Thailand » The Purchase Process

Foreigners can own property in Phuket, but there are some major limitations. Foreigners are allowed to own a condominium unit in a fully registered complex. They are also allowed to own a building. This is good news. The only caveat is that they cannot own the land on which the structures sit. However, it is possible for a foreign individual to own land through a Thai limited company, or to lease the property up to 90 years. Forming a limited Liability company is very popular and usually only takes about four or five weeks to put together with the help of a good lawyer and accountant.

This method must use Thai nominees and the purchaser’s interests are protected through a nominee agreement and pre-signed bought/sold certificates of the shares held in the nominee's names. The advantage of this route is that the purchaser can achieve complete ownership of the land. The major disadvantage is that the company requires on-going attention. Land leasing is the other very common method to owning land in Phuket. Individual lease periods, under Thai law, cannot exceed 30 years. It is possible to extend this time period by adding two more 30-year lease periods for a total of 90 years. These leases usually include a provision that the buyer can convert the lease to full ownership when the law is changed to allow foreign ownership. 

Seven shareholders are required to form a limited liability company within Thailand.

The Board of Investment (BOI) is the primary bureaucratic body regulating foreign investment in Thailand. Most ventures will not however be tackled by just a visit to just the BOI. There are many bureaucratic bodies eager to tangle you in red tape. For the most part, foreigners in Thailand have the same legal rights as Thai citizens. The only differences are the rights to working, or investing in the country. 

Foreigners May Own 

• A unit in a registered condominium
• A building (as distinct from its land)
• Registered leasehold of up to 30 years for all types of titled land (and/or buildings)
• However with appropriate extension and purchase options a 30-year lease can become tantamount to freehold purchase

Foreigners May Not Own

• Freehold land
• More than 49% of the shares in a Thai company that owns freehold land

In order to buy a condominium in Thailand, you need a passport and a document called a Thor Tor 3. The Thor Tor 3 document is proof that you have brought foreign currency into Thailand for use in the purchasing of property. The documentation is very extensive, and even more so if the purchase is in the name of a company.

The first step toward a smooth transfer of ownership is to do some due diligence work. A reputable lawyer or real estate agent can do this for you. For the most part, the description of the property has to match the description on the title deed representing it. The property's boundaries have to match especially, so as to insure there are no disputes.

The seller has to be confirmed as the owner of the property and there should be no encumbrances registered against the property. This could prevent the transfer of ownership, or obtaining an unencumbered registered lease. When all the above have been confirmed, it is time to cover the contract. There are many different contract formats out there, and it would be wise to have an experienced lawyer look over things to make sure that none of the details are overlooked. When purchasing a completed property from a private seller, the standard approach would be to draw up a purchase option contract, or reservation.

This contract holds you and the seller to the sale of the property with a given schedule and price. This is a contract that binds you and the vendor to the sale of the house at a specific price in accordance to a specific schedule. The contract will usually set up penalties in case of default on the part of either party. A ten-percent deposit is usually required to secure a property. Deposits in escrow accounts are still rare in Thailand, but it is becoming an increasingly recognized way of moving along. Escrow accounts generally trade greater security for the buyer's deposit versus a weakened claim for damages in the event of default on the part of the seller. Along with the price, payment and closing schedules, it's imperative that the contract includes clauses to cover that will pay for all the other fees. Legal fees, transfer fees and taxes are examples.