* Property Ownership Thailand * Property Ownership Pattaya * Property Ownership Hua Hin

Thai Nominees * Limited Company * Leasehold * Land Titles * Condominiums * F.A.Q.

The following information is an overview of the property ownership question here in Thailand and is intended as an informed and researched guide for reference. However, please note that it is not intended to be a substitution for taking professional legal advice from a qualified legal expert on property ownership here in Thailand. Please contact us directly if you require personal advice or a referral to a qualified legal consultant.

Please Note

Selecting the right property ownership structure for your personal circumstances is now probably the single most important aspect of property purchase here in Thailand. For your own protection demand the answers and ensure that your professional advisors fill you with confidence. If they do not then look elsewhere!

Land Ownership Legislation

Ownership of land in Thailand is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior. In brief, ownership of freehold land by non-Thais is so restricted as to not be practicably possible.

However, it is perfectly legal for non-Thais to own buildings constructed on the land and also to hold long term leases in multiples of 30 year terms. It is also perfectly legal for non-Thais to use a Thai Limited Company structure to hold possession of their land interests in Thailand as long as the company formation complies with the relevant legislation.

Any two buyer's circumstances are seldom the same and so this page is not meant to offer specific advise, but rather an overview of options that would be considered by our company as potential solutions for structuring the ownership of land in Thailand for non-Thais. Please contact us directly for case-specific advice.

Ownership Strategies

In accordance with the regulations governing ownership of freehold land in Thailand by non-Thais, three main strategies for structuring possession of land here have evolved. They are fully described in the relevant sections below and our views and opinions on their relevant merits have been acquired through years of practical hands-on experience.

• Register ownership of land in a nominated Thai national's name.
• Set up a Limited Liability Thai registered company to own the land.
• Register ownership of land in a nominated Thai national's or Limited Company's name and create long term leases with guaranteed rights to renewal.

Speed, simplicity and the lack of any additional costs are the main advantages of choosing this option. Normally this method is only suitable where an existing long-term relationship has been in place and the non-Thai is totally satisfied that they will retain control and influence over the nominated Thai national.

The purchase of the land should be structured such that the non-Thai loans the money for the purchase to the Thai. At the registration of the new landowner at the local land office the loan agreement with the land as security for the loan should also be registered and recorded on the back of the land title deed document.

A loan document is drawn up between the Thai nominee and the non-Thai purchaser with the following clauses:

1. The freehold of the property is registered as security on the reverse of the title deed document and recorded at the Land Office. This prohibits the sale of the property without the non-Thai's approval and registers the non-Thai legally on the Land Title document.
2. The sum of the loan agreement can be set well in excess of current or likely future values of the land and is registered on the reverse of land Title Deeds at the Land Office.
3. A further clause may be added ensuring that the amount outstanding will increase annually in line with the increase in the property's market value.

Obvious drawback with this option is that the land is not directly under your control. Should you no longer have a relationship or contact with the nominated Thai national you may not be able to resell the land. For the same reasons make sure that a Last Will and Testament are in place controlling the bequeathing of the property in question on the death of the Thai nominee. It could end up belonging to someone that you had not intended it to! Not often the best option unless special circumstances exist.

Forming a Limited Liability company to own the land has traditionally been the most popular method of structuring land ownership. However it is important to stress that for this method to be suitable all of the regulations for the formation of a Limited Company here in Thailand must be strictly complied with. The main advantages are the protection this method affords the non-Thai owners and the relative ease with which the company formation is processed. First Choice Homes take care of all such administration for our clients.

According to section 97 of the Thai Land Law, the definition of a foreigner includes a Thai registered company or partnership in which more than 49% of the capital is owned by foreigners or of which more than half the shareholders or partners are foreign citizens. In practice it is normally advisable to restrict non-Thai ownership of shares to 39% or less in order not to attract too much bureaucratic attention. This obviously then highlights the problem of protecting the non-Thais interests.

Protection is ensured by ensuring that several safeguards are put in place:

With these safeguards in place and properly administered the company option has traditionally been a very secure and practical way to structure land ownership for non-Thais in Thailand.

There are annual accountancy requirements that will entail the payment of company tax, accountancy and audit fees. These are estimated at between 10,000 and 20,000 baht per annum dependant on property value and company structure at the current time. These ongoing costs should be taken into account.

