If you’re not a Thai citizen, you can’t own land in Thailand

(Condo ownership laws are different)

Thailand has similar property laws and regulations as most western countries.  The Thailand Civil Code is based on the mainland European civil law system and has copied the aspects from common law countries. Thai property laws are considered western. What makes buying real estate in Thailand different and more complicated is that Thai land laws prohibit foreigners from owning land outright, thus making it impossible for foreigners to obtain outright freehold ownership over land and house.  With that said, one can see that many foreigners are investing in real estate and own vacation or permanent homes all over Thailand.  This is generally done through a 30 year lease-hold contract.  The lease-hold contract or “yellow book”, is merely a vehicle for foreigners to occupy property in Thailand for residential (or investment) purposes only.

The process for a foreigner to purchase a house and land would normally start with negotiating a total price for purchase and lease of house (building) and land.  Hence, there would normally not be a monthly lease payment on the land (there are exceptions).  Here is a typical lease-hold contract with an additional 2 – 30 year (total of 90 years) renewals.

Typically, the following general steps are taken when a foreigner makes the decision to purchase a home with a 30 year lease in Thailand.

1. Foreign buyer chooses a real estate company and real estate agent he/she feels comfortable with
2. They look through a catalogue of available properties and drive around looking at specific houses within their budget
3. Once the foreign buyer has found a property he/she likes, a reservation deposit is made to show sincere interest in purchasing the house.  Typically, the reservation deposit is around 100,000 – 200,000 THB
4. If this is a property purchase outside of Bangkok, it may be necessary to file a 30 day notice of intent to purchase the property at the land office.  This is just a paper exercise that is required in the land office
5. A lawyer then does a full title deed search to make sure the land you are purchasing is indeed owned by the person you are buying it from, as well as making sure the land you are purchasing is the same land listed on the deed
6. A lawyer then provides due diligence on the property your are intending to buy.  This will ensure correct property boundaries, discovery of any planned building projects that may interfere with the scenic view you believed came with the house, proper building permits have been paid for, etc
7. A contract is drawn up between the seller and the buyer and then carefully reviewed by both parties.  Changes to the contract should be made at this time if there is further negotiating required.  Contracts are then signed
8. An escrow agent or escrow company is chosen to hold the buyers purchasing funds.  This can be either your lawyer, real estate agent, or even in some cases, the property developer
9. In the case of a lease hold agreement, a real estate lease registration fee is charged at the rate of 1 % of the total rental throughout the whole lease term and collected by the land office at the time of registration. Also a stamp duty is collected at a rate of 0.1% of the total rental throughout the lease term
10. You are given the rights to occupy the property

 What Happens When I Sell My Lease Hold Property?

In general, when you sell your land under a lease-hold contract, the lessor must continue to honor the contract with the new owner you have just sold to.  This does not alway mean that the lease term will reset itself back to year zero for the next  lease-hold owner.  That being said, it is possible to request that the true land owner create a brand new 30 year lease-hold contract starting at day one for the person you just sold to.  With property developers, there are many incentives to do this.  There will be standard fees associated with the transfer of any lease.   In the case of most property developers, they may be happy to do this for each new lease-hold property transfer; however, it should be expected that if you sell your property after 5 years of occupying a 30 year lease, there will only be 25 years left on the contract, and the same balance of 25 years will transfer to the new lease-hold purchaser.

So what happens if I have been living on the property for 27 years and there are only 3 years left on my lease of the land?

If you have used a good and reliable real estate agent as well as a knowledgable property lawyer, your contract will probably include a separate contract wherein the true owner of the land is under a promissory or contractual obligation to renew your lease for additional 30 year terms.  It must be stated that this separate contract is currently not a protected right under the “Hire Of Property Law” in Thailand.  The renewal of your lease terms should be written and agreed upon in a separate contract which, again must be stated, is not a protected right in Thailand.  That means, in the worst case scenario, you may be required to hire a lawyer to enforce this separate contract.

Can I Start A Company To Own Land In Thailand?

In the past, holding companies have been set up to circumvent the land laws in Thailand, so that a foreigner (through a false company) can own land as a minority shareholder in said company.  Since May 2006, this loophole has been declared illegal and it is not advised to purchase land this way.  There is an inherent risk that your land contract could be voided by the land office.  Siam Society Real Estate does not recommend purchasing property through a holding company as a vehicle to gain land ownership in Thailand.  You may also put yourself at risk of being deported from the country if you do not hold a valid work permit while “operating a false company” in Thailand.

