What are my options with regards to buying Property/Real Estate in Pattaya that doesn’t have a condominium license?
The law in Thailand stipulates that foreigners are not allowed to own land directly in their own personal name, however they can own buildings. Should a foreigner want to buy a villa/townhouse, etc, which comes with land, they have two options of ownership available to them when acquiring the land:
First of all you must find a good lawyer to carefully structure a Thai Ltd. Co. for you in order to control the freehold of the land. The freehold title of the land in this case will be put into your designated company’s name. Thai law stipulates that in this case there must be at least two Thai shareholders, which are normally provided by your acting lawyer or can be provided by yourself if preferred. You (the foreigner) will then be made a director, and a major shareholder, in your company. It is also possible to have more than one foreign shareholder/director; however the total shares in foreign names must never exceed 49%. Most importantly, your chosen lawyer/law firm in Pattaya will employ a number of security measures when structuring the company to protect the foreign directors. These measures will essentially give the foreign director complete control over their assets in the Thai company; they will include, but are not strictly limited to the following:
- The foreign director(s) is the only entity that can commit, or legally bind, the company to a legal contract.
- The foreign director(s) will have shares (preference shares) with 10 times the voting rights of the standard shares (nominal shares). Thus providing about 90% of the voting power.
When the company’s formation is complete, all of the Thai shareholders will sign a share transfer form with an open date on it – this means that the foreign director(s) can replace them with any other Thai shareholder, whenever they see fit to do so.
After the company setup process is complete, and the freehold of the land has been transferred to the company name, the foreign director(s) will then be in full control of the land and be able to build on the land, sell or lease the land, and also transfer the rights to their next of kin.
Please note – the company must be seen to be running as it would normally under Thai law, therefore all the following must be addressed:
- All money must go through the company books
- Shareholder meetings must be accounted for and the minutes of the meeting prepared
- Yearly accounting must be filed with the tax office.
But any good lawyer/accountant should be able to take care of this for you – if not, you may want to consider a change! It is relatively straight forward and accepted practise to put through some expenses for running the property through the company books. The accountancy fee for submitting a company’s annual accounts are typically between 15,000 & 20,000 THB.
Take the land with a rolling/renewable 30 year lease. This is the alternative to setting up a Thai Ltd. Co. and involves the foreigner purchasing a 30 year lease. Is it common for there to be options to renew the lease twice to make a total of 90 years, and also for the contract to include an option to obtain the freehold at any given point in time.
Please note – the building itself can be owned directly in the foreigners name, even though the freehold of the land is held within a legal Thai entity, be that a company or person. However, when the land is held within a Thai Ltd. Co. by a foreigner then the building is also generally held in that companies name. This is for tax reasons and to make a resale much easier.