Apartments and Condominium License
Buying a condo unit in a building registered under the Condominium Act is not the same as 'buying' a unit in a building having no condominium license under condominium laws nor a condominium registration with the Thailand Land Department. On the outside the buildings could look the same but a true licensed condominium offers actual legal ownership, the other offers possession of the units under a contract structure (not true ownership).
The sale contract and legal structure of a licensed condominium is completely different from the legal structure of an unlicensed apartment complex. The main difference is that an apartment building not registered and licensed as condominium does not offer individual unit ownership nor joint ownership in the common property areas of the apartment complex. These apartments are sold under various legal contract structures, except outright unit ownership (as the Land Department has not issued unit title deeds). Unlicensed apartment structures contain many pittfals and the purchasers of such apartments do not find the protection in the law as with licensed condominiums. The sale contract structure should be triple checked as the developer retains ownership of the building and has the sole right to control the building and common areas unless agreed differently in the contract structure. The unit occupants only find protection in the contract structure they have been offered and which they have signed and accepted.
The main differences between licensed and unlicensed apartments are:
A condominium officially registered and licensed with the Land Department:
- The building is governed by condominium laws and offers individual apartment ownership.
- Legally recognized government issued and administrated individual unit ownership title deeds.
- Foreigners must qualify for ownership within the foreign ownership quota of the condominium.
- The unit owners are free to sell, encumber and dispose of their unit.
- Ownership of the unit gives co-ownership in the common areas of the condominium, including the land on which the building sits.
- Management and control of the condominium lies by law jointly with the unit owners (not the developer)
- Control is exercised by the unit owners through a democratic voting right system (as specified in condominium laws).
- A condominium development is a contract controlled business and must offer minimum consumer protection for the purchasers.
Note:Transfer of ownership takes place at the Land Department's provincial or local branch office (transfer tax and fees are paid at the time of transfer of ownership)
An apartment complex not registered and licensed as a condominium:
- Not governed by specific condominium or apartment laws (little governement control) but based on individual freedom of contract.
- No individual unit ownership nor co-ownership of the common areas.
- Possession of the apartment is usually offered under a unit lease agreement (the unit as part of the building as a whole).
- Foreigners do not have to qualify for lease registration under a special law and there is no foreign lease quota.
- Selling the leased unit (assigning a tenancy) requires cooperation of the landlord (owner of the building/ developer).
- The occupants are basically tenants who have to comply with the signed contracts, including management and maintenance contracts.
- If nothing is arranged control and management over the land and building lies by law with the owner of the land and building.
- The contract sale structure under which these apartments are sold could go either way, pro lessee or pro lessor/developer.
Drawbacks of lease in Thailand
- As opposed to freehold ownership leased units are subject to a local housing and land tax at a rate of 12,5% of the annual lease value.
- A property lease in Thailand is in essence a personal right (tenancy) and terminated upon death (succession must be agreed in the lease but is not guaranteed by law, only as a private contract right).
- A lease term cannot exceed 30 years, any renewals suggesting a longer term are not enforceable as a lease right.
Note: a lease exceeding 3 years requires registration of a lease agreement at the provincial or local Land Department branch office (tax is paid for registration of the lease).
Legally there is nothing against leasehold apartments and generally these apartments are less expensive, but these apartment structures do not offer the same protection in the law as is offered in a licensed condominium development project. One offers government control, actual ownership and protection under the Thailand Condominium Act and Consumer Protection laws, the other offers possession through a lease agreement under the Civil and Commercial Code, and if any offer individual protection through private agreements with the registered owner of the land and apartment complex.