BUILDING LEGAL OWNERSHIP OF A HOLIDAY HOME IN THAILAND

House construction laws in Thailand

Construction in Thailand is mainly regulated by the Building Control Act and the Town and City Planning Act. The Building Control Act provides for governmental control of virtually all types of construction by means of various applications and punishment in case of violation, the Town and City Planning Act deals with the permissible uses of land in different zones. In addition there are under both Acts Ministerial Regulations specifying regulations and zone restrictions. Building and construction can also be restricted by environmental and other laws (Nature Reserve Act, Forest Act, etc.) or if the land is burdened with a right of servitude. The relation between a customer/ employer and a builder in Thailand is primarily governed by a construction contract and the Civil and Commercial Code (specifically the chapter 'hire of work').

In addition to the zone regulations (12) for Samui specifying the type of use to which land/ property may be put in specific areas issued under the City Planning Act there are general building zone regulations (4) issued under the Building Control Act, giving standard building requirements and restrictions depending on its distance from the beach. These restrictions relate to the maximum size, distance to the land border, design and the height of the building (sample). Similar building regulations exist in Phuket, Pattaya, Koh Phangan, Hua Hin, etc..

Building or buying a home in Thailand

Foreign land ownership restrictions in Thailand relates to land only, not to the building on the land or condominium registered under the Condominium Act. The land and any structure on the land can be owned independently by different persons. Foreigners buying a home in Thailand can lease land (and optional obtain a right of superficies) and own the house as a personal property. In any land leasehold structure it is recommended to obtain ownership over the house, but ownership over the land remains the higher absolute right and the right to own the house on the land is relative to the right to use the land. The right to own the house on another man's land always follows the term of the land lease or superficies agreement and cannot exceed a term of 30 years after which the lease and/or superficies must be renewed.

How to own a house distinct from the land it is on

Buildings (apart from condo apartments) do not have a separate ownership title deed document. The procedure to obtain ownership of a structure separate from the land is as follows:

1. If buying from a developer (depending on the sale and tax structure and liabilities the developer chooses) the sale of a house separate from the land lease is either by:
   • a building sale and purchase agreement (see procedure under 3), or
   • a building construction contract with a building permit in the foreign purchaser's name.
2. In case an individual person is developing a plot of (leased) land the building permit should be issued, or during the construction changed by the Or Bor Tor, in the name of the person that leases the land.
3. Sale of a completed or existing building separate from the land requires the current owner and purchaser of the house to:
   • sign a standard land office Thai script sale of a structure document (signed at the land office in front of the competent land official)
   • followed by a 30 day public announcement/ posting of the house sale at specific locations
   • after the announcement period the parties return to the land office to complete the transfer.

Sale of completed existing house

The sale of an existing house separate from the land (land lease combined with house sale/ ownership) must be registered with the local land office (the Samui, Phuket, Hua-Hin, Bangkok or any other local Land Department's branch office) to be complete and property ownership transfer fees and taxes must be paid. Local property developers (in Samui) tend to offer a sale and purchase agreement for the house but skip the official transfer procedure (ownership has not transferred), or lease land and house (not recommended). The transfer of ownership of a building will take at least 30 days from the first visit to the land office to the issuance of the sale of a structure document (sample right or view sale document with short translation). The official land office sale document, stamped and signed by the local land office, is the document that proofs the purchaser's rights to the house and completes the transfer. Required documents:

• ID-card, passport (seller/ buyer)
• House registration book (Tabien Baan)
• Land title document
• House building permit
• Property transfer fees

Building permit

The seller of a house must have a building permit (sample top right) issued by the local Or Bor Tor. The building permit is the evidence that shows he owns the building and obtained approval to build the house. The building permit must be submitted to the Land Registry for the transfer of the house. It should be checked if the house is actually built according to the building permit. If the seller can't show a building permit the house could be illegally built or may not be built according to local building regulations. The building Control Act imposes heavy fines and even imprisonment on violators. If any violation is found the authority has the power to issue a stop-work order and demand rectification of the building or an incorrect part within a reasonable time. If the building or an incorrect part cannot be rectified, the authority has the power to order a demolition thereof.

