PHUKET REAL ESTATE PROPERTY LAND CONDOMINIUM MK no1

Land Title Deeds and Taxes

What are the different types of title deeds to land in Thailand?

Chanot (Nor Sor 4): This type of title deed, registered at the Land Department in the province in which the land is located, grants the holder of the documents full rights over the land. It is therefore the strongest type of title deed. The title deed contains a legal description of the land boundary markers that are carefully ascertained and referenced by satellite images.

Nor Sor 3 Gor: This land title designates ownership of land with fairly certain boundaries, however it is not yet a full land title (chanot). A final official measuring is required by the land department along with the placing of official markers. This type of land title may be sold, transferred, or mortgaged. If the owner of the land files a request with the Land Department, surveyors from the land department will measure the land, the title may be changed to Chanot.

Nor Sor 3: Although ownership of the land covered in this title is relatively ascertained, the Land Department has never measured or recognized the boundaries. Therefore boundary markers are normally placed by property owners rather than government authorities. Accordingly, the main risk is whether the boundaries and size of the land is accurate.

Possessory Right: This is normally an inherited land right proven by tax payments at the local administrative office. It is one of the weakest types of land rights.

Sor Por Kor 4-01: This is an agricultural title deed, usually found in rural areas. Government land is transferred for agricultural purposes to needy families. Residence is allowed on a portion of the land. It is difficult for a non-Thai to obtain an interest in this type of land deed.

How do land mortgages work in Thailand?

Land mortgages in Thailand must be made in writing and registered with the Land Department of Thailand. Mortgages do not include the buildings built on the land after the mortgage date unless they were agreed upon before the mortgage documents were signed. In addition, buildings and other immovable structures may be mortgaged separately and should be registered with the Land Department or local Amphur (province). The fee for registering a mortgage is 1% of the amount declared in the mortgage agreement.

What types of taxes must be paid when purchasing land or property in Thailand?

The transferring fee, withholding tax and the stamp duty or Specific Business Tax (SBT) must all be paid by either the buyer or seller when a property is purchased. Although Sale and Purchase agreements differ, the buyer is typically responsible for the transfer fee, while the seller pays the stamp duty or specific business tax and the withholding tax.

Transferring Fee: 2% of the registered value of the property; paid at the Land Office on the day of transfer of ownership

Stamp duty: .5% of the appraised value of the property or the purchasing price, whichever is higher

Specific Business Tax (SBT): 3.3% of the appraised or actual price of the property, whichever is higher; Imposed only if the property is transferred less than five years after its purchase (If the SBT is levied, stamp duty will not have to be paid.)

I am buying land in the provinces outside of Bangkok. Should I hire a local law firm or a Bangkok-based law firm to help me?

If you intend to hire a local law firm, be sure that the local law firm you contact does not have a pre-existing working relationship with the seller and/or Land Department officials. Such law firms may be biased in their assessment. In most Western countries, it would be deemed a serious conflict of interest and breach of ethics for the same company to act as a real estate broker and a lawyer for the same client. However, in Thailand, certain companies marketing to non-Thais do exactly that. Alternatively, Bangkok-based law firms can be retained to travel to the provinces to execute the land deal. You may feel more confident that the Bangkok-based law firm will operate independently and 100% in your interests.

What condo units are foreign nationals legally permitted to purchase?

In general, non-Thai nationals may purchase condo units in condo buildings throughout Thailand, as long as their purchase would not cause the foreign ownership ratio of combined units in the building to exceed 49% of the total floor area. Certain condo buildings in the Greater Bangkok Metropolitan Area may not be subject to the 49% foreign ownership ratio restriction.

What are the requirements for a foreign individual to purchase a condo unit in a building in which foreign purchases are permitted?

Foreigners who do not have a Thailand residence permit must show proof that the funds for purchase of the condominium were brought from outside of Thailand. Non-Thais who have legal residence permits are not required to show evidence of funds coming from abroad.

What is the most typical way for a foreigner to purchase a condominium in Thailand?

Most foreigners purchase a condominium by showing evidence of an incoming remittance of foreign currency into their bank account from abroad. This is typically demonstrated by requesting the issuance of a certifying document from a bank in Thailand.

Can foreigners inherit ownership of a condo?

Property ownership of a condo may be inherited by either Thai or non-Thai descendents under normal circumstances.

Are condominium long-term leases available?

Yes. Condominiums may be leased to foreigners for periods of up to 30 years and may have options to renew. Leases of greater than 3 years are required to be registered with the Land Department. This option may be useful to acquire condominiums in buildings that have exceeded their foreign ownership ratio quota.

Why is important to have a qualified lawyer supervise your condo purchase transaction?

