Buying Real Estate in Thailand
Buying real estate in Thailand can be a tricky process. There are different laws and regulations that you need to familiarize yourself with. Having the right legal knowledge will help you avoid pitfalls.
Foreigners are not allowed to own outright land or houses in Thailand but they can own condo units. This article will give you a quick legal introduction to thai property laws.
Most people dream about retiring to a tropical paradise like Thailand. And after a wonderful vacation it’s no wonder that many people turn to their computers and key in “buy land Thailand.”
Unfortunately, purchasing land in Thailand as a foreigner isn’t easy. The first thing you must consider is the type of deed the land has.
A Chanote is the highest certificate of land ownership and offers full legal rights to the owner, including a fully surveyed status. Other deeds may include usufruct or mortgages. And it’s always a good idea to check with the Land Department (ochndthiidin) before making any real estate purchases.
It’s also important to know that land bought by a foreigner and placed in the name of their Thai spouse is not considered joint marital property. This is based on a Thai regulation that states that property purchased by the non-Thai spouse is her personal property, she has sole management of it and can dispose or encumber it as she pleases.
As the only form of property that a foreigner can own on a freehold basis in Thailand, condominiums are very popular. Foreigners are allowed to own up to 49% of the total sellable square meter space in a condominium project and may then rent it out for long-term or short term occupancy (lease arrangement).
When buying a condominium, ensure that you have a clear paper trail of your purchase, including sale agreement contract, deposit, remaining balance of purchase, applicable Government fees & taxes and transfer fee. Also read the rules, regulations & by-laws before purchasing.
A reputable property lawyer will help to ensure that you understand all aspects of your purchase, dotting the i’s and crossing the t’s. They can also help to verify that your condominium meets the 49% quota for foreign ownership under Thai law. When purchasing a new condo from a developer, ensure that you have proof of funds being sent from abroad and converted to thai baht (Foreign Exchange Transaction Forms). When buying a resale condo from a private seller the transfer fees can be shared between buyer & seller as agreed in the sale contract.
Normally when a foreigner purchases a home in Thailand they lease the land the house stands on rather than purchasing it outright. This is done through a lease agreement with the land department. If the lease term is for more than three years it must be registered in order to be enforceable. For those wanting a longer term lease there is the option of registering a right of superficies.
The legal content of a lease agreement can be split into rights based on hire of property laws and promises based on general contract law. The former are enforceable by court action and remain valid, even after ownership of the property is transferred.
The maximum length of time a lease can be guaranteed for in Thailand is 30 years. Many developers include clauses in their sale and purchase addendum recommending that the lease should be renewed for two further 30-year periods. These are however in practice merely promises, as the legal enforceability of such extensions is uncertain.
A usufruct (Sidhi Kep-Kin) is a legal right that grants one party full enjoyment of a real property in Thailand. This agreement can be drafted for the lifetime of the holder (the usufructuary) and is similar to a lease, but with much more flexibility.
This is a popular option for Foreigners who want to be able to enjoy the benefits of owning a piece of land in Thailand without actually being the owner of that land. We can register a usufruct on a title deed and it allows you to possess, use and manage the property as though you were the full owner.
It cannot be transferred, so most people who take a usufruct will register it in their names and that of their spouse. This ensures that, should they die before the 30 years lapse, their spouse will maintain those rights. For this reason we also recommend that you consider another property option like the Right of Superficies which can be transferred and inherited.