As a prospective buyer of property in Thailand, you may have questions regarding the ins and outs of buying property. Things such as contracts, taxes, fees and other pertinent details may be difficult to navigate in a foreign country without the expert advice of a real estate professional. We highly recommend using a real estate lawyer when buying a house or villa in Thailand to help you navigate and understand the legal process. As Thai Property Law is quite complex, it can save you time and stress by having someone else handle the legalities of purchasing property.
Once your property is purchased, finding someone to take care of it while you are away or renting it out may be your next concern. Our comprehensive rental management program has been designed to make sure all of your homeowning needs are taken care of through our one-stop shop. As Samui Best Homes is a full-service real estate company, we have everything from trusted lawyers to superb villa management under one roof.
For your convenience, we have developed a simple guide below that addresses some of the most common questions and concerns when buying property in Thailand.
Land Ownership
Although buying a villa or house in your home country may also include owning the land in which the property will sit upon, there are restrictions to foreigners in regards to owning land in Thailand. Currently, foreigners are not allowed to own land, but there are exceptions to this rule.
This, notwithstanding, there are alternatives available to foreigners for successful land acquisition. The most common option is to set up your own Thai Limited Company in order to legally own the land in your name. Another option is to enter into a long-term leasehold with the landowner. It is largely unknown that despite a foreigner being unable to own land in Thailand, they can own the house or structure built thereon.
The sale and transfer of ownership of an existing building, that is separate from the land, requires the current owner and buyer of the house to strictly adhere to the standard procedure detailed at the Land Office. If this is not done, the building will still be legally owned by the developer or a third party who owns the land.
A lawyer can help you understand and follow those exceptions in order to legalise your purchase of land.
Steps in How to Buy a House in Thailand
Step 1: Finding a House
As foreign ownership of real estate in Thailand has become increasingly popular, there are a few things to consider when buying a house or villa:
- Always make use of registered lawyers and reputable real estate agents in Thailand as they will provide reputable advice and protect your interests when acquiring real estate.
- Be aware that many of the issues that do arise when buying a house in Thailand can be avoided early on in the property search. Make sure to look into relevant regulations and pertinent laws.
Step 2: Setting Up Your Thai Company
Once you have decided upon a house or villa to purchase, make sure to consult a lawyer before signing any documents. Remember that foreigners may not own a house in their name; however, a Thai registered company in the foreigner’s name may own the house. Thailand has different types of business entities, with the most commonly used being a Thai Limited Company. For Americans, the Thailand Amity Treaty is one way to legally own property. As there are many types of company structures that comply with Thai laws, it is best to consult your real estate agency or lawyer to find a company that best fits your situation.
Step 3: Buying a House in Thailand
Once both parties agree on a price, a reputable lawyer should do a title search and check the contract before signing.The title search is deemed very important as it is in this procedure that the buyer would ascertain that the seller is the rightful owner to the subject property, and that all of the property’s paperwork is in place. Also, note the type of Title Deeds in Thailand. These Thai title documents are marked with a garuda or khrut. A garuda is a mythical bird-like creature used as the national symbol of Thailand. To easily determine which type of title deed your prospective property holds, it is usually apparent by the mythical, bird-like creature called a “garuda” or “khrut” at the top of the deed. Each type of deed will display a different coloured garuda at the top that indicates the specific deed.
Types of title deeds in Thailand
- Freehold Title Deed (Chanote or Nor Sor 4): This type of title gives the holder full rights over the land, to deal with or to use it to the exclusion of others. A red garuda or khrut will be displayed at the top of this title deed.
- Nor Sor 3 Gor: A land awaiting a full title is granted this document. Any property can be built on this land as long as a building permit is obtained. This type of land may be sold, transferred, or mortgaged in the same manner as land with freehold title deed. A black garuda or khrut will be displayed at the top of this title deed.
- Nor Sor 3: This differs from Nor Sor 3 Gor as this title has not yet been measured by the Land Department, as the land has no exact boundaries. A green garuda or khrut will be displayed at the top of this title deed.
- Possessory Right: This type of title deed is not recommended as it has not been substantiated by the Land Department, but only with the Local Administrative Office through tax payments.
If you are buying a house off-plan, securing legal advice is needed in regards to buying in pre-construction projects. Additionally, there are transfer fees for your condominium and Thailand property taxes.
Transfer of Ownership
When transferring ownership of a house or villa, the procedure is conducted at the land office. It is the only government authority that is approved to administer and complete a transfer of ownership of a building. The documents needed to conduct a transfer of ownership, are as follows:
- Thai home and official documents related to real estate
- Passports/ ID cards of the owner and buyer
- Land title deed
- House book (Tabien Baan)
- Building permit
The transfer of ownership of a house or villa is recognised as an immovable property that is subjected to income withholding (personal or corporate income) tax, transfer fees, stamp duty, specific business tax calculated over the registered sale value or appraised value. The government’s assessed (appraised) value of a house or villa, used by the land office, depends among others on location, number of floors, floor space and types of materials used.
Buying a Property with Company
Buying a property that’s owned by an already registered Thai Limited Company is another common option when wanting to own a home in Thailand. If you see any listing that says “sold with company,” it means that the buyer would purchase the existing company with the featured property included. Therefore, the ownership of the property will still be under the same company. Consulting with a lawyer would provide the necessary information to transfer the ownership of the company to your name, provided all legal requirements have been met. It is important to note that when you buy a property that is part of a Thai company, as a foreigner, you will only be allowed to own 49% of the shares in the company.
Even if you would like to create a company for the sole purpose of listing your new property under the company’s assets, the company would still be majority-owned by a Thai juristic person. This means that as a foreigner, you would only own 49% of the shares in the company in which you have created. However, if all legal provisions are met, the Thai juristic person can legally sign over control of their shares in the company to you. This is a common way of buying property in Thailand, and if all legal provisions are met, you can also use the company to buy land, which is normally illegal for foreigners.
The land would still be owned by the company, however, you would be the managing director, which would give you control of the other shares’ voting. Essentially, this means that you would enjoy authority over the land ownership.
Buying a Foreign Freehold Condominium
Buying a property under a foreign freehold ownership offers a foreigner 100% ownership of the property. Although it is the best way to purchase a condominium in Thailand, it is highly recommended to check that the development of your interest allows foreigners to purchase property within.
As per the Condominium Act of B.E. 2522 (1979), the regulations for foreign ownership of a condo are dictated by this law. The condominium, as a whole, must show that the foreign quota has not been met in order for your specific condo to be legally purchased by a foreigner. The law states that foreigners can own 49% of the total floor area in a condominium building, while Thai nationals can own 51%. This is known as a foreign quota.
As there are some developments that do not comply with the Condominium Act, it is vital to check to see whether the property in which you are interested in buying, is legally available for purchase via the foreign freehold method.
We are at your service to guide and assist you with any questions about buying property in Thailand as well as any legal services you may need. Contact us via email at [email protected], or call +66 (98) 714 9274 (WhatsApp)
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