Ownership of land in Thailand
Ownership of land in Thailand is governed by the land Code BE
2497 (1954), the Civil and Commercial Code, Land Reform for
Agriculture Act BE 2518 (1975) and the regulations set forth
by the Ministry of the Interior.
Although Thai law stipulates that a foreigner may not own
land in Thailand in his name, he has the right of ownership of
buildings only. If a foreigner wishes to purchase land in
Thailand to build a property, he has 2 options:
1. The land is purchased on a 30-year leasehold with an
option to extend the lease for further 30 year periods.
Possession of the land is assured by virtue of the fact that
property occupies the land. The lesser cannot seize the
property upon expiration of the lease, as the property is
separate from the land.
In order to be enforceable, any lease for a period longer than
three years must be registered at the Land Department, which
involves payment of a registration fee and stamp duty based on
a percentage of the rental fee for the whole lease term. The
original registered lease remains in force and effect even if
the property is sold. Both parties can contractually agree to
renewals, but this right can't be registered at the Land
Department.
2. If a foreigner is going to operate a business in
Thailand then he may purchase the freehold of the land through
his Thai Limited Company. The land will be owned by the Thai
Company, not by the individual.
Limited Liability Company - this form of purchasing
property is the most popular with foreign investors as the
Articles of Association can be varied to allow greater
protection for foreign minority shareholders where majority
Thai ownership is required under the Alien Business Law.
Thai law requires that 51% of the shares be held by Thai
juristic persons, however, any company with more than 40%
foreign interest that purchases land will be investigated by
the Central Land Office in Bangkok (under section 74 of the
Land Code) to ensure that the company has not been organized
in an attempt to circumvent the prohibition against foreign
ownership of land.
This results in the foreign ownership of the company being
limited at 39% (only if buying land), but with the recommended
changes of the Articles of Association, the foreigner can be
the only director of the company, and the only person of the
company who can commit or bind the company in any contractual
dealings (buy or sell land and house), effectively giving the
minority shareholders control over the company. |