Following a recent directive to local Land Offices from the Ministry of Interior, the source of funding for the Thai majority shareholders can now be asked to be proven at land registration in order to ensure that the Limited Company is not being set up purely as a vehicle to circumvent existing Thai land ownership laws and regulations. Basically, if the Thai shareholders have neither the funds nor a genuine commercial interest in the business of the company then the land registration will not be allowed and the company itself may be dissolved. For this reason it is imperative that you engage property and legal professionals that know what they are doing and can re-assure you that they have your best interests at heart.

First Choice Homes are able to offer detailed advice and are experienced in putting together creative structures for property ownership. Contact us to arrange a one-on-one meeting to discuss your personal circumstances for relevant advice.

An extremely effective method of property ownership for non-Thais, that is often over-looked, is through a leasehold structure. The overview of this method is to create a perpetually renewable leasehold ownership structure giving all of the pertinent advantages of Freehold Ownership. Namely;

As the law states that non-Thais may not own the freehold title on land, the purchase of land and buildings on the land should be divided into separate contracts. The ownership of buildings may then be legally transferred to the non-Thai.

Freehold ownership of the land is then transferred to a nominated Thai national or juristic body (limited company) and several important safeguards are then put in place in order to allow the non-Thai all the benefits of freehold ownership whilst ensuring sufficient control and protection.

1. A lease agreement is drawn up between the two parties to include the following clauses and is registered at the Land Office on the reverse of the land Title Deeds:
   1. The granting of right of access and abode to the non-Thai. This ensures that they are able to enjoy daily use and benefit of the land as if they owned the freehold themselves
   2. The right to convert the leasehold to freehold ownership if the laws on foreign land ownership change in the future.
   3. The right to sell and/or transfer the property.
   4. Full and irrevocable Power of Attorney with respect to the land is granted by the nominated Thai national to the non-Thai, effectively ceding control.
   5. Guaranteed extension clauses granting further terms up to a maximum of ninety years before the lease must be renewed.
2. The freehold of the land is transferred into a Thai Limited Company under the following conditions: (see Limited Company section above for full explanation of how control of the company is secured with the non-Thai purchaser)
   1. The original Thai developer or land owner retains the majority ordinary shares.
   2. The introduction of a requirement for a minimum majority of 99% to approve any resolutions affecting certain restricted subjects such as changing the purpose of the company; changing the appointment of the non-Thai as the company's only executive director with the power to sign cheques and enter into contractural agreements; the refusal of a lease extension; the granting of future leases and control over disposal of assets. (Effectively creating perpetually renewable lease agreements)
3. A loan document is drawn up between the land holding company and the non-Thai purchaser with the following clauses:
   1. The freehold of the property is registered as security on the reverse of the title deed document and recorded at the Land Office. This prohibits the sale of the property without the creditor's approval and registers the non-Thai legally on the Land Title document.
   2. The sum of the loan agreement is set well in excess of current or likely future values of the land and is registered on the reverse of land Title Deeds at the Land Office.
   3. A further clause may be added ensuring that the amount outstanding will increase annually in line with the increase in the property's market value. Effectively a variable interest rate on the loan.

Ensuring ownership of any buildings is in the non-Thai's name offers further protection as the nominated landowner has no right to possession of the buildings at any time. This is the reason for separate contracts.

This method is similar in many aspects to 'outright' condominium ownership by non-Thais. You do not own any land as such but have an interest in a percentage of the entire project land through a Juristic Person (limited company) on your collective behalves.

The lease agreement and all the attendant land holding company structures need to be watertight. However, this has become a method of structuring land ownership that we highly recommend for the majority of our clients in Thailand. Unlike other methods this property structure is both strictly within the letter and the intent of the relevant Thai laws.

As you would expect, First Choice Homes takes care of all such lease arrangements and necessary company formations for our clients. Whether you are a prospective buyer or purchaser contact us for more detailed information concerning your own individual situation.

Land is titled depending on its survey status. As a matter of course one of our due diligence requirements on behalf of our clients is to make sure that the land title is correctly ascertained and verified before you buy. Often prices vary greatly depending on the type of title involved.

“Chanood ti din” (or simply Chanood as it is locally known) are title deeds with land accurately surveyed, usually by GPS ( satellite). This gives you incontestable ownership of the land and is the most accurate and valuable land title you may hold.