When a land leaseholder hires a builder the building permit could be issued in the builder's name or land owner's name. In this case the name on the building permit should be changed by the local Or Bor Tor to the lessee's name at any time during the construction, but prior to the issuance of the house registration book (tabien baan). The building permit is proof that you own the building and the building does not belong to the land owner but to the land leaseholder. Separate ownership of the house increases the lessee's right and also lowers property tax liabilities (housing and land tax).

Research by the Agency for Real Estate Affairs indicates the new city plan for Koh Samui will mandate that property projects cannot be constructed higher than 150 meters above sea level read more.... Similar to Phuket where the Ministry of Natural Resource and Environment issued a notification to protect the environment in Phuket prohibiting any building and renovation in the area 80 meters and more above the average sea level. Construction is not allowed even though the land could have a full land title deed.

General considerations when planning to build or buy a house in Thailand

(also for leasehold land for foreigners)

• what is the land title (this should at least be a Nor.Sor.3.Gor/ Khor or better a Chanote land title deed);
• is the land tile deed correctly issued and the title cannot be revoked on the grounds of any illegal issuance process (read warning under 'articles news');
• is there a solid legal structure for a long term interest in the land (proper land lease and/or superficies registered with the Land Department);
• what are the zoning and building regulations and restrictions for the specific area (what use and construction is allowed in the area);
• is there a private servitude, public or municipality road connecting the land with the public road;
• are there any mortgages, encumbrances, claims or security of any kind registered against the land title deed;
• are there any conditions in the previous sale or gift (right of redemption);
• the land is not subject to any promise or agreement, court order or other judgment or decree;
• the land owner is not involved in any action brought before court or bankruptcy/ insolvency proceedings;
• the land is not encroached nor is there encroachment on the land;
• the land is not subject to any land expropriation plan by the government;
• the land is not located in a land reform zone according to the laws on land reformation for agricultural purposes; 
• the land is not located in a forest or nature reserve zone, or other area reserved for the public;
• the seller has not (implicitly or explicitly) declared the intention or done any act to give the land whether in whole or in part to the public;
• the seller does not hold the land as an agent on behalf of any third party, nor is there any third party having priority right to the land.

Samui building zones under the Building Control Act:

1. Area 1: No building is allowed up to 10 meters from the beach. The coastline or beach line is a moving line and often at the discretion of the Or Bor Tor who can choose more or less where it starts.
2. Area 2: Building of a single story house not exceeding a height of 6 meters with a total building area of up to 75 sq.m. is allowed up to 50 meters from the beach or coastline.
3. Area 3: Building of a building with a height of 12 meters and a ground floor or total building area of not more than 2000 sq.m.
4. Area 4: Any building of up to 12 meters can be built within an area of more than 200 meters from the beach.

The above zoning areas are issued under the Building Control Act specifying what you can build. Different zones under the City Planning Act can be found in the city planning act map controlling land and property use in specific areas. The main aim under the Town and City Planning Act for Samui is to set rules for sustainable development of Samui and protect Samui's environment, however it has always been relatively simple and common practice for developers to circumvent the land allocation rules, housing development license requirements and environmental control regulations. Investigations in Samui showed that a majority of the developers in Samui violated the Land Department's land allocation rules.

Section 4 (Land Allocation Act): 'Land Allocation refers to the sale of plot of land that has been divided into 10 plots upwards with property or other remuneration in return regardless whether it is divided from one or many adjacent plots. It also refers to the execution that the land has been divided less than 10 plots and thereafter, within 3 years, it has been divided in total into 10 plots onwards'.
Section 21 (Land Allocation Act): 'Land allocation shall be prohibited unless the approval by the committee. The procedure for application and issuance of license shall be in accordance with regulation, method and conditions specified in Ministerial Regulation'.

Articles news

- An initial probe into a land scandal in Phuket found ownership documents and title deeds for four plots in Kathu district had been unlawfully issued by corrupt officials read more...
- Forest land is classified as government property under the Ministry of Natural Resources and Environment and cannot be owned by any private entity. Due to uncontrolled development and corruption in the past Samui has many illegally issued land ownership titles in these areas that may be corrected or revoked and returned to the state. More complaints of land encroachment in different areas read more..
- Investigations showed that the majority of the developers in Samui advertising property in magazines and on websites were not licensed to do business and had violated the Land Department's land allocation regulations. As a result land titles are dodgy and the status of the land NOT protected by land allocation laws or general development regulations. Foreigners have been warned they risk losing all and may face legal problems later read more...
- Following a series of inspection trips around the Samui Khun Tingchai Rochanaknan form the Department of Natural Resources and Environment recently said that because of continued uncontrolled development, Samui in once again in great danger of flash floods and landslides this year read more...
- Samui property sales in problem, sales in Pattaya, Phuket also slow. Sales Pattaya, Phuket and Koh Samui drop. Samui market in dire straits read more...

