Integrity Legal

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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