Running in joint second place are the titles of “Nor Sor Sam” and “Nor Sor Sam Kor”. They are land title deeds where clear records of ownership are maintained, and they may be sold or leased. However, they are less accurately surveyed than Chanood titles and care must be taken to establish accurate boundaries and measurements of the land.

As it stands, most “titles” outside of the developed areas are “Nor Sor Sam” or “Nor Sor Sam Kor” and so are still a very common method land title for buyers to encounter who are looking for something a little bit of the beaten track. Consequently this land also tends to offer very good value for money.

If purchasing Nor Sor Sam-titled land that lacks clearly defined physical boundaries, First Choice Homes due diligence process will include ensuring that the owner is requested to stake out the boundaries and then receive confirmation from neighbouring landowners as to their accuracy. After transfer the title is then converted into a Chanood, resulting in an immediate increase in the value of the land. Although Nor Sor Sam-titled land may well be lower-priced than land held on Chanood, the cost of such surveys and land office registration fees must be taken into account.

And there are more. Sor Kor Nung, Tor Bor Tor Hoc, and Tor Bor Tor Ha are essentially squatter’s rights registered at the district office for a small fee. Unlike the Chanood and the Nor Sor Sam Kor, the title to the land is not clear and can be challenged. Boundary disputes are common and planning permission can be hard to obtain. So be a prudent foreigner and ignore the Sor Kors and Tor Bors in nearly all cases.

Oh yes, I almost forgot one, the Sor Bor Kor. These are true title deeds, accurately surveyed and pegged (like a Chanood). They can be mortgaged and developed. But, the big but, is they cannot be leased, sold or transferred. So, also ignore Sor Bor Kor.

Chanood and the Nor Sor Sam Kor are the only titles over which a registered right of ownership or lease may be registered and as such are the only forms of ownership that First Choice Homes would normally advise for our clients.

Aren't Foreigners Prohibited from owning land in Thailand?
In what situations is it possible for foreign citizens to purchase land in Thailand?
Can foreigners own buildings even if they don't own the land?
How can a joint venture be created to acquire land or property in Thailand?
How does a limited liability company allow foreigners to own property?
What about long term leases with rights to renewal?
What are the different types of rights to private land?
How do mortgages in Thailand work?
Is owning a condominium subject to the same laws as owning land in Thailand?
How may a foreigner qualify to own a condominium in Thailand?
Can the spouse of a foreigner still own land in Thailand?

If you have a question on any topic that is not covered here then please ask us by email and we will do our best to answer for you.

Aren't Foreigners Prohibited from owning land in Thailand?

Under the strict application of the existing law, it is officially prohibited for foreigners, including both individuals and juristic entities (e.g., foreign majority-owned companies or partnerships), to own land in Thailand. However, there are exceptions to the prohibition found in the law itself as well as other methods of structuring effective purchase of land and buildings.

The Land Code has been amended to allow foreigners to own land if the following requirements are met: 1) The land is for residential purposes, 2) The land does not exceed one rai, 3) No less than 40 million baht is remitted into Thailand for investment in approved BOI ventures, 4) Foreigners must abide by Ministerial Regulations governing the nature of the business that the foreigner will engage in, the period of time for maintenance of the investment, and the location of the land owned, 5) permission is granted by the Minister of the Interior.

According to section 97 of the Thai Land Law, the definition of a foreigner includes a Thai registered company or partnership in which more than 49% of the capital is owned by foreigners or of which more than half the shareholders or partners are foreign citizens.

So to all intensive purposes foreigners are prohibited from owning freehold land and that is why the three accepted methods of structuring ownership and control have evolved. See our explanation of these methods above.

FAQ

Is it possible for foreign citizens to purchase land in Thailand in their own name?

The Board of Investment (BOI) may grant a foreign-owned company permission to own land if the intended use of the land is for an activity promoted by the BOI. Prior to the purchase, the BOI must review the land and the plans for construction and agree that the land is suitable for the promoted activity. After purchase, the land may only be used for that activity and, in the event that the business conducting the activity is dissolved, the land must be sold within one year of that date. An additional benefit of this BOI promotion is that businesses granted the right to own land under these conditions may also be eligible to conduct business activities that would also be generally restricted to foreign individuals and juristic entities.

FAQ

Can foreigners own buildings even if they don't own the land?