See also

• real estate law

Buying a house in Thailand

Overall property laws and buying a home in Thailand has its own specifics but basically is not much different from buying real estate in other countries like Germany, Australia, or the US, except foreigners may not own land in Thailand. Land ownership in Thailand is governed by the Land Code Act. Foreign land ownership restrictions in Thailand land laws refer to the land only, not the building on the land or condominium registered under the Condominium Act. The land and the structure on the land could be owned independently by separate persons. Foreigners buying a home in Thailand can do this through a 30 year land lease agreement (and optional right of superficies) with the house owned as a separate personal property.

How to own a house distinct from the land it is on

In a standard situation a real estate sale in Thailand involves land and house. The owner of the land is the owner of the things fixed to it or forming a body with the land (section 139 Civil and Commercial Code). There are exceptions, and for example in case of a foreigner buying real estate in Thailand ownership of a house can be registered and transferred separate from the land it stands on. In case ownership of a house is transferred separate from the land the transfer procedure must be in accordance with the Thailand Civil and Commercial Code (Book IV 'Property') and:

1. be in writing, and
2. registered with the Land Department's branch or provincial office.

Buildings (apart from condos in a licensed condominium building) do not have a separate ownership deed in addition to the land tile deed. The procedure to obtain ownership of a structure/ building or house separate from the land is as follows (note: the rights to use and possess the land (land lease and/or superficies) must be created first):

1. If buying from a developer (depending on the sale and tax structure and liabilities the developer chooses) the sale of a house separate from the land lease is either by:
   • a land lease and a building sale and purchase agreement followed by the land office transfer procedure (see under 3), or
   • a land lease and a building construction contract (hire of work) with a building permit in the foreign purchaser's name.
2. In case an individual person is developing a plot of (leased) land the building permit should be issued by the Or Bor or in the name of the person that leases the land (the building permit can be used as proof of ownership of the house).
3. Sale and transfer of ownership of an existing building separate from the land requires the current owner and purchaser of the house to:
   • sign a standard land office Thai script sale of a structure document, signed at the land office in front of the competent land official (this official document is used as proof of ownership of the house)
   • followed by a 30 day public announcement/ posting of the house sale at specific locations
   • after the announcement period the parties return to the land office to complete the transfer (the Thai script sale of a structure agreement will stamped and issued by the land office and can be used as proof of ownership of the building)
   • property transfer taxes and fees must be paid (each party pays a share based on the agreement between the parties)

If the above procedure has not been followed the building could legally still be owned by the developer or another third party who owns the land and built the house (not recommended) - read more: buying and building a home in Thailand

Documents required for the transfer:

1. passports/ ID-cards
2. land title deed
3. house book (tabien baan)
4. building permit

The sale of an existing house separate from the land (land lease combined with house ownership) must be registered with the local land office to be complete and transfer fees and taxes must be paid when the transfer takes place. The land office is the only government authority in Thailand for the administration and completion of a transfer of ownership of a building. The transfer will take at least 30 days (announcement of the sale period) from the first visit to the land office to the issuance of the sale of a structure document. The 30 day announcement period is to see if anyone wishes to contest the ownership over the house. The issued Thai script sale document stamped and signed at the local land office (sample right column) is the document that proofs the purchaser's rights to the house. The sale of land and house and the transfer of land with a full title deed and building on the land together is completed om the same day - read more (building yourself)

Right of superficies, as a separate registered right in addition to a land lease agreement, is not common in Thailand. Superficies is used when the owner of the land is not the same as the owner of the house erected on the land. A right of superficies is registered on the land title deed - read more...

The Thai House Book

A Thai house book (Ta.Bian.Baan - read more (external)) should not be confused with a house ownership document. A house book is only a house address and resident registration document issued and administrated by the local government district amphur. This is not an important document for foreigners and unless the foreigner has residency in Thailand he is not registered in a blue house book, even though he is under Thai law regarded as the legal owner of the house. A special yellow house book for foreigners can be obtained and depending on the location the requirements for issuing a yellow book could include a work permit or Thai marriage certificate, non-immigrant visa and ownership document (condo title deed or the land office sale of a structure document). The document that could be described as the house ownership document (separate from the land) is the building permit (issued by the local Or.Bor.Tor) or the Land Office sale of a structure document issued by the Land Department.

