Integrity Legal

Posts Tagged ‘Thai Title Deed’

26th January 2010

There are many foreign nationals who have opted to take up long term residence in the Kingdom of Thailand. For many expatriates, a pivotal question regarding residence in Thailand deals with the issue of Thai property law. Under the current laws in the Kingdom of Thailand foreign nationals are effectively barred from purchasing a Freehold Chanote (Title Deed) to land in the Kingdom. This being said, foreigners are allowed to take freehold title to Thai Condos provided certain legal requirements are met, but for many foreign nationals in Thailand actual home ownership is the preferred method of living in the Kingdom.

In the past, a Thai company could be used to own Thai Real Estate, but the company had to be structured in such a way that it comported to Thai law. In recent months there has been some discussion by Thai government officials about doing away with this system of property ownership. How this will play out remains to be seen, but some foreigners, who are still interested in enjoying Thai property, are looking at other ways of structuring their interests so as to properly comport with possible future restrictions.

One method involves the bifurcation of Thai title. What this means is that the land underneath a structure is owned by a Thai while any structures on the land are owned by a foreigner. This arrangement would be legal under current Thai law, but many are confused about how such an arrangement could be set up. This is where the Yellow Tabien Baan becomes an issue.

A Yellow Tabien Baan is used by foreign nationals who live in the Kingdom. However, they are very difficult to obtain and are usually only promulgated if the foreign national has bought a Thai condo. That being said, a foreign national who is on a Tabien Baan can obtain a building permit to build a structure in Thailand. Once the structure is built, it can be owned wholly by a foreign national. A foreigner could secure long term lease to the underlying property while maintaining ownership of the structure. Use of a Thailand usufruct or superficies would also strengthen the foreigner’s property interests without violating the de facto restriction placed upon land ownership for foreigners. This is not the only benefit that a Yellow Tabien Baan can confer upon a Foreigner in Thailand as there are other major benefits that foreign nationals can enjoy by being on a Foreign Tabien Baan.

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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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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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