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Firstly,
and probably most importantly is the simple fact that finding any small plot
of land on Koh Chang is extremely difficult. To be honest, you can
pretty much forget any ideas of buying 1 or 2 Rai and building a small house
with a sea view or a resort on or near the beach on the west coast. There are no plots
like this available. Roadside and inland the price for 1 Rai of titled
land is so high that if you just want to build a small bungalow or holiday
home it isn't worth doing. Inland valleys or the quieter east coast on Koh
Chang or even further a field on Koh Mak, for example, are places to look for
this type of land. Virtually all the small resorts or shops you see by
the roadside are built on leased land.
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For anyone not familiar with
the way things are done in Thailand it may come as a bit of a surprise that
you can't simply turn up, find a nice house or plot of land, agree a price
and buy it for cash (it's extremely unlikely you'd be able to get a bank
loan) with all the paperwork being handled by a competent lawyer.
It's a little more complicated
than that, basically a foreigner can buy a condominium pretty easily but when it
comes to owning land freehold, you need to invest over 40 million baht in one of the various
specified businesses to have the right to buy a paltry one rai for residential use.
(1 Rai = 1,600 m2).
It appears that the Thai government thinks
that if anyone can own land then millions of foreigners are going to arrive
and buy up all the land leaving none left for Thais to buy. (Knowing
these devious foreign devils, they would probably also dig up all their soil
and ship it out of the country leaving prime locations in Thailand full of
large holes.) The only alternative scenario would be for more foreign
exchange to come into the country, more jobs created and more money going
into the local economy and, apparently, that's unacceptable.
Fortunately, there are three main ways around
this rather daft rule. The simplest and by far the most common is to put the
land or property in the name of your Thai spouse or significant other.
Prior to 1998, any Thai
woman who married a foreigner would lose her right to purchase land in
Thailand. However, nowadays Thailand is an enlightened, modern society so Thai national's married to foreigners
have the right to purchase land,
but the Thai spouse must prove that the money used in the purchase of
freehold land is legally solely theirs with no foreign claim to it. This may
sound hard to prove but is accomplished simply by having the the foreign spouse signing a declaration stating that
the funds used for the purchase of property belonged to the Thai spouse
prior to the marriage and are beyond his/her claim.
A large amount of trust is obviously
involved here. which is another reason why it's better not to open your
wallet, and heart, to
the first cute bar girl that you take a fancy to, as in the future when you've
had enough of hearing "You buy me cola / Nokia / gold necklace / sunset view beachfront property,
darling." and want to split up she will hold
all the cards.
If you want the real estate in your
name then there are two common options:
Leasehold
1.The
following is the most common method since mid-2006. 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 the property occupies the land. The lessor cannot
seize the property upon expiration of the lease, as the
property is separate from the land. The problem here
is that you, as the lessee, cannot sublease the land
without the lessor's consent unless that's specifically
allowed in the contract.
The initial 30 years lease is
watertight. A subsequent 30 year term can also be included in the
lease contract but a third 30 year term is usually included in an addendum
to the contract and not filed at the Land Office. Therefore, regardless of
what a developer or agent may say, you cannot guarantee 100% that you can
lease longer than 30 years without any problems once the initial 30 year term
is up. However, as you'd have been living on the land for so long it
doesn't automatically mean that after 30 years & a day - should the landlord
refuse to renew the lease, you get kicked off and lose your house. You
do have some rights and can take the matter to court if need be.
** Also
worth bearing in mind is that any international law firm in Thailand will
draw up a 90 year lease for property - so they must be satisfied they
can write a contract on your behalf that will stand up in court if they have
to take action on your behalf.
One way to add even more security for
yourself is to own the house freehold but lease the land. This is
perfectly acceptable under Thai law. The actual house belongs to you but the
land under it belongs to the lessor who, in reality, would never be able to
sell the land under the house to anyone other than the owner of the house.
All good leases will contain clauses
that allow the lessee to transfer the land into the name of a Thai company
or own it freehold, should this option every become possible.
2. Prior to mid-2006 buying through a Thai registered company, a shell
company in most cases was an easy way to circumvent the law. If you plan to do business in Thailand then you can set up a limited
liability company
and purchase property under the company name. This form of purchasing property
was 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. By
ensuring that the minority shareholder, i.e. you, are the only director of the company, and the only officer of
the company who can commit or bind the company in any contractual dealings,
this effectively gives you control over the company.