Building permission for a house in Thailand

The seller of the house must also have approval for the building (construction permit). The government issued building license is the evidence that shows the seller owns the building and obtained approval to build on the land (it does not say that the building is built according to the building permit!). If the seller can't show a building approval the house could be illegally built or may not be built according to local building or zone regulations. Unregistered houses or houses liable for demolition (conflict with the Building Control Act or zoning regulations) have been sold to foreigners in Thailand - read more...

Term of ownership of a house on another man's land

The right to own a house separate from the land always follows the term of the land lease and/ or superficies agreement. The contract for a land lease and/ or superficies can run for a term not more than 30 years or for the life of person or person's granted the right of superficies. If the land lease/ superficies is near termination the use and possession of the land can be renewed (the owner willing to renew it). The contract may contain a renewal option but as a mere personal contract promise that can only be enforced at the time when the registered lease term runs out this must be considered unenforceable as a contract - read more...

Thai property taxes: land and housing tax

When a land and house lease agreement is put in place (or land and house is owned by a company) land and housing tax shall be collected at the rate of 12.5% of the yearly rental according to the lease agreement or the annual value assessed by the Land Department - read more...

Ownership transfer of a house: land office tax and fees

The transfer of ownership of a house is as an immovable property subject to income withholding (personal or corporate income) tax, transfer fees, stamp duty, specific business tax calculated over the registered sale value or appraised value. The government's assessed (appraised) value of a house used by the land office depends among others on location, number of floors, floor space and materials used - read more...

See also

• real estate law
• land laws

Buying real estate, land and house

Land ownership in Thailand for foreigners

Author: Robert M. Spelde (LL.M)

Under the Thailand Civil and Commercial Code foreigners in principle have the same property rights as are available to Thai nationals, however it is under the Land Code Act B.E. 2497 (1954) prohibited for foreigners to own or possess land in Thailand. As ownership of land is an essential element of any real estate (land and house) ownership it leads to the conclusion that, besides an apartment in a licensed condominium, there is no freehold ownership of real estate (land and house) available for foreigners in Thailand.

Foreign ownership under a treaty

Under the Thailand Land Code Act foreigners may own land under the provisions of a treaty, however the last treaty allowing foreigners to own land in Thailand was terminated in 1970 and there is currently NO treaty with any country allowing foreigners to acquire and own land in Thailand. In fact anyone who contravenes with the above section shall be punished with a fine not exceeding twenty thousand baht or an imprisonment not exceeding two years, or both (section 111 of the Land Code Act).

Section 86 Land Code Act: 'Foreigners may acquire land by virtue of the provisions of a treaty giving the right to own immovable properties and subject to the provisions of this Code' .

Exemptions for foreign land ownership

In theory foreign individuals can own land up to 1 rai (1600 square meters) under section 96 bis of Land Code Amendment Act (1999) for residential purposes through the Board of Investment which requires a 40 million baht investment into Thailand in specified assets or government bonds beneficial to the Thai economy. If granted it is under strict conditions and in specified areas and requires approval of the Minister of Interior. In practice, even if you would be able to make an additional investment in the Thai economy of 40 million baht, this is not a viable option. In addition this ownership is not transferable by inheritance, therefore limited to the life of the foreigner granted the right to own land under this exception.

Foreign companies

Ownership of land is also not open to foreign companies, including Amity treaty (US) companies, BVI or Hong-Kong limited companies or any other foreign juristic entity. These companies may, similar to foreign individuals, have a minority shareholding in a Thai company but may not use nominee shareholding structures to create a Thai company for land ownership.

Foreign corporations with substantial investments benefiting the Thai economy may have special privileges and exemptions for land ownership granted for the duration of their business in Thailand under:

• Section 27 of the Investment Promotion Act
• Section 44 of the Industrial Estate Authority of Thailand Act
• Section 65 of the Petroleum Act

Foreigners inheriting land

Again in theory, a foreigner married to a Thai national may as a statutory heir with approval of the Minister of Interior inherit land under section 93 of the Land Code Act, however this section must be read in combination with the above section 86 of the Land Code Act (i.e. in relation to foreign ownership granted under a treaty) therefore it does not apply to foreigners inheriting land from a Thai spouse. They may inherit land but cannot register ownership and must dispose of the land within one year from the date of acquisition (Land Code Act).

