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Legal Matters: Article #14 (March - May 2008)
Issues for the Buyer - General Overview of Options for Investment
“What are my options for investment in Phuket with the least risk?”
Well prepared developers and their legal advisers will have thought about the best way a purchaser can invest in real estate in Thailand, achieve ownership and possession of a property and be able to re-sell that property without breaking the rules prohibiting foreigners from owning land. Responsible developers will adopt a co-operative approach and not simply leave a foreign buyer with limited experience or a buyer's lawyer without necessary facilitation of investment or information to enable a safe and secure investment. Thai companies may be involved in this process in certain forms, but not in a way that includes not only what the law considers to be 'nominees' and proper regard must be applied to what the land offices interpret locally to be an acceptable transaction. It must be clear that there is no 'circumvention' of the law to a land officer before registration of title will be accepted.
(Desmond Hughes, Partner)
“Can a leasehold structure provide me with security?”
As leasehold become more popular, so the integrity of a lease and how it works within a development becomes under scrutiny. If owners are given indirect control of the destiny of their lease and its renewal then they will feel more comfortable with a transaction. The wording in the lease agreement and all other associated agreements should correspond with that ethos otherwise the point of the investment protected structure is undermined. A lease can be a secure instrument subject to who the parties to the lease are and it's drafting.
(Kris Limcharoen, Partner)
“What are the options relating to condominiums?”
Owning a condominium unit by purchasing direct freehold title is the most practical option for foreigners investing in the property market. Thai law permits foreigners to purchase such freehold title provided that the foreign ownership in a condominium does not exceed 49% of the total registerable area of the condominium. Most foreigners purchase a condominium unit by showing evidence of an incoming remittance of foreign currency into their bank account from abroad as shown by a valid Dor Tor 3 from a Thai Bank.
It is advisable to buy into a project early, so your purchase comes within the 49% foreign quota. Alternatively, condominium units may be leased to foreigners for periods of up to 30 years and may have options to renew.
(Desmond Hughes, Partner)
“What is the most basic element when investing in a residential project in Phuket?”
Whether you are purchasing a condominium freehold or taking a lease on a villa, the most basic element in the transaction is to undertake a full title search which in Thailand requires verification of title back to its origins as possessory title "Sor Kor 1".
Unfortunately there is no title insurance available in Thailand, so investors will have to rely on title information from the seller or conduct their own title search.
It is important for investors to be aware that land titles issued by the government may not always be legal. This is often an alien concept to investors from western countries. However in Thailand title deeds can be revoked by the government if they have been issued illegally. It is therefore extremely important for an investor to conduct due diligence into the land title even in the case of condominium investment.
(Kris Limcharoen, Partner)
This article is one in a series of articles for Exclusive Homes and was co-written by
Desmond Hughes (Partner) and Kris Limcharoen (Partner) based in the Phuket, and Bangkok offices of Belmont Limcharoen respectively and now with an office in Koh Samui.
Information supplied by:
Belmont Limcharoen (Phuket)
4/1 Prabaramee Rd., Patong, Kathu, Phuket 83150
Tel: +66 (0) 7634 2882-4 Fax: +66 (0) 7634 2885
Email: desmond@belmontlimcharoen.com
Belmont Limcharoen Company Limited
39 th Fl., 3904 A United Center Building.
323 Silom Rd., Bangrak, Bangkok 10500
Tel: +66 (0) 2635 5071-3 Fax: +66 (0) 2635 5074
Email: kris@belmontlimcharoen.com
Belmont Limcharoen (Samui) Co., Ltd
23/30 Moo4 Bophut, Koh Samui, Suratthani 84320
Tel: +66 (0) 7724 6185-7 Fax: +66 (0) 7724 6188
Email: samui@belmontlimcharoen.com
www.belmontlimcharoen.com
