Condominium is a building or complex in which apartment units are owned by individuals and common parts (land on which the building sits, hallways, elevators, etc.) are owned jointly by the unit owners. The Thailand Condominium Act defines condominium as a building that can be separated into units for individual ownership which include personal and common properties.
A condominium in Thailand is usually a tall building divided into apartments but it may also include a horizontal building structure or complex according to the definition of condominium by the Thailand's National Legislative Assembly.
Foreign condominium ownership in Thailand
Foreigners are permitted to buy and own condo apartment units in a condominium registered under the Condominium Act freehold in their own name in Thailand, however, not more than 49% of the total unit floor space of all units in a condominium complex, often referred to as 'saleable floor area', can be foreign owned under the Thailand Condominium act ( section 19 bis of the Condominium Act B.E.2522). Foreign ownership in a condominium building is allowed within the 49% foreign ownership quota. In case of 100 equal condo units 49 can be foreign owned. The remaining units 51% are restricted for foreign ownership and must be owned by Thai persons.
Saleable area is not the exact use-able floor area as it is measured from the centre of certain walls which are joint ownership between the adjoining units, see the Chapter II of the Thailand Condominium Act for more information about common areas and private property under the Thailand Condominium Act.
Buying a condo in Thailand
A foreign purchaser of a condominium apartment unit must comply with the provisions in the Condominium Act. The Condominium Act requires that the foreign purchaser who is not a foreign resident in Thailand has remitted foreign currency into Thailand for the purchase of the condominium unit at least equal to the purchase price of the condominium unit. The authorized financial institution in Thailand must exchange the total amount of foreign currency into Thai baht. As proof of the money exchange the bank in Thailand will issue for amounts exceeding 20,000 USD a Foreign Exchange Transaction Form (FET-form, formally known as Thor Tor 3), or a credit note or bank letter of guarantee for lower amount as proof of remittance and exchange of foreign currencies. If the remittance from abroad is in Thai baht the bank will not issue the FET transaction form or credit note and the foreign purchaser will not comply with the provisions in the Condominium Act and therefore is unable to apply for ownership over a condominium unit. |
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The full purchase price for the condominium MUST be transferred into Thailand as foreign currency and exchanged by the handling bank in Thailand into Thai Baht. For non resident foreigners to be eligible to purchase a condominium in Thailand they must present proof to the Land Department that the funds have been remitted from overseas in FOREIGN CURRENCY and exchanged to Thai baht INSIDE Thailand. The foreign purchaser's name must show as either the sender or receiver of the money on the documents supplied by the financial institution inside Thailand. Without such proof the Land Department will NOT permit the transfer of ownership to the foreign buyer.
The most impotant ownership document of a condominium unit is the ownership title deed (a sample is shown above). The unit title deed shows the owner and details of the condominium like floor area and percentage of voting rights in the condominium juristic person. It also shows registered rights against the condominium such as mortgage or lease rights. In addition to the unit title deed each condo unit has a Ta Bien Baan or government issued housebook which gives the exact address of the unit and could state the owner and the people living in it.
In addition to the Condominium Act (external) a condominium is regulated by its condominium juristic person and the 'regulations' (internal) of the condominium. The regulations of the condominium for example regulate that the units cannot be used as a business or company address.
When buying a condominium unit the condominium juristic person must supply a letter of guarantee that the condo unit falls within the 49% foreign ownership quota and a letter of guarantee that there are no outstanding fees for the unit to the condominium juristic person. Other documents required when transferring the condominium are the buyers and sellers ID-card-passport, a marriage or divorce certificate (if applicable), a land office Tor Dor 21 power of attorney (if applicable). It is recommended to obtain the service of a reputable real estate agent or a conveyancing lawyer with experience in the condominium sale and purchase procedure and transferring ownership of a condominium unit to a foreign buyer.
Common mistakes when buying a condominium:
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Not having transferred the purchase price for the condominium in foreign currency into Thailand;
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Not having clearly agreed in an off the plan purchase agreement that the purchase concerns a freehold purchase and not a leasehold purchase;
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Not having obtained legal advice on how taxes and transfer fees are to be divided and ending up paying more than necessary;
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Not having obtained legal advice on the condominium sale and purchase agreement, required terms and conditions and responsibilities of the parties;
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Not having conducted due diligence on a project or unit and being confronted with unexpected issues after signing the purchase agreement and having paid the deposit;
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Not having checked the condominium title deed or ensured that the apartment building is free of encumbrances and a true condominium or condominium development under the Thailand Condominium Act.