Thailand laws regulating real estate transactions do not provide as many inherent consumer protections as those in most western jurisdictions. For example, in Thailand, real estate agents are not licensed and title insurance is not commonly used. Thailand is very much a "Buyer Beware" jurisdiction.

1) Can a foreigner obtain 100% interest for a land lease in Thailand?

Yes. A foreigner can obtain 100% interest for a land lease in Thailand. Unlike direct land ownership, the law allows foreigners to obtain long-term land leases.

2) Do I have to register the land lease at the Land Department?

Leases up to three years need not be registered but registration at the Land Department is mandatory for leases that are three years or more.

3) What is the maximum lease term available?

The maximum lease term available is 30 years, with an option to renew for an additional 30 years. Each lease renewal that is agreed upon with the landowner must be registered at the local land office. For each new registration, taxes will be levied. Land for industrial or commercial purposes may be leased for up to 50 years by a foreign company under certain circumstances, with the possibility of extending the lease thereafter.

4) Why is land leasing favored by foreigners who wish to own property in Thailand?

There are numerous obstacles faced by foreigners who wish to buy land or purchase property in Thailand. To avoid these obstacles, many foreigners choose to acquire land on a 30-year leasehold with an option for extension. This is the simplest and most straightforward way for foreigners to acquire property in Thailand. In addition, a lease stays valid even in the event that the property or the land is sold.

5) What are the advantages of having a land lease over purchasing land with a company?

A foreigner’s lease rights are formally recognized by the Thai law. The land lease is executed and registered only once, after which very little legal maintenance is required. In comparison, a limited company has several shareholders who may have interests that are different from yours, and this could translate into potential risks for you and your objectives. Also, a company requires regulatory compliances such as yearly balance sheets to be filed with the Tax Department.

6) What are some of the drawbacks of land leases?

Even a well-constructed land lease and a separate option agreement to extend the lease between the landowner and the lessee cannot guarantee the timely renewal of the lease. A landowner may refuse to sign any registration for the lease extension beyond the 30-year expiration. Although the lessee can sue the landowner for breach of contract, the legal process entailed may be costly and time-consuming. Other drawbacks include the difficulty in obtaining a mortgage for a lease (as opposed to direct ownership); a lower resale value; and potential lawsuits from the landowner for lease violations.

Entering into a lease, or forming a company to buy land or purchase property - both methods have its advantages and disadvantages. It would be wise to examine your individual needs and obtain legal counsel from knowledgeable and trustworthy attorneys before you make a decision.

What are the different ways of acquiring land rights or purchasing property in Thailand?

2.1 Land Leases: Although Thailand real estate law restricts land ownership rights to non-Thai citizens, foreigners may hold 100% interest in a Thailand land lease. Thailand lease law allows a 30-year maximum lease period, with the possibility of renewing the lease for additional 30 year periods.

2.2 Company Ownership: Thailand registered companies with majority Thai ownership are able to buy land in Thailand. In the past it has been common for foreign nationals to acquire an interest in Thailand real estate as minority shareholders in a Thai majority company.

2.3 Investment: Thai real estate law allows foreigners to buy and own a limited amount of land based on investment of 40 million baht for five consecutive years, provided that the land is used for residential purposes.

2.4 Thai Spouse: According to Thai real estate law, a Thai spouse of a foreigner may be allowed to buy land or property in Thailand in his or her own name. However the married couple may be asked to sign declarations at the Land Department to state that the funds used are the separate property of the Thai spouse. This may have the effect of waiving any claim on the land or property by the non-Thai spouse. This may become problematic in a divorce case as it may be difficult for the non-Thai spouse to prove that the land was marital property. In this case, a skillfully drafted Thailand prenuptial agreement may come in handy to minimize the risk to the non-Thai spouse.

2.5 Usufruct Habitation and Superficies: A non-Thai may acquire a life term interest in certain types of property rights in Thailand. One example, a usufruct, is a right to use (and profit from) land and is similar to a leasehold but is non-transferable with some important differences.

Can Thai nationals buy real estate in their name and then execute an agreement that the land is held for a foreigner?

This is a risky approach because it is technically illegal under Thai property law for a Thai national to act as a nominee of a foreigner to buy real estate. Therefore, the agreement may be illegal and problematic. It is best to consult an experienced real estate lawyer in Thailand for the best available options.

Can foreigners own houses in Thailand?

In general, foreigners can own buildings and houses in Thailand as Thai real estate law places no nationality restrictions on ownership of houses or buildings in Thailand.

The information provided on this site is for informational purposes only. No warranty is expressed or implied.

Before taking any legal action, persons are advised to seek the advice of a lawyer qualified in the area