The real estate laws in Thailand restrict all foreigners from owning any land in Thailand with the sole purpose of severly limiting foreign land ownership.  The reason for these laws is to safeguard the country from the danger of having too many foreign investors owning Thai property, which could lead to foreign politcal control in various ways.  It makes sense to do this.  Thailand should be for Thai people.  Because there are a lot of foreigners with more money than your average Thai citizen, there is an inherent danger or risk of foreigners controlling the majority of land here, and thus potentially the political system as well.  Hence, in it’s most general form, Thai law restricts all foreigners from owning any real land in Thailand.

Buying real estate in Thailand follows a different legal process than buying real estate  in a country offering outright property ownership for foreigners. Property laws in Thailand are straightforward (foreigners cannot own land) but sales structures aimed at foreigners are often complex and confusing. Real estate in Thailand can legally be divided into the following objects:

• Apartments that are registered under the Condominium Act of Thailand
• Apartments NOT registered unde the Condominium Act
• Land
• House
• Land and House

Lease Contracts & Lease Terms

The Term Of A Lease Cannot Exceed 30 Years….

…but can be renewed for two more consecutive 30 year leases

The term of a real estate lease in Thailand may be fixed or periodic. The maximum lease term in Thailand is 30 years (section 540). Any lease of immovable property for a longer period than 30 years in Thailand may only be made by renewal of the lease contract upon its expiration. Based on supreme court judgment it is possible to say that a valid and enforceable renewal can only be made within a period of 3 years prior to the expiration of the first lease term (not 30 years prior to expiration). If for example the lessor and lessee have executed 2 or more consecutive 30-year lease agreements it shall by law be deemed as 1 lease and reduced to 30 years.  Restating this, one can have a contract written stating that the true property owner agrees to renew the lease contract for a second 30 year term within 3 years of the first 30 year lease expiring.  This is enforceable according the Thai supreme court judgment, but a new contract must be written during these remaining 3 years.  This same procedure can be done one last time for a total of 90 years.  After that, the lease term is no longer valid.  Leases cannot be passed down to surviving parties in the event of a death of the lessee, unless prior agreements have been made in an outside contract between the seller and the buyer.

For specific leases by foreign corporations the Thai government created a longer term in a specific act; the Hire of Immovable Property for Commerce and Industry by Foreigners Act B.E. 2542.

Thai law puts a limit of 30 years on any property lease in Thailand. Parties cannot extent this term in the contract. For the same reason parties cannot make an enforceable provision for renewal of a 30 year lease term. A renewal promise in a 30 year lease agreement is under Thai hire of property laws not enforeable by legal action and legally best described as a moral obligation to the person or developer who gave the option. A renewal promise in a 30 year lease agreement merely hold the illusion of a longer lease contract.

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Moving To Thailand | Our Progress So Far

We are fast approaching the one month mark for our new lives in Thailand, and when it feels like we aren’t making as much progress as I’d like here, I have to keep reminding myself that we have indeed accomplished a lot in just over four weeks.  We have learned to drive in a system that I would call just short of chaotic; we enrolled our daughter in both ballet class and a full curriculum school (with uniforms, Thai language immersion, a swimming pool and even homework!); P and I are both enrolled in Thai language classes (me, beginner, P, intermediate); I joined a yoga studio (I now know that “hai jay kao/ hai jay hok” means inhale/exhale in Thai); and we have found the perfect location for our future dream house.  So, all in all, not too shabby for just under a month.  Not to mention all the wonderful people we’ve met, the morning runs on the beach, the night market trawls, and the odd game of elephant polo.

Moving To Thailand Priority #1: Make A Home For Ingrid

One of our first goals upon arriving in Thailand was to make Ingrid feel as safe and comfortable with the transition as possible.  She does still frequently ask when we’ll be going back home to Portland, but yesterday she asked me if we were going to stay here for “all the day” (I think she meant for a long time).  We had been out all afternoon looking at houses, and although we have had more than one long talk with her about moving here, it finally dawned on her that we weren’t just here for a quick vacation.

