In our previous articles about legal vehicles of real estate ownership in Thailand, we pointed out that a foreign investor basically has two options to choose from – Freehold and Leasehold. Everything said in those stories fully applies to condominiums – where buying a villa or a standalone house has its own peculiarities due to Thai law. Now it’s time to talk about them.
Just like in the case of a condo, Thai law allows a foreign individual to own, manage and use their villa in Thailand. The trick is that this does not apply to the land plot a house is built on. Freehold ownership is limited to Thai residents only, leaving a foreigner only the option of ownership through lease agreement registered in a local Land Office. Thus, the duality: the villa is owned by the foreigner while the land is leased.
This form of ownership has its limitations and risks such as the expiration of the land plot lease or ‘physical loss’ of the foreign owner. There is an option, however, allowing to minimize risks and extend the duration of the ownership by registering Freehold ownership of both the house and the land under a Thai company limited, and not the foreigner (non-resident) directly.
In this case the investor acts as a founding shareholder and managing director of the company entitled to sign documents on behalf of the firm. Should the investor wish to sell the house, this can be done either as a direct sale of the object or by selling a share in the Thai company. Registering and running a Thai company incurs some extra expenses annually, but this form of real estate ownership is more secure legally.
As with all type of real estate deals, conducting due diligence before signing the contract is crucial. The procedure includes checking the designated purpose of the land plot where the villa is or will be built, adequacy to construction standards and state approvals, dates of ownership transfers, payment terms, re-sale conditions, mortgages and charges.
Having said this, let us repeat the rule of thumb for all property buyers in Thailand. Put your trust only in real professionals who are genuine experts in their respective fields. An experienced property agent will help you to find the desired property, while a reputable law firm will check all the paperwork, compose the contract, conduct payment and register ownership.