Thai real estate lawyer answers questions about real estate

Jett Gunther: I'm sure we can all agree that Thailand's real estate market needs significantly more clarity and transparency to attract more foreign buyers. That's why I contacted a leading law firm in Bangkok to address some of the most frequently asked questions about foreign property purchases in Thailand. Khun Sirichot is a junior partner at Siam Legal, and I was very impressed by his openness and expertise in answering my questions. I'm delighted to present this interview to you.

Introduction to Siam Legal and Khun Sirichot

Jett Gunther: Khun Sirichot, thank you very much for your time. Let's begin with a brief introduction to Siam Legal and your legal background.

Khun Sirichot: Okay, our office has been around for about 17 years, and I've been working at Siam Legal for about 13 years. I'm currently a junior partner and head of the inheritance law practice. So I've been working in real estate law for 10 to 11 years.

What are the most frequent inquiries regarding Thai real estate law?

Jett Gunther: Okay, that's why we have you here, to clarify a few points. My next question: You mentioned you've been here for a while. What are the most common problems your international clients bring to you during your work? Could you briefly list them, and then perhaps we can discuss each one in more detail?

Khun Sirichot: Yes, because our firm offers a wide range of services, from immigration law and corporate law to family law, real estate law, and inheritance law, as well as litigation and visa matters. Therefore, we receive a variety of inquiries from clients and expats in Thailand and worldwide. These inquiries aren't limited to specific nationalities. In my area of ​​expertise alone, I'm primarily asked about financial matters, such as how to acquire real estate in Thailand, how to protect these interests and investments, how to plan and manage an estate in Thailand, and how to plan for retirement in Thailand. That's precisely what I'm currently working on.

There are many different questions, so I can't say exactly which ones are asked most frequently. However, inquiries about buying real estate in Thailand, including land, houses, and apartments, are quite common. We receive about 5 to 10 inquiries on this topic.

Jett Gunther: Great, that aligns very well with the questions my audience asks me. So we'll get to that in a moment. It's exactly what you mentioned. Let's start with the topic you brought up: buying property in Thailand as a foreigner. I think there's a lot of confusion about how foreigners can acquire property in Thailand. Could you give us an overview of the different ways foreigners can purchase property in Thailand?

Khun Sirichot: Okay, when we talk about real estate, there's immovable property and movable property. Specifically, immovable property includes land and houses, condominiums, factories, hotels, and residential developments, for example, land that's to be cleared for the construction of condominiums or housing estates. I'm not sure which area exactly. Could you please elaborate? What kind of property are you referring to?

How can foreigners buy Thai real estate?

Jett Gunther: Sure, my audience consists mainly of private clients. So, we'll start by asking: First, how can foreigners acquire a condominium? Then we can look at land and real estate. But let's begin with condominiums. What options are there for foreigners to own a condominium in Thailand?

Khun Sirichot: Okay, good news! It's very easy for foreigners to purchase condominiums in Thailand, even multiple ones. Whether as an individual, through a foreign company, or jointly with other foreigners or a Thai citizen – there are no restrictions. The only important thing is that the foreign ownership percentage in the building does not exceed 49% according to the Condominium Ownership Act, and that the purchase money is transferred from abroad to Thailand. Capital located in Thailand cannot be used for the purchase unless you have permanent residency or are a member of a BOI privileged company. If you are a privileged person within a BOI company, then you can use funds located in Thailand for the purchase. However, as soon as you no longer qualify as this type of person, no longer fall under BOI regulations, or no longer have permanent residency in Thailand, you must sell your condominium, as you will then be properly disqualified.

The simplest way to buy a condominium is as an individual. You purchase a condominium and then transfer the purchase price, or at least the purchase price, from abroad to Thailand. Any currency is acceptable except Thai Baht. Transferring Thai Baht from abroad to Thailand to purchase a condominium is not possible. Such a transfer can cause problems, and the Land Registry official may refuse to register the transaction due to difficulties with banks issuing a specific form. This form is also known as the TT3 form (Thor Tor Saam or FET form). It is a document you must present to the Land Registry official on the day of the transfer of ownership. Without this form, the transaction will not be registered. If you ensure that the property is a multi-family building, the foreign ownership percentage does not exceed 49%, and it is a fully detached unit, you can purchase the condominium in your own name.

