PROPERTY LAW IN THAILAND
Many expats wish to invest in Thai real estate. Property law in Thailand rules normally forbids foreign nationals from owning land. Our legal experts at Isaan Lawyers Thailand can provide solutions to secure a real estate investment through a lease, superficies, usufruct, Sap Ing Sith, Thai company, mortgage & more.
We have been looking after the Property Law in Thailand interests of overseas and expat clients since 2006. Since that time, we have been advising upon all aspects of land and Property within Thailand and how best to protect the assets involved.
As you may know, despite recent or forthcoming legislation which may allow under certain circumstances wealthy overseas nationals to own small amounts of land the vast majority of foreign nationals will not be eligible. Different rules apply to Condominiums that can be owned by foreign nationals.
Whilst land will be owned by either a Thai National or in some cases by a Thai limited company and operating as such, foreign nationals can protect their assets in the following ways.
Property Law In Thailand
Under the Civil and Commercial Code Thailand (CCCT)Book 4 the following Property Law in Thailand rights are registerable.
Property Law in Thailand Section 1417 onwards. This section states that immovable property may be subject to a Usufruct by virtue of which the usufructuary is entitled to the possession and use and enjoyment of the property and has the right of management of the property. This right can be created for a period of time or for the life of the usufructuary. This can be used for land and where there is a house upon the land.
The right is registered on the title deed (Chanotte) itself and is authenticated by and kept updated by the local land office where the property is located. The Usufruct ends with the death of the Usufructuary and cannot be left to heirs within a last will.
Property Law in Thailand, Sections 537 onwards. A popular way for foreigners to guarantee that they will be allowed to stay on a property is to make a lease agreement (or rental contract). The Commercial and Civil Code of Thailand use the term ‘hire of property’ at sections 537.
Under Thai law, the hire of immovable property must be made in writing and if the lease or contract is for more than 3 years, it must be registered at the local land department. You can register a lease only on title deeds such as Nor Sor Sam, Nor Sor Sam Kor or higher (like a Chanotte). When a foreign national registers any lease at the land department, his name will be written in Thai on the title deed, with the length of the agreement, and the date of registration. As with the Usufruct option above.
It’s important that your lease agreement is well drafted as there are many clauses that can be added in order to protect your interests. For example, will you be permitted to sublease the property to a third party? What about the renewal? Would you like this contract to be transferred to your heirs? Etc.
The maximum term for a lease via Property Law in Thailand rules is 30 years under Thai Law (section 540 of CCCT) and it can be renewed. A small land tax is also payable at the time of registration at the land department, at this time it is 1% of the entire rental value.
The right of Superficies
Property Law in Thailand Sections 1410 onwards. It’s a real right, like the Usufruct, meaning it’s attached to an immovable property, a thing, and not a person. So, the owner of the land can change, but this right will stay until it’s extinguished by the contract made between the parties.
By giving the right of superficies, the owner of a piece of land creates in favor of another person, a Foreigner or a Thai national, also called superficiary, the right to own upon or under the land, buildings, structures and plantations. (Section 1410). Unless otherwise provided, this right is transmissible to your heirs by way of inheritance. (section 1411). In other words, the owner of the land grants another person ownership of the structures upon the land for a maximum of 30 years, if it’s a fixed period OR for the life of the owner of the land or of the superficiary. Generally, the right of superficies will be added to a lease agreement on the land and both contracts will have the same length of time. Like a lease agreement or other contracts, renewals are possible.
Like an usufruct agreement, superficies must be registered in order to be valid. To register the right of superficies, the owner of the land must bring the title deed to the land department. Both parties must sign and the name of the superficiary will be added in Thai on the back of the title deed. Again, as in the lease and usufruct options above.
Superficies can be given for some consideration (money) or for free. If given for some money, there is a tax of about 1.1% to pay directly to the land department, for the full agreement, on the day of the registration.
Property Law in Thailand
Additional supporting documents
Memorandum of Understanding, MOU.
An MOU is a personal document or contract that can be drafted to cover a wide range of agreements commercial and personal between parties. The MOU for Land and Property can accurately cover where finances came from to buy land or property, whose money it was and what it was for. It can cover division of assets upon separation of a relationship for example where you are in a relationship with a Thai or married to one. This is particularly important as the land office can ask the Thai national owning land and granting one of the agreements above to sign their documentation to the effect that the money used to purchase land was the money of the Thai and not the foreign national being granted a right. Thus an MOU can document the actual circumstances accurately and as above can cover division of assets, restrict the sale of the same by any parties and can document both parties clear intentions and agreements should any future problems legal or otherwise arise.
We also advise all parties subject to land purchases and agreements with regards to property law in Thailand to have drafted a Last Will governing Inheritance. Thai Inheritance without a Last Will follows the line of succession and is a long and drawn out process. Should you wish to know further information please ask where we will be happy to provide further information.
As you can see the above documents are important documents to have drafted professionally in order to accurately reflect the position, intentions and agreements between parties. We would be happy to draft any legal documents required to assist you in any purchase or agreement you are looking to enter into.
We hope that the above information assists. Should you have any further questions please do not hesitate to get in touch.
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