To generate sales in off-plan condominium developments in the tourist areas of Thailand (where condos primarly aimed at foreigners) some developers are deliberately offering more freehold sale agreements to foreigners exceeding the 49% foreign ownership limits within the project. This dodgy sales tactic is often used to generate sales and money for the project as foreign purchasers pre-pay through payment instalments the development project. When it comes to registering ownership of the condos upon completion of the project part of the foreign purchasers will automatically be offered a 30-year lease structure or a Thai company ownership structure and not freehold ownership.
Ownership of a unit and succession
A foreigner who complies with the Condominium Act can own a condominium unit freehold in his own name, however upon his death the foreigner who receives the unit by inheritance must sell the unit within 1 year from the date of acquisition. The unit can be transferred by will or gift to another foreigner but the receiving foreigner must sell within 1 year as he does not comply with the Condominium Act to register ownership under the Condominium Acrt ( read more).
Lease ownership of a condominium under a registered lease agreement
If the 49 percent foreign ownership in a condominium is filled up it is possible for foreigners to lease remaining condominium units under a registered 30-year condominium lease agreement, as long as a Thai person is the freehold owner of the condominium unit.
Warning: in the tourist areas of Thailand often a large part of the condominium project is sold under a leasehold structure to foreigners, however the voting right are controlled by the owner (condominium developer), therefore matters relating to the condominium juristic person, like management of the condominium, are controlled by the developer. In a leasehold purchase the purchaser should be given the voting rights in the condo juristic person as attached and stated in the condominium unit title deed to assure desicions are made only for the benefit of the condominium.
Lease of a condominium unit is like lease of any other real estate property in Thailand governed by the Chapter Hire of Property in the Civil and Commercial Code, and the law is applied in the same manner if the lessee is a foreign or Thai national ( learn more about hire of property in Thailand). There is in principle no remittance (FET form) needed to register a long term condominium lease agreement in the name of a foreigner at the Land Department.
If in a condominium project the foreign ownership quota is sold our the remaining units may be owned by partly (minority) foreign owned but foreign controlled Thai companies, however, a company set up to register ownership in the Thai side of the condominium building will have the same legal drawbacks as land holding companies (i.e. it can't be a dormant nominee structured property holding company). These companies must comply with the same laws and are restricted by the same regulations and subject to the foreigner definition in the Land Code Act and the Foreign Business Act 1999 (section 19 of the Condominium Act) and if deemed foreign under a stricter enforcement of existing laws such ownership would be not allowed by law.
An unregistered residential apartment building
Apartment in Thailand is a term generally used to describe a unit in a condominium building registered under the Condominium Act or a unit in a multi unit residential complex which is NOT registered as a condominium building under the Condominium Act. Only apartment units in a building registered under the Condominium Act offer freehold ownership. Apartment structures not registered under the Condominium Act require extra caution as these buildings do not offer freehold ownership, nor have these units government issued and controlled ownership title deeds. Also these structures do not have the same consumer protection as is offered in a licensed condominium development project under the Thailand Condominium Act. The sale structure of unlicensed apartments are not as straightforward as buying a unit in a registered condominium. The legal structure is often complex and may have hidden pitfalls and responsibilities. The apartment legal structure needs close scrutiny by a legal professional familiar with apartment structures.
Contrary to a registered condominium building, apartments are governed by general laws applicable since there is no specific law (besides building and environmental restrictions) issued regulating apartments or apartment unit ownership. Apartment units do not have individual ownership unit title deeds and it is not possible to register individual ownership of the apartment unit at the land department. Only registered condominiums have unit title deeds and offer independent freehold ownership and co-ownership in the land and common areas.
A structure to sell unregistered apartments the recent years (before the latest land office regulations and business registration rules) was ownership through a Thai holding company owning the land and multi-unit building on behalf of the foreign unit purchasers. The foreign purchaser would get a beneficial interest in the apartment unit and the land via ownership in the holding company. The foreigner purchasers would become a shareholders in the minority foreign owned Thai holding company (minority foreign owned not to be classified as a foreign company). The sale would include a share transfer agreement and maybe a leasehold agreement. Under present law and regulations this is not a recommended structure and is generally seen as an illegal structure.
It is possible for each purchaser in the apartment to obtain a 'Ta Bian Baan' or house registration book. This is an official document issued by the District Amphur identifying the house, its address and its occupants, however, this must not be confused with an ownership title and it can't be used as proof of ownership as it is merely an administrative document.
