Buying off plan real estate

Housing and condominium developers in Thailand and escrow agreements

Off plan or pre-construction or under construction real estate developments in Thailand are usually financed by the buyers who pay deposits and price installments during the construction directly to the developer who uses these payments to finance the housing or apartment project. In the event of default or bankruptcy of the developer the buyers could lose all monies paid unless his payments were deposited in an escrow account held by a third party

Condominium Conveyance Tax

Ownership transfer tax and fees

Total transfer fees and taxes involved for the buyer with the transfer of ownership of a condo in Thailand could range from a relatively small amount to a more substantial amount depending on the agreement with the seller. In a sale and purchase of a newly built apartment unit consumer protection laws specify that the developer may only ask up to half of the 2% transfer fees from the buyer, all other taxes, fees and costs involved with ownership registration on the name of the buyer must be born by the developer.

A building permit (the official permission to built or alter a structure on a piece of land with a land title deed) is issued by the local 'Or Bor Tor'. The construction plans must comply with the Building Control Act and the Town and City Planning Act and local specifications issued under these acts. The relation between a employer and the contractor in Thailand is governed by the construction agreement with attachments, the civil and commercial code and specifically the sections 587 to 607". Below the first 3 pages of a 13 page contract.

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Lease (rent), construction, mortgage, loan or assignment agreements are as Thai contracts governed by the Civil and Commercial Code of Thailand. The legal effect, legal requirements, the extent of obligations and legal duties of a contract (Thai contract law) is primarily codified laws in Book 2 and 3 of the Civil Code. It must be noted that in a civil law jurisdiction the meaning and interpretation of written laws are explained by the Thai Courts (and the highest Supreme Court of Thailand).Samuiforsale กฏหมายไทย isn’t simple

• Lease and rent of real estate
• Contract for mortgage and loan
• Construction or building contracts
• Deed of assignments

Hire of property (lease, rent, tenancy contracts)

A lease, leasehold, rental or tenancy of an immovable property for residential or commercial purposes in Thailand is as a specific contract governed by the section 'hire of property' in the Civil and Commercial Code. The fundamental principles of hire of property in Thailand are;

1. a hire of property is a personal right of the lessee and in essence as a contract right not transferable without permission of the owner of the property (section 544);
2. a hire of property contract is terminated upon death of the lessee, but not upon death of the landlord (section 569);
3. a hire of property with a period over 3 years must be registered on the title deed at the local land office;
4. only a written agreement for hire is enforceable by legal action (section 538);
5. the total registered term for hire of property cannot not exceed 30-years, any longer term is reduced to 30 years (section 540).

As foreigners are not permitted to own land in Thailand foreigners buying real estate in Thailand often enter into a long term land lease agreement. It should be noted that a land or ground lease in Thailand is in essence a personal contract right of the lessee (and as a personal 'land hire' or 'land tenancy' terminated upon death of the lessee). It is not a real right (or property) attached to the land (but to the lessee). A lease in Thailand is not transferable as an asset but can only be assigned as a contract between different parties. A lease agreement does have aspects of a real right as true lease rights are not terminated upon transfer of ownership of the land or death of the owner but in essence it remains a contract attached to the lessee.

Foreigners entering into a long term land lease should consider including a right of superficies. A superficies can be compared with a form of leasehold and as a real right it is primarily attached to the land. A right of superficies is not terminated upon death nor upon transfer of the land.

The maximum term a foreigner can obtain a 'leasehold' in Thailand is 30 years.

See also

Mortgage and loan (contracts for)

A mortgage is a contract whereby a person, called the mortgagor, assigns a property to another person, called the mortgagee, as security for the performance of an obligation, without delivering the property to the mortgagee. The mortgagee is entitled to be paid out of the mortgaged property in preference to ordinary creditors regardless as to whether or not the ownership of the property has been transferred to a third person.

A loan is a sum of money which is borrowed and has to be paid back, usually together with an additional amount of money that you have to pay as a charge for borrowing. The loan is specified in a loan agreement. Loans and mortgages are often associated with real estate property, whereby the mortgage is registered with the real estate property as security for the lender.

See also

Construction contracts

Construction of a home in Thailand is primarily governed by the Building Control Act and the Town and City Planning Act and various regulations issued under these acts. The relation between a employer and the contractor in Thailand is primarily governed by the construction contract and the Civil and Commercial Code and especially the chapter 'hire of work'.

See also

Deeds of assignment (contracts)

Deed of Assignment allows one party (the assignor) to legally transfer rights or property they own to someone else (the assignee), either as a gift or in return for a specified amount. The deed of assignment is the legal document or contract stipulating what kind of rights or property has been assigned. The assignor could for example assign his full rights under a sale and purchase agreement (prior to the title transfer) or his leasehold rights under a contract for lease to the assignee.

The information in this website is made available to give you general information about lease right and building in Thailand and is not intended to be comprehensive nor to provide specific legal advice. We cannot accept responsibility for any inaccuracies, incompleteness of information, errors or omissions in respect of information on our website.

Investing in real estate in Thailand

By foreign nationals

Foreigners can own an apartment in a condominium in Thailand, but ownership of land or land and house is limited to only Thai nationals. It is under the Thailand Land Code Act not possible for foreigners to obtain outright ownership over land and house in Thailand. Foreign land ownership limitations apply but many foreign investors have been duped into believing that they can own land in their own name in Thailand.

Land ownership by foreigners in Thailand

Foreigners are not allowed to own land in Thailand. According to section 86 Land Code Act foreigners may acquire land in Thailand only by virtue of the provision of a treaty providing him with the right to own immovable property. Since 1970 Thailand has no longer any treaty with any country allowing any foreigner to acquire land pursuant to section 86.

Land titles: ownership and claims of use or possession

Land titles for private use can be issued by the Land Department or other government departments in Thailand. The title allows certain private use and grants certain rights to use, possess, own or transfer rights to a specified area of land in Thailand. Only the Chanote or Nor Sor 4 Jor is a true ownership land title deed in Thailand.

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).

What is a right of usufruct in Thailand

The essence of a right of usufruct (section 1417) is that it transfers the rights of possession, use, enjoyment and management of an immovable property from the owner to the usufructuary (the person granted the right of usufruct). It gives certain strong rights but also obligations that are normally associated with ownership of the property (right of management and obtaining benefits from the property). Usufruct is governed by sections 1417 to 1428 civil and commercial code.