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More information about land ownership
Land ownership is a complex and regulated aspect of real estate in every country, and Thailand is no exception. With its unique legal framework and restrictions, understanding land ownership in Thailand is crucial for both local and foreign investors.
Table of Contents
◊ Can a foreigner get full land ownership in Thailand ?
While under the Thai law, generally, foreigners cannot own land directly in Thailand there are several exceptions and ways to own the right of ownership of the land in Thailand. Below is the list of possible ways and things to consider for a foreigner wanting to own a land:
Leasehold: Foreigners may purchase land on a leasehold basis, with leases hundred for a maximum of 30 years with renewals or additional extensions. Leasehold on the land creates in the foreigner firm evidence of possession and use of the property interest for the term of the lease.
Condominiums: A Land Department regulation of 1979 includes condos in the category of dwelling houses moreover they can be owned in freehold by foreigners. However, the area where foreigners may own freehold condos or apartments has been restricted in regard to percentage. Foreign ownership in a freehold or leasehold in a condominium building or complex may not exceed forty-nine percent percentages of the total floor area of all units combined.
Thai Company: A foreigner may form a company in Thailand and buy the land in the company’s name. Nevertheless, the foreign ownership of this company must not exceed 49 and the company has to be actively involved in a legal business as forming of the company solely for purposes of owning land is strictly regulated. This way is the most popular however it has also the most registration requirements for foreigners.
- Treaty Exceptions: Rarely certain foreigners holding nationality from a country which entered into a treaty with Thailand exceptions permitting the nationals of that state to own the land in Thailand.
Make sure to contact a lawyer before land buying to set up properly of ownership structure and comply with regulations.
◊ Is it possible to rent land on a long-term basis ?
Yes, renting land for the long term in Thailand is a common practice, and it is also reasonable for the case when an individual or company may wish to obtain land for some time without owning it permanently. At the same time, six key points should be considered that should be known to anyone wishing to rent land in this country:
Lease duration: Leases in Thailand are often made for no longer than 30 years, and it is usually provided with an option to extend the duration;
Lease agreement: Both parties should sign the lease agreement, which will contain all the specific conditions and rules of the lease, including the duration of the lease, rent amount, payment, and obligations of the parties and other specific cases.
Law examination: Before signing the contract, it is recommended to conduct proper due diligence on the land and the owner, as Thai law is rather restrictive, regulates the terms and cases of land use, and there are different problems related to land in the country.
Registration: If the validity of the lease is more than three years, otherwise the contract is simple and cannot be used legally, then the lease agreement must be signed and registered at the Land Office.
Negotiation: When concluding an agreement, it is allowed to negotiate everything that affects the final contract, starting with the amount of rent, the duration of the lease or any other provisions. For some cases, it is better to involve lawyers in the negotiation process.
Sub-lease: Not every lease agreement allows sub-lease, which can also be regulated by a special clause. To do it legally, it is better to refer to a specialist dealing with questions concerning Thai real estate and property law to follow the laws and protect your own rights.
◊ What is a land ownership purchase contract ?
Land purchase agreements in Thailand are legally binding documents between buyers and sellers that establish the transfer of ownership rights to plots of terrain. The contract details the terms and prerequisites of the acquisition like price paid, installments, and any other pertinent provisions. It functions as evidence of the understanding and safeguards the entitlements and positions of both gatherings included in the exchange.
Elements regularly remembered in Thai land purchase contracts incorporate:
- Identities Particulars: The agreement ought to unequivocally express the names, locations, and subtle elements recognizing the purchasers and venders included in the transaction.
- Land Possession Portrayal: The contract should give a point by point depiction of the land being sold, including its estimate, outskirts, area, and any noteworthy highlights.
- Purchase Cost: The agreement should particularize the concurred upon buy cost for the land and the cash in which it will be paid.
- Installment Conditions: The agreement should outline subtleties of the installment conditions, including the sum of the store (if relevant), the opportunity and strategy for installments, and any conditions or objectives for installment.
- Exchange of Ownership: The agreement should evidently state the conditions for the exchange of proprietorship, including the date of exchange and any extra commitments or necessities, for example, getting crucial allows or authorizations.
- Expressions and Ensurances: The contract may remember articulations and assurances made by the purchaser and vender concerning the land, its condition, and any lawful or budgetary issues identified with the exchange.
- Default and Remedies: The agreement should set up the results of default by either gathering and the accessible arrangements in the event of infringement.
It is critical to counsel with an attorney or lawful expert particular in property laws in Thailand to draft or audit the land purchase contract to guarantee consistency with nearby directions and ensure your advantages in the exchange.
◊ What is a land ownership sale contract ?
A land sale contract, in general, is a legally enforceable document which describes the terms and conditions of the sale, including well-known facts such as the amount of payments to be made, terms of payments, and provisions. In this context, a land sale contract in Thailand is a document, which describes the terms and conditions of the agreement concluded between the seller and buyer used for the development of a piece of land :
Identification of Parties: This part usually includes names, addresses, and other identification details of the seller and buyer.
