Can
you tell me more about land mortgages in Thailand?
An application made in writing, followed by a registration
at the Land Department of Thailand are two necessary
procedures for land mortgages in Thailand. Buildings
built on the land after the mortgage date will be
not covered unless they were agreed upon prior to
the signing of the mortgage documents. Such buildings
and other immovable structures should be mortgaged
and registered separately at the Land Department or
local Amphur (province).
What
are the pros and cons of utilizing company formation
to own land in Thailand?
By utilizing company formation, foreigners are able
to acquire ownership interest in land in Thailand.
This ownership is deemed permanent if the company
stays in operation and does not sell or transfer the
land. Company formation for the purpose of owning
land would be suitable for people considering setting
up businesses in Thailand; people with intentions
of holding land for investment or for long duration;
and as inheritance for future heirs. One other advantage
of this type of ownership is the possibility of mortgaging
and/or subdividing the land for resale purposes. This
is a right normally conferred by land leases.
The use of Thai nominees to hold shares in a company
owning land in order to circumvent the law is an offense
under Thai law. It is therefore recommended to have
genuine Thai partners in any company owning land in
Thailand.
Another issue to be aware of is the need to maintain
regulatory compliance of the company. The law requires
a Thailand-registered company to file annual balance
sheets and to maintain a company address. Moreover,
companies that are not operating may be de-listed.
It would, therefore, be wise to use an active company
to purchase land or buy property in Thailand.
If
I hire a Thai national to buy land or purchase property
on my behalf, can this person execute an agreement
stating that the land belongs to me?
In principle, it is illegal for a Thai national to
buy land or purchase property on behalf of a foreigner.
Therefore, the agreement may be considered illegal
and void. However, at least one Supreme Court decision
allows for the non-Thai using a Thai representative
to recover his investment in the land.
When
buying land outside of Bangkok, is it best to hire
a local law firm from the province or a Bangkok based
law firm?
There are many qualified law firms in provinces outside
of Bangkok. However the majority of law firms with
attorneys fluent in English are based in Bangkok,
and to a lesser degree in the other major urban areas.
Also, Thai law as it applies to foreigners is a specialty
area. While local firms that deal primarily with Thai
clientele may be excellent lawyers in their fields
of expertise, they may have little experience with
regard to the special issues involving non-Thais in
Thailand.
Before
you hire a local law firm, do check that there is
no pre-existing working relationship between the seller/Land
Department officials and the local law firm. This
is to prevent any biased assessments during the process
of buying land.
Foreigners are able to find many qualified law firms
in Bangkok. Bangkok-based law firms are able to commute
to the provinces to execute the land transaction.
Many foreigners feel more comfortable with this approach
as these law firms operate independently and in full
interests of the client (buyer).