Although Thai law prohibits foreigners from owning land in Thailand, foreigners have the right to own buildings (just look closely at condominium purchase and it really falls under this category as no right to freehold ownership of land is included). If foreigners wish to purchase land in Thailand in order to build property, they have 2 options, forming a joint venture limited company with majority Thai ownership and procuring a long term lease with a right of renewal.

FAQ

How can a joint venture be created to acquire land or property in Thailand?

One method foreigners can employ to acquire land or property is by forming joint venture companies with majority Thai ownership but with adequate safeguards to protect the foreigners' minority interests. If a foreigner plans to run a business in Thailand then he may purchase the freehold of the land through his Thai majority limited company. The land will be owned by the Thai Company, not by the individual.

FAQ

How can a limited liability company be used to allow foreigners to own property?

Purchasing property with a limited liability company has traditionally been the most popular method for foreign investors as the Articles of Association can be varied to allow greater protection for foreign minority shareholders. Enforcement of the regulations varies throughout Thailand, but the Land Office should and generally does require that Thai nationals own a legitimate majority interest in a company if they wish to purchase land legally. In the light of recent government directives it is more important than ever to take competent professional advice on the implications of structuring land ownership with this method.

FAQ

What about long term leases with rights to renewal?

As a foreigner is not restricted from purchasing buildings or assets, one of the most effective ways to acquire land that a building resides on is to purchase the land on a 30-year leasehold with an option to extend the lease for subsequent 30-year periods. Leases are limited to 30 years, except on land for industrial purposes, which may be established for 50 years. Similarly, lease extensions are capped at three terms of 30 and 50 years respectively before renewal of the lease would be required. Possession of the land leased for an already owned building is protected by the fact that the building rests on the land; ownership of the building is separate from the land and cannot be seized by the lessor once the lease expires. Leases exceeding three years are enforceable for only three years unless they are registered with the Land Department. Therefore, a 30-year lease must be registered with the Land department. In addition, a lease continues to be valid even in the event of the land being sold.

FAQ

What are the different types of rights to private land?

Land can be controlled through the right of possession or through title deed and other documentation. Individuals who actually possess and use land may have the right to possess such land under the Civil and Commercial Code. The primary form of evidence for ownership of land is a title deed (Chanood or Nor.Sor 4). These title deeds must be registered at the Land Department in the province in which the land is located. It should also be noted that a parcel of land may be commonly held by several individuals. A person whose name appears on a Chanood, or Land Title Deed, has all the legal rights to that land, can produce the deed as evidence of ownership to Government officials, can prove the land has clearly defined boundaries, and can engage in legal acts upon that land as allowed by law.

FAQ

How do mortgages in Thailand work?

Land mortgages in Thailand must be made in writing and registered with the Land Department. Mortgages do not include the buildings built on the land after the mortgage date unless they were agreed upon prior to signing the mortgage documents. Additionally, buildings and other immovable structures may be mortgaged separately and should be registered with the Land Department or local Amphur.

FAQ

Is owning a condominium subject to the same laws as owning land in Thailand?

Sec. 19 of the amended Condominium Act of 1990 allows qualified foreigners to own individual condominium units as long as the total area of foreign-owned units within the entire condominium complex is less than 50 percent of the total area of all units.

FAQ

How may a foreigner qualify to own a condominium in Thailand?

A foreigner or juristic entity can own a condominium in Thailand if the individual has permanent residence status in Thailand, the individual has been permitted to enter Thailand under BOI privileges, the juristic entity is registered in Thailand but classified as "foreign" under the Land Act, the juristic entity has been granted investment privileges by the BOI, or the individual or juristic entity has brought foreign currency into Thailand for the purpose of purchasing a condominium unit.

FAQ

Can the spouse of a foreigner still own land in Thailand?

Until recently, Thai nationals who married foreigners became ineligible to own land in Thailand. The understanding was that once the foreigner and the Thai were married the land became community property and officials believed this was perhaps a too convenient way for foreigners to circumvent the law. However, under current law a Thai spouse is legally allowed to own land in Thailand. The foreign spouse may be required to sign a letter declaring the property to be the separate property of the Thai spouse, consequently waiving any claim on the property.

To have the opportunity to discuss in more detail any point(s) raised above please contact us to make an appointment for an informal chat or email any queries that you may have.