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Posts Tagged ‘Thai usufruct’

8th August 2011

It recently came to this blogger’s attention that the Association of Southeast Asian Nations (ASEAN) has celebrated its 44th birthday. In order to provide further information on this story it is necessary to quote directly from the official website of Channel News Asia, ChannelNewsAsia.com:

SINGAPORE: Singapore will mark the 44th anniversary of the Association of South East Asian Nations (ASEAN) with a flag-raising ceremony at the Indonesian Embassy on 8 August. Indonesia is the current Chairman of ASEAN. Singapore’s Ministry of Foreign Affairs (MFA) said this year’s celebrations are particularly significant. It said this will be the first time that the ASEAN flag will be flown at all ASEAN member states’ diplomatic and consular missions in ASEAN countries and ASEAN’s dialogue partners and ASEAN Member States’ Missions where UN headquarters and offices are located…

Readers are asked to click upon the relevant hyperlinks noted above to learn further details from this insightful article.

Frequent readers of this web log may recall that there have been significant discussions within ASEAN regarding issues such as a unified ASEAN visa, the exchange of University credits in an intra-ASEAN context, and a framework for dealing with issues pertaining to the South China Sea. As of yet, there has not been a full resolution regarding these issues, but the dialogue continues with many hopeful that ASEAN will be able to provide a strong platform for regional and global trade as well as business.

In news which is likely of more pertinence to those in Southeast Asia, it recently came to this blogger’s attention that there is further optimism regarding the Thai real estate markets. To quote directly from the official website of The Nation, NationMultimedia.com:

The property market will benefit from political stability and the government’s policy of boosting demand in the first-home market in the second half of this year, according to property experts. A survey of leading property firms by The Nation, seeking outlooks for the property market in the second half of 2011, found most believing that following the election, home-buyers will return to the market because of renewed confidence in political stability…

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Many foreign nationals in Thailand contemplate a Thailand property purchase either in the form of a Condo in Thailand or a house. In the case of a house in Thailand, it may be possible to enjoy the benefits of a Thai home notwithstanding restrictions placed upon foreign ownership of Thai land. In fact, through use of instruments such as Thai leases or Thai usufructs it may be possible to secure virtually total control over a home in Thailand. Some opt to secure their interest in a Thai house by bifurcating the title to the house from the title to the property (sometimes referred to as a Chanote). In any case, there may be ways in which a foreign national can enjoy the benefits of real estate in Thailand.

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…

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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.

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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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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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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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