Five options for acquired land and house

Five options for acquired land and house

Option # 1 - In a name of company (recommended)
Foreigners, aliens, or farangs, can form a company which can own land and property. The company issues shares, of which the foreigner owns 49% - and the foreigner is designated as the Director of the company.

The remaining 51% shares of the company are owned by (usually) six Thai persons (each Thai person should not own more than 19% of the shares).

The Thai persons each give the foreigner completed, signed, but undated share transfer forms. The only shareholder who can call a shareholders meeting is the company Director, and the Director is the only one who can approve any resolutions of the company shareholders.

When the property is sold, the Director (and 49% share holder) dates the pre-signed share transfers forms, enables the transaction as Director, and the sale is completed. There are, however, matters of tax reporting for Thai companies, and special rules for companies not engaged in commerce, that the buyer should be aware of – a good Thai lawyer is necessary

Option # 2 - Lease - limited recommendation.
 Foreigners can lease land on a 30 year contract which contains a clause giving the lessee first option on a further 30 years. The same contract, registered at the Land Office (Department of Lands), can be renewed every 30 years for a maximum of 990 years. The lessor's heirs are bound by law to honor the agreement, and the lessee can bequeath the lease to his/her heirs in a Last Will and Testament. A potential weakness with this solution is, for example, that the lessor can conceivably claim that the lessee is mismanaging the land to the detriment of its value, and can sue to dissolve the agreement. Of course, this point must be proven in court, but could be a serious headache for the lessee. Also, although leases may be offered by reputable and trustworthy land owners, conditions can change through the passage of years.

Option # 3 - Contract of Credit - limited recommendation.
 Instead of purchase or lease, the payment for land can be registered as a loan to the seller, documented in a Contract of Credit, registered at the Land Office. The value of the loan is set at the registered value of the land plus the actual building cost of any structures on the land. The buyer's name appears on the Title Deed as creditor, which effectively prevents the registered owner (debtor) from selling the land before repaying the loan. The weakness with this solution is that as property values rise, the value of the property will in the future be greater than the value of the loan, and the debtor could conceivably buy the land back at bargain price simply by repaying the loan.

Option # 4 Married to a Thai
In 1999, Thai property law, concerning a Thai whose spouse is foreign, has been amended for a favor of a Thai with a foreign spouse. Such couple may now legally own a land in Thailand. Nevertheless, a land must be registered under a name of a Thai. Also, a foreign spouse must sign a declaration stating that the funds using to buy a land is of a Thai spouse, so that he/she waives his/her right to the ownership of land.

Option # 5 Investment (BOI)
A foreigner who invests 40 million Baht for no less than 5 years, for some other than ownership or real estate itself, is entitled to buy up to one rai (1,600 square meters) of land for residential purposes. Permission from the Ministry of Interior must be obtained.

Types of land title deeds Click here!

 

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