Thai shareholders are required but in the past nominees were used.
Pattaya is the nearest place to find lawyers
who have a wealth of experience dealing with foreigners and speak English
and/or other European languages. The costs for a package which includes
setting up a company, handling the purchase of a small plot of land, plus a
couple of trips to Koh Chang by the lawyer is around 40-50,000 baht.
It takes around 3-4 weeks to set up a company, once it's done you'll still
have to file annual tax returns and submit audited accounts annually.
Again, a lawyer can take care of this for you relatively cheaply.
However, in late May 2006, the
Interior Ministry issued a decree ordering Land Offices nationwide to
investigate any land purchases by companies which had foreign
directors/shareholders to ensure that they weren't trying to circumvent
ownership laws and did not sue nominee shareholders. This led to a
great deal of confusion and panic amongst the thousands of foreigners who
had already purchased property using this route.
There's no indication that existing
companies would be investigated, one new land sales or purchases. As
always, there is a simple work around which appears to be the simplest, legal method to get around the current crackdown.
It's also worth noting that crackdowns in Thailand rarely last long,
especially if they negatively effect the image of Thailand abroad.
To get around the restriction the
buyer's company is set up as 100% Thai owned, so no problem at all in
buying land. Once the sale is completed controlling shares, i.e.
ownership of the company is transferred to the foreigner. Simple,
but requiring trust in your lawyer as they'll be a time when you
have handed over a large amount of money to buy land and the title deed
will be in the name of a company that you have no control over - until the
lawyer makes the change. Use a reputable law firm and you wont have any
difficulties.
The company should be
actively trading. However, this isn't the case for most companies
that have been set up in order to buy land. Therefore, all lawyers
will recommend that you do your utmost to show cashflow on the company's
accounts. For example, the company owns the land and the company's
registered address is your house. Therefore, because you - as the MD
of the company - need somewhere to live, the company can rent the house it
has just bought to you, you pay your company rent in order to live
in the property. Simple & legal even though all you are really doing is
transferring money from your personal account to your company bank account
which you control.
Remember is that you are bending the rules by
having a lawyer set up a company specifically so you can buy property and
whilst this is a common way of doing things in Thailand it doesn't mean
that it's strictly legal.
July 2007 - You'll now find it
very hard to find any lawyer willing to set up a shell company for a
foreigner to buy land. ** All good lawyers will recommend leasing.
** A good lease contract will also include the right to transfer
the land to a Thai registered company or into foreign ownership, if this
ever becomes possible, in the future. If you meet a lawyer who
says it's no problem to set up a shell company and you have nothing to
worry about, think very carefully.
How to set up a
company in order to buy land
Minimising risk
In Sept
2005 the National Park authorities notified all holders of
farmland on the west coast that they would be surveying their land to
confirm that it wasn't within the park boundaries. By mid-September
this work was complete. Therefore, all land surveyed is now deemed to
be outside the park and the park has no claim on it. That should have paved
the way for title deeds to be issued, however as of July 2007 nothing has
happened. in fact, in early 2007, the same land was surveyed again by
the same authorities and owners also told again that it was only a
matter of time before title deeds would be issued.
One good
thing though is that everyone now knows where the boundaries of the park are
and the question
"What if the
park decide that they want to expand their boundaries and take the land?"
shouldn't be an issue. In the time between the two surveys land
prices for farmland in Kai Bae doubled and they will rise further as soon as
any confirmation of the issuance of title deeds is given.
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As a
stranger in a strange land you need to be careful about who you are dealing
with, especially if you are a stranger with a few million baht to spend on
real estate. Even more so, if you are stranger who goes around
telling anyone they meet that you have a few million baht to spend on real
estate.
The
first, obvious step is to
make sure you are dealing with the actual owner or a representative appointed by
the owner of the land/property and not someone who's spotted the chance to try to make a few
quick baht.