Jett Gunther: So if it falls under the foreigner quota, can it, in principle, be acquired through a property contract?

Khun Sirichot: Yes, for the most part, I'd say, but there are exceptions. In some areas, you can't buy condominiums, and in some projects, for example in Ratchadamri, they mostly sell leasehold apartments. The owners of the land on which the complex stands aren't the owners of the apartments themselves. It could be royal property, crown land, so to speak. Therefore, they can't buy condominiums there. The same applies to other projects, which I'd rather not name right now. Oh, I'd rather not name them, okay?

Jett Gunther: That's fine, but if the condominium only allows full ownership, they would tell you that, wouldn't they? You couldn't enter into a full ownership agreement unless it's a registered condominium that you own, right?

Khun Sirichot: Yes, you should ask the developer or seller from the outset whether it's a freehold or a leasehold. For leaseholds, the maximum term is 30 years according to current law. While an extension clause can be agreed upon, it doesn't come into effect automatically. As the buyer or lessee, you must contact the lessor or developer to apply for the extension and have another 30 years registered. Automatic renewal is not possible. Even if the initial 30-year term ends, the second term does not renew automatically. You must apply for the registration of the second term.

How can foreigners acquire land in Thailand?

Jett Gunther: We've been discussing how condominiums fall under the foreigner quota. You can purchase them as full ownership and then have to transfer money. But what about acquiring land and real estate? How would a foreigner go about that?

Khun Sirichot: Land and house, or land and villa, or something similar. As you know, foreigners in Thailand generally cannot buy or own land. Therefore, they cannot acquire land in their own name. However, there are some other options frequently used by foreigners, such as leasing or leasehold. For example, one could lease land for 30 years and then purchase the villa or building in their own name, provided the local authorities, such as the district office, the land registry, or Or Bor Tor, allow it. They are quite flexible towards foreigners and often approve such construction in the area. So, one can acquire a leasehold and then register the building in their own name. However, if the local authorities make it difficult and obstructive, it will be very challenging to register the building or property in the foreigner's name. An alternative would be for the foreigner to lease both the land and the house for 30 years with a renewal clause or similar agreement. However, if you have to contend with the local authorities, I advise against this. In some areas, such as Hua Hin, Cha-am, Phuket, or Pattaya, this is common practice, and foreigners are allowed to use buildings essentially as leasehold property. Ownership of the building is then registered in the foreigner's name. This works without any problems there. However, I cannot guarantee that this is the case in all parts of Thailand, in all provinces and districts.

Jett Gunther: Okay, assuming the municipalities and local authorities agree. The most common way to acquire land and real estate is through a leasehold, as you described. This usually has a term of 30 years and can be extended, but an application must be submitted. Is that correct?

Khun Sirichot: Exactly. Exactly.

Jett Gunther: Great, to sum it up briefly.

How can foreigners ensure the legitimacy of the seller and the property?

Jett Gunther: We talked about the uncertainties for the locals and the fact that the land is owned by the Crown Dependencies. So we discussed at length the necessary research. This brings me to my next question: How can foreigners ensure that the seller and the property they are buying are legitimate and that they can legally acquire this property?

Khun Sirichot: Well, that's quite difficult unless you're buying from very reputable properties or directly from the developer. Such developers will provide you with the most accurate information you could want. However, with some local developers, you'll need to conduct due diligence on the property. If you don't know how to do that, I strongly recommend consulting an experienced lawyer. After all, the property's value is enormous, and if you only save a few euros and then have no protection on a property worth 10, 20, or 100 million baht, that's questionable, isn't it?

I mean, the legal fees are much lower than the real estate agent's commission, right? The agent's commission is 3%. Let's say the property is worth 10 million THB, that would be 300,000 THB. But the legal fees are significantly lower. Even my firm shouldn't charge more than 150,000 THB for the entire process, from due diligence to the transfer of ownership. After that, you don't have to worry about anything else, right? You can relax completely.

Jett Gunther: Okay, so you're recommending hiring a lawyer and thoroughly examining the property, as it could potentially be worth tens of millions of baht. I appreciate your honesty in addressing the many obstacles and giving your answers, even if you admit it's difficult.

