[I]t was announced that O-A Retirement visas are going to see the insurance coverage requirement go up to 100,000 US Dollars or self-insurance thereof, so roughly the equivalent of 3 million Baht basically shown in a Thai bank account in order to maintain O-A Retirement Visa status.

Meanwhile, insurance seems to be a rather nettlesome issue as a proposed “Tourism Fee” has proven difficult to implement while many question the need for such a measure especially as the tourism sector in Thailand is tenuously recovering. Although it now appears this initiative has been suspended. Another issue recently in the news, seemingly unconnected to immigration policy, pertains to Thai real estate law. It seems proposed “Long Term Residence Visas” (albeit something of a misnomer as these travel documents do not confer permanent residence in Thailand) may allow foreigners to own Thai real estate under limited restrictions. However, even this proposal seems to be under serious scrutiny. To quote directly from a recent article in the Bangkok Post:

A property executive who requested anonymity said many Thais might disagree with the government’s attempt to attract affluent foreigners by granting them full land ownership of one rai for residential use. “It’s good that the government wants to boost the economy by attracting foreign investment,” said the executive. “Thailand is very attractive among foreigners. They want to stay here as our medical services are good, the cost of living is low, the food is superb, and we have a lot of international schools for their children.” However, some locals think it is unfair to them, as many still cannot afford to buy property.

Clearly, the notion of foreign nationals being able to acquire residential real estate in Thailand is not a settled issue. Furthermore, based upon prior announcements from the Thai Land Office it seems that land ownership in Thailand associated with LTR visa status may never be a reality in Thailand.

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.

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.

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.

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.

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.)

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.)