All in all, I think Ingrid’s transition is going well.  She is loving the pool and the occasional pony ride on the beach, and just this week she learned how to swim (Mom, if you’re reading this, I know you’re breathing a huge sigh of relief).  But most of all, we are loving the fact that Ingrid is in school Monday through Friday from 8:30AM until at least 2:30PM.  I say “at least” because the afternoon school schedule is very loose.  I was surprised and relieved to find this out, especially when I was late on the second day to pick up Ingrid.  I had P call the school to let them know we were running a few minutes behind, and he said that they acted kind of funny on the phone.  We found out a few days later that some of Ingrid’s classmates regularly stay at school until well after 5PM (one little girl was there past 8PM one evening, her teacher informed me), so showing up at 2:45PM was no big deal.

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Ingrid is enjoying school so far and has already made friends with three sweet girls (all of whom speak exclusively Thai but appear to have no trouble communicating with our daughter).  Sitting still and paying attention for 45 minute stretches is difficult for a four year old (heck, it’s difficult for me!), but I’m impressed with her flexibility thus far.  She’s been a really good sport, and I’m proud of this incredibly strong little girl who takes life in stride and manages to enjoy every minute of it.

We have had the pleasure of meeting the parents of Ingrid’s new friends, and they graciously invited us for dinner last night on the beach.  The girls played in the sand while the adults gorged themselves on fresh crab, shrimp, squid and fish.  There is so much good seafood here, and we just can’t get enough.  We enjoyed watching the kids chase each other and collect seashells, and we tried practicing our less than mediocre Thai with anyone who would listen.  Despite our massacre of their native tongue, the Thai people we have met thus far have been incredibly generous when it comes to enduring our painful attempts to speak their language.

Moving To Thailand Priority #2: Learn The Language!

Since our Thai leaves much to be desired, Paul and I have enrolled for language classes.  I just finished my second week, and I can say with near certainty that I am tone deaf (my sister, husband and anyone who has had the misfortune of hearing me sing would confirm this).  I just can’t hear the tonal differences in Thai.  There are all these cute Thai tongue twisters where they have four variations of the same word in one sentence, all with different tones to change the meaning of the word.  I am pretty terrible, but I take great comfort in the fact that I am still much better than the two Brits in my class who have both been living in Thailand for well over a year and can barely say “hello” in Thai.

Speaking of, I found an unusual place to improve my Thai: a new yoga studio I joined.  Despite the humid, stagnant air and temperatures of nearly 90 degrees, I love this studio.  The teachers are great, and the other students are very friendly.  I’m usually the only farang in class and the teachers kindly lead half the class in English, just for my benefit.  It’s interesting: in some ways, the language barrier almost doesn’t exist in yoga class.  The sanskrit names of the poses are universal, and once you’re familiar with the poses, the sequence is the only thing that might vary (unless you’re doing Ashtanga yoga, of course, and then the sequence is exactly the same every time).  I find it fascinating to see all these beautiful Thai women doing yoga.  In some ways, the classes seem very Thai (i.e. very un-American) in the sense that there is a lot more giggling and a generally playful attitude, as opposed to a more serious and competitive environment one might find in the US.  And last night the teacher had to ask the ladies three times to stop talking so he could begin class–that would never happen at my yoga studio back in Portland (nobody ever seemed to talk to anybody there).  So, in a way, it’s a much more relaxed atmosphere and makes yoga even more enjoyable.  And watching these women do all the familiar asanas in a place so far away from where I used to practice makes the world seem much smaller.

I’m thankful to be practicing yoga regularly and channeling my inner zen because all of the house hunting has been a little frustrating.  I mentioned in our last post the lack of road signs and the general chaos of driving, so actually navigating our way to a particular house is extremely dangerous and very time consuming.  And once we arrive, the house is usually a huge disappointment.  What looks like a beautiful, well-manicured home from the outside is usually a construction nightmare once inside.  There have been a few exceptions, and these places really stand out for their quality and attention to detail.  We are smitten with one place in particular.  It is located about 30 minutes outside of Hua Hin proper, in a small town one kilometer from the beach.  The development is called Hana Village, and it’s the brainchild of an American guy and his Thai wife.  Together they have created the most beautiful homes for the best value in the area.  All the houses are custom built with the buyers’ input to ensure that the clients get exactly what they want.  Since P and I have unfortunately been bestowed with the picky gene, and because we fancy ourselves as having good taste and a good sense of space and proportion, we jumped at the opportunity to design our own house.  We hope that if we go through the trouble of designing and building our dream home here, some of our friends and family will actually come visit (I hope that those same friends and family members are reading this post and get the hint!)

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