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Due to the imposition of more
restrictions regarding foreigners setting up companies, more and more people
are going with the right of habitation, superficies and usufruct.
These are options that have always
existed but unless you had some knowledge of property law you probably would
never have come across had the Thai government not imposed strict
regulations governing the set up of Thai/Foreign registered companies.
The reason being that law firms don't make anywhere near as much money
arranging one of these forms of contacts as they do setting up a registered
company and then providing the associated services which you require in
order to keep your company operating e.g. 15 - 20,000 baht/year for annual
audits & tax reports etc.
Info on this page is taken and adapted
from postings on various web forums and websites from law firms in Thailand.
Leases
As mentioned elsewhere in this section,
natural or juristic persons can lease land in Thailand for up to 30 years
under one contract. Addendums can be added to allow for options to
extend the lease for additional 30-year terms upto to 60 or 90 years.
However, leases for periods longer than 3 years require registration at the
Land Office in charge for a certain property, otherwise they will just be
considered ordinary leases with a validity of no more than 3 years. Standard
lease contracts carry certain limitations. Typically, a lessee cannot
sublease a property without the written consent of the lessor, and the
lessor has a right to access the property for inspections.
All good law firms will draw up a 90
year lease for clients or will offer advice on a lease that you are given by
a real estate developer. If you are buying a house have a contract
that states you own the house freehold and lease the land as this will give
you added security as in reality there's no way the lessor could sell the
land that your house is built on. It would be impossible to sell as a
buyer couldn't do anything with it.
However, Thai law, as the law of many Western countries, also knows the
system of usufruct. An usufruct is similar but not identical to a lease in
so far as it permits the usufructor to exploit the natural resources of a
lot. Commonly, an usufruct also includes the right to sublease the property
or to transfer the rights to a third party without the necessity to secure
the permission of the owner.
To be honest, the following aren't
particularly common in Thailand and I haven't seen them in use on Koh Chang,
but they are options open to foreign buyers.
Usufruct
A usufruct may be created for your
natural life. You also can lease the land to a third party which would not
end if you died. Example: If you died, you can lease out the property to a
third party before your demise as per the Supreme Court ruling 2297/1998;
'the lessor does not have to be the owner of the property. Therefore the
usefructuary can rent out the land. Although in the event of death of the
usefructuary within the lease term, only the usufruct will be terminated but
not also the lease'.
This way, a thirty year lease can be granted to a third party for a maximum
of thirty years. This could be passed on to your children or other relative
even though you have died. As long as the lease agreement was made before
you died.
With the usufruct, you are registered on the title deed. The land can never
be sold or transferred by the owner of the land until the servitude is
terminated. You can also get a yellow book which is a House Registration
Certificate (Thor. Ror 13)
The usufruct would be registered with a 1.5% tax of the value of the benefit
- if you are not married to a Thai wife or a tax of 100 Baht if you are.
Associated costs from SunbeltAsia law firm in Bangkok are , as of Sept 2006,
9,500 Baht for the drafting of the agreement, 8,500 Baht for registration of
the usufruct, House Registration Certificate (yellow book Thor Ror 13) plus
professional registration fees of 8,800 Baht.
Superficies
This is basically a formal register of
the right to control and use the property (i.e. a house) for the rest of
your life and is made at the Land Department. It's a very simple procedure,
one needs only appear at the land office with the person who holds title to
the property, the original title document (the Chanote), the title holder's
ID Card, a copy of the page (s) of the house registration book for the house
in which the title-holder is registered to live in. (This probably
wont be the same house registration book for the house for which you intend
to register the superficies.), and your passport.
This can be done yourself, but having
lawyer present will help as this type of arrangement isn't common. The
total cost for this - excluding any fees your lawyer might charge is a mere
75 baht plus the photocopying costs for a few documents.
Some examples of how these type of leases can be used in real life . . .
Example of a Married Man to a Thai
and Right of Habitation:
A husband married to a Thai Lady is
granted a right of habitation on the land and house. No tax is collected for
the right except 100 Baht or less. He can have that right till he dies. The
agreement is for his life and is registered on the title deed. He also gets
issue a "yellow Book" which is a House Registration Certificate
(Thor.Ror.13), which is given to foreigners. His wife should have a will
leaving the land and house to him.( if the house is not in his name) The
right of habitation is used when the house and land purchase was combined.
The husband cannot operate a business at this location. By the way, the
husband has no rights to the ownership of the land unless she dies, as he
signed a declaration that it was a gift and he is not expecting anything
back, it is her money now to buy the land.
Example of a Single Male and Usufruct:
A foreigner is not married. He talks to a seller of a plot of land. He gets
a usufruct instead of buying the land and pays 5 million Baht for that right
to use and enjoy the property as well as management of the property. The
government fees are 75,000 Baht. The agreement is for his life and is
registered on the title deed. He also gets issue a "yellow Book" which is a
House Registration Certificate (Thor.Ror.13), which is given to foreigners.
With the usufruct, he can sell or transfer the right. If the house burns
down, the usufruct ends until it is restored. This is why insurance is
important to be paid to the benefit of the owner. A inventory should be
taken and registered with the usufruct. If he has transfered (sold) the
usufruct to a third party, it does not end on his death but when the 30 year
term expires for the third party.
Example of a Foreign Couple and Superficies:
A foreign couple want to retire in Thailand. They find a plot of land and
want to build a house and register a superficies for both of their natural
lives. They are given the right to own, upon or under the land, buildings,
structures or plantations. The right was granted for 2 million Baht and the
tax due was 30,000 Baht. This right can be transferred and transmissible by
way of inheritance. If the foreign husband dies, the wife can still live on
the property and can even leave it in her will to a third party. A 30 year
term than applies to the person who inherits the right. Both husband and
wife are registered on the title deed. They also get issue a "yellow Book"
which is a House Registration Certificate (Thor.Ror.13), which is given to
foreigners. This agreement is common when it is a plot of land and the house
has to be built.
Example of a Single Foreign Lady and a Thirty Year Lease:
She would like to stay in Thailand and she finds some beach front property.
She obtains a 30 year lease plus a option of 30 years. The registered rights
are only the 30 years to have the use or benefit of the property and no 100% guarantee she will ever get the additional 30 years. (Although legal
opinion from all international law firms in Bangkok is that this shouldn't pose problems.) The land lease ends
when she dies. The government has a charged tax of 1.25% on the 30 years
lease.
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