Ask to
see a copy of the front and back of the land or property title deed. These
will be in Thai, so you need a Thai speaker with you but it will show you who the current owner is and the shape,
area and exact location of the property with reference to any neighbouring
public property such as the sea, roads or rivers. Even if you don't speak
the lingo you should be able to match the plan of the land on the land title
to what you can actually see.
Inspect
the land in person. The photo you saw on the web may not be a true
reflection of the real lay of the land. Also, make sure someone has a tape
measure so you can accurately check that the dimensions on paper match what's in
front of you.
Verify the access to
the property. An
important point as the dirt track path that leads to your coconut grove by
the ocean may well belong to a neighbour who will later decide to build a
brick wall across it the moment you refuse to pay an extortionate amount for
the right to continue using it. If the property in question is not adjacent to a
public road it is essential that there is evidence of a registered way
for vehicle access and all utility connections. The Thais call land with no
direct access to it 'land with no eyes'.
Read the sales
contract. This may sound obvious,
but it is truly astonishing how many people sign first and ask questions
later. Unlike most of the Western world, Thailand has no real form of consumer
protection legislation. 'Buyer beware' is the order of the day.
If the contract is not in English or any language that you understand, insist
upon taking a copy for translation before you pick up your pen. And it
goes without saying that you shouldn't sign anything if you have doubts
about any of the clauses on the contract.
Koh Chang
specific
Local landowners
have benefited greatly from selling off land that has been in their families
for generations. In fact a lot of families have, over the decades
acquired bits and pieces of land all over the islands. Many of these
tracts of land had been left vacant and almost forgotten as the money,
labour and desire to farm or utilise them to make money wasn't there.
When land prices
soared a couple of years ago, land documents were hurriedly pulled out from
Granddad's plastic 1998 Asian Games souvenir hold-all and neon flashing baht signs
and images of a new Toyota pick-up (3 litre turbo, 4 door, auto, black) parked in front of the house immediately appeared in the
family's mind. Willing buyers came knocking on the door
and this unused land was sold. Everyone was happy or so it seemed.
In some cases, when the buyer tried to build on the land they found out that the Thai
navy had appropriated the land, as it was unused, years earlier and so
it couldn't be built on by anyone. There's quite a lot of this
type of land around and it's something to bear in mind if you are looking at
land in relatively undeveloped areas of the south of the island, especially
land near the shore.
Building on
farmland (Por Bor Tor land document) . . . .
Speak to a
lawyer based in Bangkok who you're paying to give you 'best advice' and
they'll say you can't build on it and you'd be a fool to buy it. But,
as with many laws in Thailand this is one which so many people ignore as to
make it unworkable and unenforceable in real life. Lawyers with
experience 'upcountry' i.e. in any provincial city with a large number of
expats - e.g. Chiang Mai, Phuket or Pattaya will give advise as to how risks
can be minimized give plenty of examples where reality differs from the
absolute letter of the law.
When it
comes to building something on Por Bor Tor land on Koh Chang, you first get
permission from the local 'Pu Yai' ( official in
charge of a particular area of the island), if he says it's OK to build you
then submit your plans for a house on your land to the local planning
dept. and then
go ahead and build it. No
buildings on PBT land have ever been ordered to be taken down. For a
few examples of large structures - huge hotel laundry in Kai Bae,
swimming pool in Klong Prao, dozens of shops, banks & 7-eleven minimarts in Kai Bae, nightclub in Pearl
Beach, etc. Hardly small
scale dwellings but all built roadside on PBT
Thai
investors & businessmen know what they can do, farangs who've been here
a while and understand how things work in Thailand know how things are done.
Anyone new to Thailand will be, justifiably, more cautious and want to go by
the book. Buying this type of land is best suited to those who
are accustomed to the Thai way of doing things.
Also worth
noting is that nowadays you can't build anything permanent within 20 metres
of the shoreline. You could get away with knocking up a sundeck but
you'd be asking for trouble by building a waterfront restaurant, bungalows
etc. There are rumours that the powers that be want to extend the 20 metre building limit, to 40 metres. However, if land already has
buildings on the shoreline, which were built legally in the past, then you
can rebuild them when they fall into a state of disrepair, but if you want
to dramatically change their size, style etc then you'll need to have a
private word with your local planning officer . . . keep your wallet
well-padded and to hand.
Land
and Property for Sale on Koh Chang
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