Could you briefly explain what due diligence generally entails from a lawyer's point of view?

Khun Sirichot: Okay, if you're buying a condominium. Let's say you're buying a condominium. As I mentioned before, the first thing you need to know is whether the property the project is built on is fully owned land. That's the most important thing. Secondly, the condominium should be registered as such, not as an apartment or hotel, okay? Because in Western countries, there are some terms that use the word "apartment" that aren't usually used for condominiums. An apartment in Thailand, as you know, has a different meaning. It's like a dorm room, right? It's not an apartment with services, okay? But it is a condominium. So, a condominium might mean something different in other countries, but in Thailand, a condominium is what you're familiar with. In some countries, it might be called an apartment or flat, right?

As mentioned previously, the building must be in full ownership, the land it stands on must also be in full ownership, the building must be registered as a condominium complex, and the foreign ownership quota must not exceed 49%. However, in some projects in Bangkok, this quota is above 49%. So, if you find a seller for a property you like, but cannot purchase it due to the excessive foreign ownership quota, and the seller is unfortunately a Thai citizen, you cannot transfer the foreign ownership quota from the seller. In this case, your only option may be to acquire the property through other means, such as by setting up a company. Is that really worthwhile? Probably not. And finally: Does the capital you intend to use to purchase the property have to be transferred from abroad?

These are the most basic requirements for foreigners to purchase a condominium in Thailand. If you carefully follow these four steps, you can then address other aspects, such as whether the residential complex borders a public road. You might be familiar with rental projects like Ashton Asoke, right? These apartments don't directly border public roads. While it may seem that way at first glance, you can only be certain through thorough investigation. Only a lawyer can advise you, for example, on whether there's a risk of leakage due to the project not being adjacent to a public road. In Bangkok, for instance, it's common for developers to own land such as roads and register them as easements for other projects in the area. Therefore, you should ensure you won't have to pay road tolls and identify the actual owner of the road before your project. Due diligence can provide you with this information. If you're not a lawyer, I'm not sure you'd understand what this entails, especially when dealing with the land registry official, as everything will be in Thai.

The official in charge doesn't speak good English, and the documents are entirely in Thai. How are you supposed to read the map, the site plan? You wouldn't understand anything, would you? It's not as simple as searching for land online in Western countries, where you just enter your address and the results appear. No, it doesn't work that way in Thailand.

Jett Gunther: Speaking of the West: There, certain mechanisms exist to protect the buyer in this process, such as escrow companies, property insurance, or geological surveys. Are there similar mechanisms in Thailand, and are they effective?

Khun Sirichot: Okay, regarding the S4 escrow service: Thailand has had an escrow law since 2008, but while it works in theory, it's not very practical. Only banks are allowed to offer this service legally. If we, as lawyers, as a reputable firm, have no other choice, we have to help and protect our clients by not paying the seller the full amount. We have to prevent this and withhold a portion of the payment until the conditions are met. For example, you shouldn't pay more than 40% to the developers until the project is completed. 10% would be reasonable. Why would you pay 80% or 90% to the seller or developer only to have them go bankrupt in the end? They simply go bankrupt and have nothing left. If you sue, you might win on paper, but you won't have any money. Why would you do that? I mean, if you have a lawyer who reviews the contract beforehand, sets a fair price, tries to protect you as much as possible, and advises you against overly risky actions. But if you want to take that risk, the decision is yours. What are we supposed to do? We have to warn clients and tell them, "Don't do it, don't go any further, don't get involved." An escrow account would be useful if you appoint a lawyer as escrow agent. This would be especially advisable if you're not in Thailand or don't have a bank account there. Without a bank account, you can't enter Thailand. So there's no way to transfer the money, right? And you shouldn't pay the seller 100% before the transfer date; that's too risky.

