In general, the property laws and regulations of Thailand are patterned after the western countries in much the same way that the Thailand Civil Code is based on the mainland European civil law system. Thai property laws are in effect considered western.
Ownership of land in Thailand is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior. The conditions imposed on land ownership for non-Thai nationals are so restrictive that ownership is not practicably possible at all.
There are, however, certain ways wherein a foreign national can go about land possession without violating the provisions of the property laws of Thailand. The following are three ways to get around land possession in Thailand by a non-Thai national:
- Register a Thai nominee
- Set up and register a Limited Liability company to own the land
- Creating long term leases with guaranteed rights to renewal for registered ownership under a Thai nominee’s name or under a Limited Liability Company’s name.
Register a Thai Nominee
This option allows for a much faster and simple and straightforward processing without the burden of additional costs. And this is why this option has become as the first choice of many expatriates or foreign nationals who are keen to invest in properties in Thailand.
This method is normally suitable where an existing long-term relationship has been established and in place. The foreign national should have established retaining full control and influence over the nominated Thai national. If you are confident about your controlling position over the nominated Thai national, this can be the suitable option to satisfy land possession.
The obvious disadvantage of this option is the fact that legally, the land is not under your control, since it is not under your name. In the event of severing ties with the nominated Thai national for whatever reasons, you have no way to resell the land. You can only protect the property in question if a last will and testament is in place controlling the bequeathing of the property on the death of the Thai nominee. This means that the Thai nominee will sign a last will and testament specifying that the property should be transferred to another person who could be your new Thai nominee in case of the first nominee’s death.
Registration of a Limited Liability Company
This method has been the popular option for many foreign nationals in the past in structuring a way to own land in Thailand. The foreigner must know and be aware of all the requirements to process and register a Limited Liability Company in order for this method to work. This means having only 49% ownership by foreign nationals and the majority 51% of the shares are held by the local Thai nationals. As in the first option, the conditions do not warrant protection on the interests of the foreign nationals. So it is imperative that certain legal documents are made and in place to make sure that you still hold the control over the property registered under the company’s name.
This method is often overlooked and not even considered by foreign nationals desiring to own properties in Thailand. The principle of this method is to create a perpetually renewable leasehold ownership structure that equates the pertinent advantages of Freehold Ownership such as:
- Security of tenure
- Enjoy the benefits of asset appreciation
- Can make your asset as a gift to whom you desire.
- Property is yours to enjoy until sold or bequeathed.
The law is specific on its conditions that non-Thais may not own the freehold title on the land. It is therefore important that two or separate contracts are drafted for each property – land and building. Ownership of buildings may be legally transferred to the non-Thai national.
Like the first two methods, this method, too, needs important safeguards to ensure that the foreign national enjoys the benefits of freehold ownership in terms of control and protection. The lease agreement should contain the following clauses:
- Non-Thai should have right of access and abode on the land.
- In the event that the laws on foreign land ownership change in the future, the non-Thai national should have the right to convert the leasehold to freehold ownership.
- The right to sell and transfer the property
- A non-Thai national should have full and irrevocable Power of Attorney with respect to the land granted by the nominated Thai national to the non-Thai. In effect the Thai national returns control to the non-Thai.
- The lease contract should have guaranteed extension clauses granting further terms up to a maximum of ninety years before renewing the lease.