Land Description: The land sale contract should describe what land and what rights of ownership for the land are being sold: the contract should contain size of the land, location, and other possible peculiarities.
Purchase price: The contract should contain information about the amount of the purchase price and the currency of payment . If most or all of the amount of purchase is stated to be paid later, the contract may also post the first payment and the terms and ways of the regular subsequent payments and the currency of such payments.
Sale Conditions: The contract may mention whether the agreed transaction is conditioned on receiving specific development permits or other permits or clearances.
Transfer of ownership: The date on which the ownership is to be transferred and any additional obligations in this section should be published here. It seems important to indicate if the buyer’s obligations include the payment to the seller of the costs of transfer of the ownership, echivalents and/or taxes.
Representations and Warranties: Such provisions usually made by the seller and buyer of the land, like that they have rights to enter into the contract which is conditioned on the owner of the land being able to sell the land.
Default and remedies: Condition of what the consequences of the parties to comply with their obligations under the agreements may be should complete the document.
◊ Why is it necessary to carry out due diligence before buying land ?
Before purchasing land in Thailand, it is essential to carry out due diligence because the country has specific rules, regulations, and land laws that differ from other states. Furthermore, it is crucial to check whether the land is legitimate, the possessor is the legal owner and whether there any disputes, encumbrances, or zoning limitations that may affect the land. The key reasons why due diligence is essential before purchasing land in Thailand are the following:
Legal Compliance : Thailand has specific laws and statutes regarding land ownership, due diligence makes sure the land sought to buy is legally available for purchase by foreigners or foreigners. Ensuring one’s dissoluteness about buying the land of land or understanding any constraints, specified obligations, revised conditions, or other related factors related to buying the land.
Title Checking : Verifying the ownership and title of the landlady you mean to buy is necessary. Acknowledging that the seller has the right to sell land and that the title is clarified and free of any constraint, usually including liens, departures, or lawsuits, can protect land speculation from any potential legal issues or disputes that may arise in the future.
Land use and zoning : Due diligence will enable you to control land use rules realistic and equal for that area. This makes sure the lot you purchase is suitable for your intended intentions, whether you demand it for residential, business, or agricultural purposes. Therefore, you will not own any land that you cannot spend because it is not suitable for zoning demographics.
Boundary and Survey Checks: Due diligence requires that you or other professionals check whether the plat you mean to buy is landlocked, and a survey seeking the property is helpful. The aim is to investigate the land to ensure the actual creates and dimensions of the thing match the proposed landowner’s description. At the end, it stops the final line to keep it with added landowners in the space.
Infrastructure and Utilities : Due diligence will enable you to investigate the utilitarian access and availability of roads and other necessary utilities such as electric power and water supplies.
Financial and tax benefits : Checking all the payment aspects of your purchase is necessary. This makes sure the price cited an agreeable price to purchase or buy. Make determined all taxes are paid and that there are no financial responsibilities.
Due diligence is crucial when purchasing land in Thailand. It will provide people with the possibility to avoid fatal errors, protect themselves from potential legal, financial, or practical problems. To help them proceed with this step, they should probably hire professionals, including property lawyers and certified real estate experts familiar with all of the above-required considerations.
◊ What are the transfer taxes as regard land ownership ?
In Thailand, the transfer of land taxes is referred to as the transfer fee and the specific business tax. It is imposed on the transfer of ownership of immovable property. The buyer generally pays this tax during the land ownership transfer process. The two central taxes are as follows:
Transfer Fee: The transfer fee is a tax levied on the transfer of ownership of any immovable property. This fee is determined by the assessed value of the property, not by the country, but by the Land Department. Thailand’s transfer tax is now 2% of the assessed value of the property. However, this tax can be negotiated by the parties in the transaction.
Specific Business Tax: The Specific Business Tax is an alternative to the transfer fee or for registration of ownership of immovable property. However, if the property in question is sold before the expiration of years five, then it would be avoidable. The tax is determined by the estimated price of the property or the price at which it was purchased, whichever is higher. The current rate of specific business tax is 3.3% of the assessed value or price, whichever is higher. In contrast to the usage fee, the specific business tax is the seller’s responsibility. Although, the parties in the transaction can negotiate who will be responsible for this tax.
◊ What is the procedure at the land office for land ownership ?
The buyer and the seller should sign the agreement on sale and purchase in the Land Department office together with the appropriate officer of the Land department then the buyer should make the entire payments agreed upon by both parties to the seller or make a payment deposit to the seller. When these are complete, the transfer procedure will be completed at the Land Office by the buyer ;
The buyer will fill the land ownership transfer application;
The buyer shall pay the transfer fee and get a new land granted land title.