Okay, what happens if you pay and the seller simply disappears? They could delay payment or try to deceive us—we don't know. So, if you transfer the money about a month before the transfer date, your lawyer can assist you with the transfer and ownership transfer. We'll transfer the payment to the seller, take ownership on your behalf by power of attorney, and handle everything. That's how an escrow account protects you. However, if you're in Thailand on the transfer date and have a bank account there, you don't need a trustee or escrow agent to hold your money. You can transfer your money from abroad to your Thai account. Before transferring, make sure the currency isn't Thai Baht and that the amount transferred is at least equal to the purchase price. In the payment reference, specify, for example, "Purchase of a condominium with the corresponding number in the project in your name." Or you can simply state that you wish to purchase a condominium with the corresponding number and project name in your name. This is very important. If you provide incorrect information, we may not be able to prepare a proper document for the land registry.

Any tips for buying property with a Thai spouse?

Jett Gunther: Okay, I understand. Many people have submitted questions, and I'm sure many of them want to buy property together with their Thai spouse. These questions often revolve around what happens when you get married and how the ownership is handled. So my question is: What advice would you give a foreigner who wants to buy property with their Thai spouse?

Khun Sirichot: Okay, if you mean the condominium, that's fine. You can buy it together with your Thai spouse. The ownership transfer can be in your name, your joint name, or her name—that's no problem. However, if the condominium is to be in only your name, you will need a letter of consent from your wife. Your wife must confirm that you are buying the condominium solely in your name. Men usually state their marital status as single. If both partners are men, they do not state their marital status as married. Women, on the other hand, use the title "Mrs." or "Ms." in Thailand. Buying a condominium is very straightforward.

Regarding land and a house, I recommend acquiring them before marrying a Thai citizen. This allows you to clarify everything. If you purchase during the marriage, controlling ownership can become difficult, as part of it might be considered joint property and another part personal property. About 10 to 15 years ago, the Land Registry required the foreign spouse to sign a declaration of consent confirming that the land and house were registered in the Thai spouse's name. This is considered personal property, not joint property. The purchase price comes from the Thai spouse, not a foreigner. Therefore, signing this form is essential. Otherwise, the Land Registry will not allow your spouse to purchase the property in Thailand. This declaration of consent must be signed exclusively at the Land Registry or the Thai Embassy.

This declaration of consent cannot be signed before a notary, a Thai lawyer, or any other person, including a notary in another country. That is simply impossible. It must be signed exclusively at the Land Registry, the Thai Consulate, or the Thai Embassy.

Jett Gunther: So it sounds like after marriage, when buying a property, all the laws are in favor of the Thai spouse. They have to agree, acquire the property as their private property, and the purchase agreement is signed at the Thai embassy. Wow, that's really very advantageous for the Thai spouse. So, would you legally advise me to buy a property before marrying a Thai spouse, if necessary?

Khun Sirichot: Yes, but even if you buy beforehand, you need a proper agreement with your girlfriend or fiancée, okay? You need an agreement like a lease or a loan agreement. Don't put the contract in her name, because if you do, you can't claim it as a gift later. That's pretty difficult, I'd say. You can try, but it's challenging. Why waste your time and money in a legal battle to prove yourself? You can easily protect your investment beforehand, right? So you should have some kind of protection beforehand, like an agreement or arrangement, for example, a 30-year lease or a loan agreement. As for usufruct or tenancy, many land registry officials have recently been refusing to register such transactions because they are considered a circumvention of the law. Also, the government fees are much lower than for rent or mortgages. Regarding the lease agreement, the government fee, the registration fee, is 1.1% of the total term for the entire period. However, for a usufruct, if you specify no consideration, the government fee is very low, less than 1,000 baht. In this case, the government receives nothing and may refuse to register the usufruct or the land.

What happens to property during a divorce in Thailand?

Jett Gunther: Okay, great, I'm glad we discussed this. Many people are very uncertain because so many questions arise about divorce. What happens during a divorce? Could you give us an overview of the process? If you don't bring it up, I'd be happy to answer specific questions.

Khun Sirichot: I recommend that you draw up a prenuptial agreement before getting married in Thailand and have it registered on the wedding day. Any agreement made between you and your wife after the marriage is considered a prenuptial agreement and can be declared invalid by either party. Therefore, it offers very little protection. I advise against a postnuptial agreement and strongly recommend a prenuptial agreement that should be drawn up before the wedding and registered on the wedding day. A prenuptial agreement can regulate many matters, from financial issues to the consequences of a divorce.

