The first question everyone asks when thinking about buying land and building a house in the paradise we call the Land of Smiles is “can foreigners own land in Thailand”? The direct answer, unfortunately, is no, but there are ways we can legally secure the right to use land and build a house.
1) 30 year lease with option to extend. Buy the land in the name of a Thai person, usually your mate or someone you think you trust, then lease it back for 30 years with an option to extend;
2) Start a Thai company in which you can own up to 49% of the shares and own land through the company.
The simplest way to “own” land in Thailand is to buy the land in the name of a Thai citizen and lease it back from them for 30 years with option to renew. By simplest,
I mean least expensive and quickest. The Thai citizen has their name on the title deed for the land, which means THEY OWN THE LAND, NOT YOU. However, at the time of the purchase you enter into a separate agreement with the new land owner to lease back the land for 30 years with an option to extend for another 30 years.
Many real estate companies will attempt to convince you land can be leased with up to 3 continuous 30 years leases, a guaranteed total lease of 90 years. There is no provision in the Civil and Commercial Code for continuous leases. The lease MUST be renewed after each 30 year period. Section 540 Civil and Commercial Code:
"The duration of a hire of immovable property cannot exceed thirty years. If it is made for a longer period, such period shall be reduced to thirty years. The aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal". Any lease over 3 years must be registered at the AMPHUR (district office) and there will be a 1.5% fee for registration and stamp duty. Also the lease value will be considered taxable income of the Thai owner.
The lease agreement can specify any terms you want such as the lease amount, what happens in the event of your death or the death of the real owner, what happens if you want to sell the property, etc. Your lawyer should also add that if the laws change to allow foreign ownership of land, the land title will be transferred to you.
If your relationship with the land owner becomes uncooperative, you may have problems with the lease extension. Thai courts have found lease extensions to be a legally binding, contractual matter between the parties involved, but you may have to go to court to enforce the contract and Thai courts are not known for their sympathy towards foreigners. The conditions of the lease extension, such as price, taxes, registrations fees etc., should be specified in the lease contracts but thetion to extend the lease cannot be registered at the land office.
The lease will survive the death of the land owner(s) and transfer to their heirs, or transfer of the land ownership to another party, but you may find the new owners uncooperative and unwilling to extend the lease.
Supreme Court Judgment 6763/ 1998; ‘In case the lessor promise in the lease agreement to extent or renew the lease term, but has sold the leased land plus the lessee was entitled to accept, the ‘contractual rights’ are not binding upon the new owner and only lease rights that are ‘real rights’ will transfer to the new owner’. Your lease should allow for sub leasing. If in the future, you want to sell, and you don’t have the support of the land owner, you can sell a sub lease on the land, plus the house.
However, you will probably not get the sane price as if it was freehold land and house.
If your Thai wife is buying the land, you have to sign a document stating that the money did not come from abroad and that the property is the separate property of your wife and that you acknowledge that you have absolutely no rights or interest in the property.This is significant in case of divorce.
One additional protection for the leaseholder is to hold physical possession of the title deed (Nor Sor3 or Chanoht). Without the original title document, the land owner would be unable to transfer the land to another party, borrow against it or make other agreements using the land as collateral.