Apartment units not registered under the Thailand Condominium Act are commonly sold under a lease structure, including rules and regulations and management contracts. In case of a lease the seller or developer (the owner of the land and building) 'sells' the unit under a 30-year lease agreement. Registration of the unit lease is an essential requirement, because the lease of the unit is not enforceable over 3-years if the lease is not registered by the competent authority (the local land office). The lease will be registered as lease over part of a building at the Land Department. The unit in the lease is indicated and specified in the plan of the building. It is advisable not to hand over large deposits or the full purchase price before proper registration of the lease at the land department in the lease purchaser's name. It does happens that under the new regulations the developer is not able to register the lease simply because he does not comply with the regulations or has not obtained the correct documents. Without registration the purchaser wil not have a registered right and thus an insecure and un-saleable asset.
Alternatively the building and unit is owned through co-ownership of the building as a whole by all the purchasers (e.g. a foreign or Thai juristic entity owns the building on behalf of the purchasers). Foreigners or foreign juristic entities are allowed to own a buildings under Thai law, however not the land it stands on. Here lies another drawback of apartment structures as the purchasers cannot have (co-) ownership in the land on which the apartment is built. In a registered condominium the unit is freehold owned (within the foreign ownership ratio) and the land is legally jointly owned by all the condominium unit owners. In case of ownership of the apartment building as a whole, ownership is generally combined with a land lease agreement in favour of the owner(s) of the building. The land lease is under present law only guaranteed for 30-years. If the lease is not renewed after that period (at the discretion of the owner of the land at that time, irrespective any renewal options) the building remains illegally upon land owned by someone else. The legal ground to own the building upon that land has ended and a new structure of possession of the land must be put in place and negotiated by the owners of the building with the owner(s) of the land.
In case of a true condominium there is a separate unit title deed issued by the Land Department. This is the first document to obtain. The Land Department is responsible for issuance of the unit title deeds and registration of transactions, including the transfer of ownership and mortgages of condominium units.
An apartment complex is an allowed concept, however, has drawbacks and offers less legal regulations and protection compared to freehold ownership of a condominium unit. The apartment structure itself must comply with the Building Control Act and Ministerial Regulations as a residential building, and comply with the City and Town planning Act and local Ministerial Regulations, and depending on the size (Ground Floor Area and/ or height) and number of units apply for an Occupancy Permit and may have to comply with licenses under the Enhancement and Conservation of National Environment Quality Act.
Other Condominium Building
Certain types of buildings are defined as 'usage controlled buildings' in the Building Control Act which include condominiums, theatres, hotels, hospitals and buildings used for commercial, industrial, educational or public health purposes or other purposes as designated in a ministerial regulation. These types of buildings require special certification and approval. The Building Control Act imposes heavy fines and imprisonment on violators, which is doubled if the building involved is of a commercial nature. The fine itself comprises a lump sum and a daily fine throughout the period of violation. In addition, if any violation is found, the authority has the power to issue a stop-work order and demand rectification of a building or an incorrect part within a reasonable time. If a building or an incorrect part cannot be rectified, the authority has the power to order the demolition thereof.
It should be noted that the current Condominium Acts in Thailand does not specify in any detail the specific requirements necessary in order for it to be identified as a condominium. As long as the building is able to hold ownership separately according to the area, whereby each area consists of private ownership in the property and joint ownership in the common property. There are no specifications outlining height or space requirements, nor are there any specifications outlining the minimum amount of individual units necessary within the building. A condominium, as such not defined in the Condominium Act, is a 'Villa Condominium'. A villa condominium can be a goup of buildings, some say, a horizontal condominium. A villa condominium is based on a decision by the government's legislative advisory body, but has to comply with the Condominium Act.
Between April 1999 and April 2004, as a temporarily measure and an attempt to reduce the surplus number of condominiums , foreigners could under certain restrictions and in specified areas own up to 100 % of the aggregate unit space. This has since been amended back to 49 % of the aggregate unit space (read more).
There are 4 legal acts relevant to the purchase of a condominium unit by an alien, being the Condominium Act B.E. 2522 (1979), the Condominium Act (No. 2), B.E. 2534 (1991) the 1991 Act is the amended Section 19 the Condominium Act 2522 translation) and the Condominium Act (No. 3) B.E. 2542 (1999) issued on 28th April, 1999. The amendmets to Condominium Act B.E. 2522: Condominium Act (No.4) B.E. 2551 (2008). The condominium itself is in addition governed by its Regulations. |
