Advice for foreign Nationals Ownerships Of Condominium in THAILAND
Since 1971, a foreigner (an alien) or a majority – owned foreign company cannot own land or land with buildings in Thailand. Foreigner can own condominium but more about that later. In May 2001, however, the Amendment Land Code Act came into force and does not make an exception. The Act’s relevant points translate as follows:
Aliens wishing to acquire land in Thailand must bring foreign currency into Thailand for certain types of investment in an amount to be specified in ministerial regulations which shall in no event be less than 40 million Baht and obtain permissions from the Minister of Interior. Any aliens meeting such requirements may be granted permission to own land in an area not exceeding one(1) rai for residential purpose.
The ministerial regulations have not been issued as of January 2000.
Foreign Ownership of Land in Thailand
As a general matter, THAI law prohibits foreigners from owning land in THAILAND. The prohibition applies to foreign individuals and juristic entities (e.g., companies or partnerships). Additionally, it applies to THAI registered juristic entities which are owned or controlled by foreigners.
Prohibition on Foreign Ownership of Land
□ THAI LAND LAW:
Under Sec. 86 of the THAI LAND LAW, a foreigner may own Land in THAILAND only permitted by treaty. In fact, THAILAND does not have any treaty with any country.
Permitting foreigners from that country to own land. Therefore, foreigners are effectively, prohibited from owning land in THAILAND.
Under Sec. 97 of the Land Law, the definition of a foreigner includes THAI registered companies or partnership in which more than 49% of the capital is owned by foreigners or of which is more than half the shareholders or partners are foreigners.
As a practical matter, it is often difficult for a THAI company with foreigners having substantial minority ownership (e.g., 51% THAI, 49 Foreign) to acquire land in THAILAND. The policies of Land Offices vary throughout THAILAND, but often they require that THAIS own at least 60% or 70% of a company in order to register land ownership.
Under former Land Office policy, THAI nationals who married forigners were prohibited from ownership of Land in THAILAND. This prohibition was based on principles of community property law and general presumption that the THAI spouse was holding the land for the benefit of the foreigner. However, under current Land Office policy the THAI spouse can own land in THAILAND, provided that the foreign spouse signs a letter declaring the property to be the separate property of the THAI spouse and waiving any interest in the property.
□ Condominium Act (No. 2) of 1990:
Sec. 19 of the condominium Act effectively prohibits ownership of condominium units by a foreign unless the foreigner qualifies for foreign ownership as described below
□ Alien Business Law
The Alien Business Law, which regulates foreign investment in THAILAND, can have an indirect impact on the ability of foreigners to own land. ( see: the terms of the Alien Business Act of 1999)
There are three legal acts relevant to the purchase of a condominium unit by an alien, being the condominium Act B.E. 2522 ( or 1979, the Condominium Act (No.2), B.E. 2534 ( or 1999) and the condominium Act (No.3) B.E. 2542 (or 1999) issued on 27th April 1999.
Condominium Act ( No.2 ) of 1990 (as mended April 27, 1999)
Sec. 19 of the amended Condominium Act authorizes qualified foreign s to own individual condominium units provided that the total area of foreign – owned units within the condominium project does not exceed 49 percent of total area of all units within the project. In Bangkok and other municipalities to be designated in ministerial regulations, the 49% limitation does not apply. The followings foreigners qualify for condominium unit ownership:
□ Individuals having permanent residence status in THAILAND
□ Individuals who have been permitted to enter THAILAND under BOI privileges
□ Juristic entities registered in THAILAND but being classified as “foreign” under the Land Act.
□ Juristic entities which have been granted investment privileges by the BOI.
□ Individuals or Juristic entities which have brought foreign currency into THAILAND for the purpose of purchasing the condominium unit.
Condominiums / Strategies
Despite the board scope of the prohibition on foreign ownership of land and condominium in THAILAND, and the narrow scope of the exceptions, a variety of tactics of prohibitions.
These include, For example:
□ Forming joint venture companies with majority THAI ownership but adequate safeguard for the foreign minority interest.
□ Long term leases with rights to remewal.
The Condominium Act has currently been amended and it is now possible for 49 percent of the units in all condominiums for 100 percent of the units in condominiums with a total of the units in condominiums with a total development area of under 5 rai located in Bangkok, all municipal district and such other areas shall hereafter be announced by the Minister of the interior ( which is expected to included rural Phuket ) to be foreign owned, provided always ( this is unchanged ) that the funds for the purchase have been remitted from aboard.
As an attempt to reduce the surplus number of condominiums, the new Act has made an exception so that aliens or alien juristic persons ( majority foreign –owned companies) can own up to 100% of aggregate unit space registered in a condominium up to 27th April 2004.
A Condominium title
A condominium title ( True title deeds =Chanott ti din ), First established under the condominium act of 1979, is a title to a part of building or buildings with multiples owners, and a fractional interest in the land ( always a chanott) and other common parts of the building such as the stair well or lobby. The title will state the floor area of the private apartment, the ground area of the common land and the percentage interest which that apartment has in the common property. This percentage also representsthe value of voting interest in the condominium company or owners association.