Foreign controlled Thai companies

Up till May 2006 it was common practice for foreigners to form a Thai company and to hold land under a Thai company structure. Since the land office guidelines starting in May 2006 followed by the business registration rules and the proposed amendments to the Foreign Business Act this practice is less common. Recent discussions in the Thai government to further clamp down on this structure through new laws and regulations have led to the conclusion that a Thai company structure is not a viable or secure vehicle to create a long term foreign controlling interest in real estate in Thailand.

Land Code Act limitation foreigners right Introduction Thailand property laws Building or buying a house in Thailand Buying/ owning a Thai condominium Land Ownership by a Thai nominee

Land holding companies Land Ownership title deeds Land Ownership transfer fees Nationality Act (Thai ownership) Land Code Act (updated)

Thai private limited company formation

Laws governing formation and incorporation of types of Thai business entity can be found in the Civil and Commercial Code of Thailand, title 12 'partnerships and companies'. Limited companies in Thailand have basic characteristics similar to those of Western corporations. A private limited company is formed through a process which leads to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws), as its constitutive documents. A Thai Limited Company can be set up relatively quickly if the paperwork is in order. The company incorporation process, from the reservation of a business name till the certificate of incorporation of the company, can under the new company formation rules be completed in a few days (formation sheet).

Starting (formation of) a business in Thailand

The first step is the reservation of a company name. This is done online with the Department of Business Registration. Usually 3 names are given, ranked by preference, and approval of the name will usually take up till 3 days. Certain names associated with the royal family, names of ministries and other governmental units, names with Thailand, names close to that of other companies, names against public moral, names that are misleading, are not allowed. The approved corporate name is valid for 30 days.

Memorandum

The Memorandum of Association of the company has to be filed with the Commercial Registration Department (Registrar of companies) and must include the name of the company that has been successfully reserved, the province where the company will be located, its business objectives, the capital to be registered, and the names of the three promoters. At least three individuals must sign the Memorandum of Association. The promoters can be foreigners and Thai nationals however, each promoter must be a shareholder of the company. The use of Thai nominee promoters/ shareholders by foreigners is prohibited under the Foreigner Business Act (and Land Code Act).

Share capital

There minimum capital requirements for a limited company in Thailand is 1 million baht. In general, the registered amount of the capital should be respectable enough and adequate for the intended business operation. If a foreigner requires a work permit the company concerned must have a registered capital of not less than Baht 2 million, fully paid-up for each 1 work permit., 4 million share capital for 2 and 6 million for 3 work permits (note registered share capital and company income tax rate).

Once the share structure has been defined, a statutory meeting is called during which the Articles of Incorporation and Articles of Association (by-laws) of the company are approved, the Board of Directors is elected and an auditor appointed.

Articles of association

The Articles of Association are the regulations of the company concerning its internal affairs such as weighted voting rights and matters requiring approval and protecting the foreign minority rights within the company through the issue of preference shares. In a later stage preferential rights may be attached to newly issued shares, in other words you have to buy the preference shares by increasing the register capital.

When operating a Thai company with a (Thai) partner (one or more persons who direct the same company), it is advisable to restrict or limit the signing power and independent authority of the directors in the by-laws by requiring joint signatures and joint consent of the directors in all matters of the company, other than maybe day to day management.

Share certificates

All shareholders must have a share certificate issued in their name by the limited company in Thailand and the company must have an updated registration book of shareholder kept at its registered (head) office of the company. Bearer shares are not allowed under Thai company laws - a share certificate is not the property of whoever happens to be in possession of the share, but who is registered and recorded as the owner with the Business Registration Department as the shareholder (also see last paragraph Foreign Business Act section 4).  

The company's fixed share capital cannot be altered except by an alternation of the memorandum of association in one of the methods authorized by the Civil and Commercial Code. Types of shares, ordinary or preference cannot be altered read more...

Statutory meeting

Within three months of the date of the Statutory Meeting the director(s) must submit the application with the Registry to establish the company.

Tax, Company tax, Value Added Tax