equity are not regarded as mutually exclusive methods of property ownership. Although similar concepts such as usufructs, superficies, and escrows exist, for the most part Thailand does not recognize many equitable concepts. A case in point is the Thai view of nominee shareholders. Nominees are strictly forbidden under statutes passed by the Thai parliament (while the definition of nominee is left somewhat vague). Further, nominees are viewed with extra hostility where they are being utilized for the purpose of maintaining control of a Thai company to own land.

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11th August 2009

Thailand is a very large and somewhat polyglot Kingdom. There are many different dialects of Thai as well as many religious and cultural traditions present throughout the Kingdom. Keeping track of the comings and goings of the Thai citizenry can be a difficult task, luckily there are Thai Immigration authorities deal with these concerns. However, a more important concern, particularly for the common Thai person, is keeping track of the vital statistics records for those resident in the Kingdom of Thailand.

A Thai Amphur office (spelled Amphoe or Ampoe) is best described as a civil registry office. The office is tasked with keeping a record of Thai marriage, Thai divorces, births in Thailand, deaths in Thailand, recordation of Thai prenuptial agreements, and in limited circumstances recordation of Thai wills. In a way, the Amphur office is something of a “Jack of all trades,” office. Another accurate name for this office is a “civil registry.”

Even though the Amphur’s legal mandate does not involve registration of Title deeds for Thai property or Real Estate, a really major part of the Amphur’s role in the Thai bureaucracy involves Thai household registration. A Thai household registration booklet, also known in the Thai language as a Tabien Baan (or Tambien Baan), records the place of a household and the head of the household. It further records how many people live in that household and their names and ages.

The Amphur office maintains the database of this information and is the office that must be used in order to change information listed on the Tabien Baan or when adding a new member to the Thai household registry. Contrary to popular belief, it is possible for foreign nationals to obtain a tabien baan or be registered on an already existing tabien baan. That being said, the only type of Tabien Baan that a foreigner may be listed on is a yellow tabien baan which is different from the blue tabien baan. A blue tabien baan is reserved for Thai citizens and foreigners with Thai permanent residence. It should be noted that the ease of getting on a yellow tabien baan will likely depend upon the office with jurisdiction over the household because local office procedures can differ and this could result in relative difficulty for the prospective registrant.

Foreigners can get married at a local Amphur office regardless of citizenship. However, the procedure for getting two foreign nationals married depends upon each person’s nationality. A person’s nationality and their Embassy’s protocols can affect the marriage process. It is wise to do research or contact an attorney before beginning the marriage registration process.

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7th August 2009

In recent weeks there appears to be an upward trend in the Thai property market. Looking at the situation strictly from the standpoint of a foreign attorney, more people seem to be looking into purchasing Thai property. That being said, what type of Thai property is seemingly in demand?

There seems to be renewed interest amongst foreign nationals in obtaining a Thai Condo. These Condos often have the benefit of conferring foreign freehold ownership to the foreign national in the Thai Title Deed. Further, by obtaining a foreign freehold Title deed, the foreigner would likely be able to obtain a Yellow Tabien Baan, which is a house registration specifically designated to non-Thai nationals. Although somewhat difficult to obtain, there are many benefits associated with a Tabien Baan. Another benefit to the owner of a Thai condo: easier obtainment of a Thai O visa.

Aside from the legal benefits of purchasing Thai real estate, it would also appear as though the property market has stabilized and demand is on the rise. Many people take the view that the Thai property market has “bottomed out,” although we cannot make speculations as to the accuracy of this claim, the plausible argument could be made that the seemingly continuous descent of the property market is at an end.

What does this mean for the potential buyer? For starters, it means that one should carefully weigh all options before making a decision to buy property. Further, a prospective buyer should conduct due diligence in order to ensure that the property in question is valuable and the seller does in fact have the right to the property he wishes to sell.

Often when buying Thai Condos, it is wise to wait until a building is actually built before putting any money down as a deposit. Unfortunately, Thailand is rife with stories of unsuspecting buyers who put up a down payment on a property development only to see the developer go bankrupt before the building was completed thereby leaving the prospective buyer with a deposit down on an unconstructed untitled piece of property. in order to avoid situations such as this it may be wise to retain a property lawyer.

Finally, with the Thai property market apparently on the upswing, transaction taxes and fees may be on the rise as well. Since the Thai government imposes land transfer fees based upon the price of the Real Estate rising prices may create an environment of rising fees.

(Nothing Contained herein should be construed as legal advice. No attorney client relationship, express or implied, is created by reading this piece.)

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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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9th May 2009

An odd question came up while I was in the office today. A married couple (one Thai and one non-Thai) was researching Thailand property ownership and after going over the usual information regarding Thai Leases, Thai Mortgages, and uses of Thai Limited Companies for property ownership a more interesting question arose. All of the questions surrounding their prospective property were routine, but then the conversation turned to Thai Wills and what would happen to the Thai Real Estate upon the death of the Thai husband.

Pursuant to sections of Thai law it is illegal for foreigners to own land without the written approval of the Thai Interior Minister. As a practical matter, obtaining written approval from the Interior Minister of Thailand is difficult, if not downright impossible. This brings up a conflict of laws because when a Thai will speaks during the Thai probate proceedings, ownership of property that was owned by a Thai could be passed to a non-Thai. What happens to this property since it is essentially illegal for a non-Thai to own land?

Thai law deals with this issue in a quintessentially Thai way. The law says that the property must be sold within 6 months of the closing of the Estate. In the United States (as well as other common law countries) probate of wills entails the closing of a deceased person’s estate. Generally Judges in common law countries wish to get estates closed as quickly as possible. In Thailand, Thai Judges are not as expeditious in getting wills probated and estates closed. The upshot is that estates will stay open for years and in some cases decades.

The practical implication of this failure on the part of Thai probate courts to quickly close estates creates a situation in which a foreigner in Thailand can maintain de facto ownership and control of an inherited piece of real estate provided the estate stays open. Should the de facto owner decide to sell the property, then all he or she would need to do is close the estate, legally inherit the property, and execute a sale. This process is probably more complicated than this and a possibility always exist that a court would close the estate quickly, but at present this does not appear to be the case.

(Please Note: Nothing written herein should be used in any way as a substitute for personalized legal advice from a licensed attorney. No lawyer-client privilege or relationship is executed between reader and author of this piece.)

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