Moreover, generally, there are 7 steps of the Amicable Land Transfer Case Procedure at the Land Office :
Step 1 : Submission of documents : the buyer will obtain all the documents that are necessary to transfer land ownership
Step 2 : Engaging a lawyer : the Land Transfer forms can be filled by the Lawyer and the application process is conducted by the Land Office.
Step 3 : Application process : both buyer and seller will visit the Land Office where the land is located and submit the application to transfer land ownership.
Step 4: Verification and assessment: The Land Office will verify the agreement and carry out the assessment of the land transfer. They will examine whether the agreement is in accordance with the rules and whether the taxes are reasonable. This will also involve checking the documents to confirm the ownership of the land, as well as the verification of the transfer stamps if any. They will confirm the size of the land through a survey and assess both the transfer and specific business taxes.
Step 5: Payment: The transferor will report the assessment of the Land Office and pay the fee for transfer of ownership. The buyer will meet the specific business tax which is about 3.3 per cent the value of the land as assessed by the government. The land office will provide a payment receipt, which, in turn, will be used in the process of signing the agreement.
Step 6: Transfer process: The buyer and seller as well as the representative from the land office or the notary public must be present during this process. In this step, all parties will sign the transfer agreement in addition to other forms that will be given. A stamp duty will be put on the documents once this process is complete.
Step 7: Confirmation and registration: The land office will then issue the buyer with evidence that the land has been registered in his name. The seller should get a letter of acknowledgement as evidence that she has successfully transferred the land. After the transfer process, go back to the first step. A new title deed will be prepared in both Thai and English for the buyer after all these steps.
◊ Why is it necessary to draw up a will for land ownership ?
In Thailand, drawing up a will regarding land ownership is necessary due to the country’s inheritance laws. According to Thai regulations, if a person dies without establishing a valid will, the distribution of the deceased’s estate will be determined by a restrictive hierarchy of family members whose rights are precedence among all other relatives. In cases in which such assets as land or property are involved, the relevant legal procedures may be both long and complicated. It means that preparing a will is essential for every person to be certain that their assets, including land, are distributed not according to legal regulations but one’s personal preferences.
Drawing up a will regarding land ownership in Thailand is essential for the following reasons:
- Making Sure Your Intentions Are Followed: You can express your intentions regarding your land distribution with the help of your will. If you do not prepare one, the assets, including your land, will be distributed in line with Thailand’s inheritance laws, which may not coincide with your wishes.
- Flexibility in Land Distribution: Having a will allows your land to be distributed among the beneficiaries of your choice. You can determine the percentage of ownership, choose to which persons or organizations your assets will be allotted, and regulate the conditions of the transfer or use of land.
- Avoiding Intestate Succession: Changeable intestate succession law is applied to the distribution of the estate when a person dies and the relevant instruments are not made ineffective in the case of your land distribution . In this case, a limited range of relatives is granted land ownership, which may also not correspond to your preferences. Making a will, you can distribute your assets according to your wishes and not the legal provisions.
- Protecting Non-Thai Spouses or Heirs: In the case in which the testator is a non-Thai person married to a Thai national, a will is necessary. In accordance with the inheritance law in Thailand, non-Thai spouses and heirs are not granted a land ownership right. In this case, their legal system is made void, securing the rights to the land of the said people and preventing future disputes and complications.
- Fewer Legal Challenges: Preparing a will significantly reduces the percentage of potential heirs’ disputes and legal challenges. It is achieved since instructions regarding the land distribution are presented, and your preferences are definite and inviolable.
- Maximizing Efficiency and Continuity: A will ensures that the process of your land assets’ allocation will be completed quickly and smoothly in accordance with the established preferences.
To make your will valid and obligatory, you should follow the relevant legal prescriptions and consult an attorney well-versed in Thai inheritance and estate planning law .
◊ Why should you avoid having nominees ?
There are several reasons why it’s generally not a good idea to use nominees for land ownership in Thailand. They include the following:
Prohibition of nominee structures: It’s illegal for foreigners and companies to use nominees or strawmen to circumvent restrictions on land ownership. Thai law prohibits or restricts foreigners from owning land, with a few exceptions: they can own condominium units, and they can acquire land under particular investment schemes.
Legal consequences: If the use of nominee structures to hold land is discovered, they can be punished in various ways, including penalties, fines, or confiscation of the land. They can risk losing their land to serious legal penalties if they use nominees.
Uncertainty and lack of control: If the land is held under nominee names, the actual owner does not have proper control and legal protection over the land. Nominees can act against the owner’s interest, transfer or sell the land without their consent, or involve them in legal disputes. This uncertainty can lead to various problems, including disputes, financial losses, and proving ownership.
Inheritance and Succession: In the event that the actual owner dies, there are risks of complications and uncertainty over the nominee structure’s inheritance and succession. The nominees have no automatic legal right to inherit or distribute the land according to the owner’s last will.
It’s notable that Thai law does provide for fully legal ways that foreigners can own property in Thailand. These include putting land under a long-term lease, setting up a Thai company with majority Thai ownership, or using designated investment vehicles.