Thailand real estate laws basics
THAI LAND LAWS restrict foreigners from owning land in Thailand and Thai laws in general limits foreign property ownership in Thailand. Buying real estate in Thailand follows a different legal process than buying realty in a country offering outright property ownership for foreigners. Property laws in Thailand are straightforward (foreigners cannot own land) but sales structures aimed at foreigners are often complex and confusing. Real estate in Thailand can legally be divided into the following objects:
- Apartments registered under the Condominium Act of Thailand
- Apartments NOT registered unde the Condominium Act
- Land
- House
- Land and house
Real estate rights
Property rights under Thai law to obtain ownership or an interest in these real estate properties can be devided into:
- Freehold ownership of a condominium unit registered under the Condominium Act within the foreign 49% ownership ratio of such a condominium
- Ownership over a building separate from its land
- A registered leasehold of up to 30 years of:
- a condominium unit registered under the Condominium Act...
- an apartment unit not registered under the Condominium Act (as part of a building)
- land and/ or house
- land (combined with ownership over the building upon the land)
- Right of superficies (alienation by the owner of the surface of soil of all rights necessary for building on the surface)
- Right of usufruct
- Right of habitation
- Controlling shares in a company that owns real estate
The most viable and secure legal structure to obtain a long term interest in a property in Thailand is a freehold ownership title of a unit in a condominium registered under the Condominium Act, or in case of a house in Thailand, a land lease interest combined with ownership over the building upon land. The land lease should preferably be combined with a right of superficies. The main drawback of investing in real estate (land and house) in Thailand is the limited term of possession. Both lease and superficies can only be registered for a period of 30 years. These periods can be renewed (the owner willing to renew) but only upon expiration of the first term. A lease or superficies agreement can suggest a renewal option but legally such promises are not supported by Thai law. Any investment in land and house must be made with a maximum term of 30 year possession and use in mind.
The main drawback of investing in a freehold condominium in Thailand is that foreigner must qualify for ownership of a condo in Thailand, but when he dies his foreign heirs are not automatically entitled to register ownership over the unit (read more).
In a long term lease it is not advisable to lease both land and house. Such lease structures could benefit the seller/ developer but gives much less legal protection and a greater tax burden for the foreign purchaser. The purchase procedure should preferably include a land lease agreement, a superficies and a separate construction or sale and purchase agreement for the house.
Read more
