Thailand Law Foreign Land Ownership 'Loopholes' Tightened
- By Gregory Smyth
- Published 10/1/2011
- National, State, Local
- Unrated
Thai law consulting firms are advising foreigners that land ownership in Thailand has come under greater scrutiny.
Using clever strategies to get around Thailand property law may in fact leave you in need of a good Thailand lawyer. Popular practices are coming under increased scrutiny by Thai government departments in an attempt to stamp out illegal land ownership.
Under Thai law a foreigner cannot own land. For this reason buying a unit, or condominium, has become a popular way of avoiding long-term leases or rental agreements.
Condominium units can be sold separately to foreign property investors provided the total foreign ownership of a property does not exceed 50 per cent.
Other property investment strategies used by foreigners may not be so sound (and of course, it is always wise to consult with a legal service in Thailand before undertaking any transaction).
Suspect strategy
Law firms in Thailand advise that while foreign individuals are not permitted to own land outright, a majority Thai-held company can legally purchase land. For foreigners making a business investment in Thailand through a Thai company (which requires 50 per cent Thai shareholding), using the company vehicle to purchase land is a valid strategy.
The difficulty arises when individuals form a bogus company using nominee shareholders (so-called silent shareholders without voting rights) to buy land. Thai officials have cracked down on this practice and land offices are being more stringent in checking the credentials of partially foreign-owned
companies buying or holding land.
This check includes an investigation into whether a company is actively trading, has regular shareholder meetings and yearly audits. Thai shareholders are also being checked as changes to business law in Thailand have made nominee shareholder arrangements illegal.
There are legal avenues for foreigners to control land and these include:
- Leasehold, which allows foreigners to lease land and property for a maximum 30-year period;
- Board of Investment (BoI) privileges, which can entitle foreign companies to buy or lease land;
- A Thai company or spouse may grant a foreigner a Right of Superficies, which under Thailand law gives a foreigner the right to own buildings without owning the land they occupy;
- A foreigner may give funds to a Thai spouse to buy land or property in Thailand. However, under Thai law this becomes the sole property of the Thai marriage partner and could be problematic in a divorce case or death of the Thai spouse.
According to Thai law consulting firm, BSA Law, investors need to be careful of changes to Thailand law and new legal interpretations.
They advise that while the strategies outlined above may be legal, each can present its own difficulties and foreign investors need to seek independent and expert advice. The Thailand law firm warns that practices that were common in the past are now coming under more intense scrutiny and may no longer be valid investment strategies.
There is a myriad of potential pitfalls awaiting foreigners wanting to invest in Thai land or property, but with the right advice a piece of this south-east Asian paradise could be yours to keep.
Using clever strategies to get around Thailand property law may in fact leave you in need of a good Thailand lawyer. Popular practices are coming under increased scrutiny by Thai government departments in an attempt to stamp out illegal land ownership.
Under Thai law a foreigner cannot own land. For this reason buying a unit, or condominium, has become a popular way of avoiding long-term leases or rental agreements.
Condominium units can be sold separately to foreign property investors provided the total foreign ownership of a property does not exceed 50 per cent.
Other property investment strategies used by foreigners may not be so sound (and of course, it is always wise to consult with a legal service in Thailand before undertaking any transaction).
Suspect strategy
Law firms in Thailand advise that while foreign individuals are not permitted to own land outright, a majority Thai-held company can legally purchase land. For foreigners making a business investment in Thailand through a Thai company (which requires 50 per cent Thai shareholding), using the company vehicle to purchase land is a valid strategy.
The difficulty arises when individuals form a bogus company using nominee shareholders (so-called silent shareholders without voting rights) to buy land. Thai officials have cracked down on this practice and land offices are being more stringent in checking the credentials of partially foreign-owned
This check includes an investigation into whether a company is actively trading, has regular shareholder meetings and yearly audits. Thai shareholders are also being checked as changes to business law in Thailand have made nominee shareholder arrangements illegal.
There are legal avenues for foreigners to control land and these include:
- Leasehold, which allows foreigners to lease land and property for a maximum 30-year period;
- Board of Investment (BoI) privileges, which can entitle foreign companies to buy or lease land;
- A Thai company or spouse may grant a foreigner a Right of Superficies, which under Thailand law gives a foreigner the right to own buildings without owning the land they occupy;
- A foreigner may give funds to a Thai spouse to buy land or property in Thailand. However, under Thai law this becomes the sole property of the Thai marriage partner and could be problematic in a divorce case or death of the Thai spouse.
According to Thai law consulting firm, BSA Law, investors need to be careful of changes to Thailand law and new legal interpretations.
They advise that while the strategies outlined above may be legal, each can present its own difficulties and foreign investors need to seek independent and expert advice. The Thailand law firm warns that practices that were common in the past are now coming under more intense scrutiny and may no longer be valid investment strategies.
There is a myriad of potential pitfalls awaiting foreigners wanting to invest in Thai land or property, but with the right advice a piece of this south-east Asian paradise could be yours to keep.
Gregory Smyth
BSA Law has focused on providing reliable thai Law consulting and services to the business community in Thailand for nearly 30 years.Click to find out more about Law firm in Thailand.
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