If you both have a child, you can also arrange for its custody. However, this isn't as simple as with real estate, which you can just divide according to the principle: "This is my property and this is your property." And what counts as joint property after the wedding? What counts as personal property? A prenuptial agreement clearly defines who owns what before the wedding.

Jett Gunther: To summarize briefly, based on what you just said: Ideally, you should sort all of this out before the wedding. Draw up a prenuptial agreement and buy a property beforehand. Because if you marry a Thai partner and something happens, you'll be pretty much screwed. That would probably benefit your Thai partner more, right? You have to hope you marry a really nice person.

Khun Sirichot: Exactly, but a different scenario would be if the marriage is dissolved not by divorce but by death. In this case, you can have a will drawn up. Your Thai wife can create a will for you. For example, she can bequeath the land and house to you without you becoming the owner. You would simply manage it as the executor of your wife's estate in Thailand. As executor, you can sell the property to a third party. So, you don't have to become the owner. Once you do become the owner, you must sell the land and house within one year. Otherwise, the state will intervene and force you to sell, for example, through an auction. However, this rarely happens. Therefore, try not to register the land and house in your name, but simply remain as executor.

What happens to the property if the foreigner dies?

Jett Gunther: That applies if your Thai spouse owns the property and passes away. You can either inherit it as executor of their will and sell it, or you can inherit it, but then you must sell it within one year. That's how it works if your Thai spouse dies. But what if you own a property yourself, one you acquired in your own name? Whether it was a condominium purchased before the marriage or just recently – and you pass away. Assuming you've written a will: Is this a straightforward process in Thailand where the will is simply followed and the property is automatically transferred to the deceased? Could you please explain that in more detail?

Khun Sirichot: A will doesn't save much time, but it provides clarity. Without a Thai will, the estate is divided among the legal heirs. These can be the parents, spouse, children, or descendants of the deceased. Let's say you haven't made a will under Thai law and the deceased had two parents, two children, and a spouse (yourself). Then the estate is divided equally among five people. You would have to share your assets with others. This can become complicated if the deceased had no parents or children but siblings. In this case, you would have to share the assets with your siblings, which you might not like. With a will under Thai law, you can specify this differently and, for example, say: "All of my assets should go to my spouse." My assets should go 100% to my spouse. However, should my spouse pass away, I might want to leave my assets to your children, your parents, or your siblings. Without a will, however, the distribution is unclear, as you have to share with everyone. For example, what happens if you own a property and don't want to share ownership with others? Then you have to wait until someone sells it. Who then takes over the administration of the estate? This can be regulated in a will. That's the importance of a will, even if the process isn't completed immediately. It might take roughly the same amount of time, but the distribution is much clearer this way.

Jett Gunther: Okay, just briefly: What if you don't have a Thai spouse, but are a foreigner yourself and own the property as an individual, while your family consists entirely of foreigners? Let's say you live here and die – what would happen in that case?

Khun Sirichot: Again, if you don't have any relatives in Thailand: You can draw up a Thai will if you own assets in Thailand. For larger estates, for example, 1 or 2 million THB, it's worthwhile to create a will under Thai law that covers your assets in Thailand. You can then bequeath your assets in Thailand to your family members living abroad and appoint them as executors. This isn't a problem; they don't necessarily have to be Thai citizens. It could be, for example, your spouse, one of your children, or a friend.

Jett Gunther: So a foreigner can be appointed as executor of a will, right?

Khun Sirichot: Yes, they can.

Does the political instability in Thailand affect the laws regarding foreign property ownership?

Jett Gunther: So we've discussed a lot about buying property as an individual and together with a spouse, and I thank you for that. Another frequently expressed concern from my audience is their skepticism regarding the Thai political system and the current situation. Many foreigners express concern about the political instability in Thailand, correct? They fear that laws can be changed at any time. Hence the question: Has the political instability in Thailand actually had an impact on the laws governing foreign property purchases in the past?

Khun Sirichot: No, don't panic. The Thai government will not do that.

Jett Gunther: But they haven't done that in the past?

