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Important Issues for Property Investors
Legal Matters: September 2010 - November 2010I am in the process of purchasing a property where the interest available is a leasehold interest. I understand that in Thailand a lease needs to be registered. Could you explain this process to me?
“In Thailand a lease that is over 3 years in length must be registered at the Land Department. If it is not registered then it will possible to enforce only the fi rst 3 years and not any of the remaining years. In order to register a lease the land must be Nor Sor 3 or Nor Sor 3 Kor or Title Deed (Chanote) as it is not possible to register against any other land type. Also, if the land is mortgaged then it will not be possible to register the lease without the bank’s consent. The lessor and lessee will need to provide certain documents to the Land Department including the original copy of the title document, identifi cation documents (such as a copy of passport if the lessor/lessee is an individual or copy corporate documents if a company) and proof of payment of the rent. In terms of proof of payment the Land Department just needs to see that what should have been paid up until the registration date under the terms of the lease has been paid. So, if the lease provides for yearly payments of the rent the Land Department will require proof of payment of the years up to the registration date whereas if the lease provides for payment upfront of the total rent for the entire term the Land Department will require evidence that this payment has been made in full. If your lawyer or representative is to attend the Land Department to complete the registration on your behalf they will need to have a power of attorney from you which is in the Land Department standard form. If you are purchasing an existing lease from the current lessee (on a re-sale) the Land Department will also require that you provide a consent letter from the lessor to this assignment.
In terms of timing of registration, the optimum position for a lessee is that registration
takes place at the same time as the fi rst lease payments to the lessor. On registration a
fee of 1.1% of the full value of the lease is charged which will be calculated on the total
rental that is due from the lessee to the lessor throughout the term”.
(Desmond Hughes – Deputy CEO)
Could you explain to me the diff erence between a condominium
project and an apartment project?
In Thailand the distinction between a condominium and an apartment is a legal distinction. A condominium project may look identical in every way to an apartment project but what defi nes whether or not it is classed as a condominium is whether it has been registered with the authorities as a condominium. In order to register as a condominium, an application will have been made for this designation which may involve more documents and paperwork needing to be fi led in the pre-construction phase than would be the case if the project is to consist of apartments rather than condominiums. Once the construction of a condominium project is fi nished, or all but fi nished, an application is made to register the project as a condominium which will involve the submission of a number of documents to the authorities. Once registered the Land Department will issue title deeds for each of the condominium units of which foreigners may acquire the freehold to 49% of the units. The law also provides procedures for the common parts to be owned collectively by all owners and for owners to have a say in how the project is managed. For an apartment project there is no ability in law for a foreigner to own freehold nor is there any mechanism in law providing owners with common ownership of the common areas or a stake in the management. For this reason, in an apartment project you should check carefully how ownership and maintenance of the common parts is dealt with and ensure that you are provided with suffi cient rights in the purchase contracts.
(Kris Limcharoen – CEO)
I am a foreign national. Is it possible for my young children who have Thai citizenship to own land in Thailand?
As long as the purpose of your child owning land is done for legitimate reasons or,
in other words, as long as it is not done as a means to allow someone to own land
who would not normally be allowed to own land. The Land Department may raise
questions to ensure they are satisfi ed the transfer to your child is being done for
genuine reasons.
However, it is important to note that if your child owns the land then no transactions
involving the land (such as a sale or a mortgage) can take place without a court order
which could severely restrict the ability to deal with the land. Once your child reaches
the age of majority the restrictions fall away and your child would own the land in the
same way as any other Thai adult.
(Desmond Hughes – Deputy CEO)
Information supplied by:
Limcharoen Hughes Glanville (Phuket)
T: +66 (0) 7634 2882-4 F: +66 (0) 7634 2885
E: Phuket@Limcharoen.com
Limcharoen Hughes Glanville (Bangkok)
Tel: +66 (0) 2635 5071-3 Fax: +66 (0) 2635 5074
E: Bangkok@Limcharoen.com
Limcharoen Hughes Glanville (Samui) Co., Ltd
T: +66 (0) 7724 6185 - 7 F: +66 (0) 7724 6188
E: Samui@Limcharoen.com
Limcharoen Hughes Glanville (Ho Chi Minh City)
T: +84 862 917 000 F: +84 862 916 999
E: HoChiMinhCity@Limcharoen.com
Limcharoen Hughes & Glanville (Bali)
T: +62 361 727 114 F: +62 361 727 486
E: Bali@Limcharoen.com
www.limcharoen.com