Khun Sirichot: Yes, especially if you're buying a condo or have an account in Thailand, you don't need to worry. You'll be treated like a Thai citizen. However, if you're planning to buy land and a house, you should definitely consult an experienced advisor who can provide competent guidance and accurate information. So, if you have everything properly organized, you'll be protected to a certain extent, but not 100% as when buying a condo. So, dear condo buyers, don't panic! You'll be treated like a Thai citizen. For example, like Ashton Asoke, you won't be treated any differently. If the situation changes for Thai citizens, it will affect you equally.

Jett Gunther: But to be perfectly clear: In the last 20, 30 years, during which we've experienced these military coups, these government coups, and these government coups, the laws haven't changed, right? For foreigners.

Khun Sirichot: Yes, the changes will not come into effect and will not affect past practices. Anything that was legally regulated in the past is unproblematic. However, should you be planning something in the future—for example, the government might extend the term of leases for foreigners from 30 to 50 years, or the new government might do so—this is just one example. It would only be a minor adjustment for foreigners and would not cause any harm.

Jett Gunther: But there has never been a government in the past that announced it would pass a law prohibiting foreign property. That has never happened in Thailand, right?

Khun Sirichot: As far as I know, yes. But maybe I'm still too young or something.

Jett Gunther: But you didn't notice that, did you? I just wanted to bring it up because I know the foreign ownership structure hasn't changed all these years, but we simply want to talk about it. And you say you're also optimistic about the future?

Khun Sirichot: Yes, I mean, why would we make a foreigner unhappy if we want to keep him happy?

Jett Gunther: So they can bring their own money, right?

Are foreigners treated unfairly in Thai court proceedings?

Jett Gunther: Okay, one more question. We've discussed the political uncertainty and everything else, and we're both quite optimistic. My last question for you—thank you if we don't get around to concluding—concerns the perception that foreigners are treated unfairly in court cases against Thais. I don't know if that's true; you're welcome to answer that. But if so, what can foreigners do to ensure they are treated fairly within the justice system?

Khun Sirichot: I have many clients who win lawsuits against large property developers, believe me.

Jett Gunther: Oh yeah? And how did they turn out?

Khun Sirichot: How can someone be treated unfairly if they win a case? If you lose all your cases, that obviously means you've been treated unfairly. But there are many cases where foreigners win against Thais. Even with well-known property developers—if they're so powerful, why do my clients win? It means we try to treat foreigners equally. Drug problems or prostitution might sound dangerous to foreigners, but they aren't. I can understand why some foreigners believe they've been treated unfairly, but only in cases against their Thai spouse. In that case, the court can indeed act differently, but not because of nationality or because you're a foreigner, but because the other spouse is usually Thai. Thai women, for example, are granted custody by the court. The Thai court would consider them the mother, even in partnerships, and they would be granted the primary right to guidance and upbringing. Women would also be granted this privilege in Thai courts.

The second reason is alimony, because she is a woman. She depends on your support; you are a man, you have a male partner. You are obligated to feed and provide for your family. Therefore, the court will order the man to pay alimony to the woman. This is not because you are a foreigner, but because you are a man.

And thirdly, it's about the land, because it was clearly stipulated, and you knew from the beginning, that you weren't allowed to own the land, but you accepted that risk. How can the court protect you in this case? That's not fair, is it? However, when it comes to fair treatment, that's a different matter. And in the case of an employment relationship: if you go to a labor court, the judge will generally rule in favor of the employee. So, if both the employer and the employee are Thai citizens, the judge will still rule in favor of the employee.

It's not about your nationality, it's not about you being a foreigner, but about a completely different aspect.

Jett Gunther: Yes, different circumstances. The circumstances depend on whether you are the man or the employer, and this is also the case between two Thai parties.

Khun Sirichot: Yes, exactly.

Jett Gunther: Sirichot, that was really great. I'm sure the viewers greatly appreciate your views, and I admire your honesty and humor on many of these issues that concern people so much. You were very open and honest about it. Thank you so much for that.

Khun Sirichot: Thank you very much as well.

Jett Gunther: So, very briefly: How can people get in touch with you?

Khun Sirichot: You can send your inquiry to Siam Legal at [email protected] or visit our website www.siam-legal.com. You can easily contact one of our lawyers through our website.