Buying A Condominium in Thailand

Foreigners are permitted to have individual freehold ownership of a condominium in Thailand.

The Thailand Condominium Act B.E. 2522 defines a condominium as a building that can be separated into units for individual ownership and which include personal and common properties (land on which the building sits, hallways, elevators, etc.). The Condominium Acts 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 in Thailand can be a flat or horizontal building structure or high rise building structure. As such not defined in the Condominium Act is a 'Villa Condominium'. This can be a group of buildings, some say, a horizontal condominium. A villa condominium is based on a decision by the government's legislative advisory body, but must obtain a condominium license under the Condominium Act.

Buying a condominium in Thailand

The ownership document of a condominium in Thailand unit is the unit title deed. The condominium unit title deed states the owner and if any encumbrances, obligations, or mortgages, etc. are registered against the unit. On the unit title deed registered encumbrances transfer with ownership of the condominium. A registered mortgage can still be executed if ownership of the unit has been transferred. The unit title deed also shows details of the condominium like floor area and percentage of voting rights in the condominium juristic person.

Also the previous land office Thai script sale agreement for the condominium unit should be reviewed as this document could contain relevant information related to the condominium.

In addition to the unit title deed each condominium apartment has a Ta.Bien.Baan or housebook which gives the exact address of the unit and could state the owner and the people living in it. The house-book is issued by the local municipality and the condominium ownership title deed is issued and administrated by the local land office. Administration and transfer of ownership when buying a condominium takes place at the local land office.

Condominiums are regulated by its rules and regulations (internal) and the Thailand Condominium Act (external). The regulations of a condominium for example regulate that the units cannot be used as a business or company address or matters relating pets. The condominium rules and regulations and management of the condominium registered under the Condominium Act is decided by voting of the unit owners in the condominium general meetings.

Foreign ownership of a condominium in Thailand

Foreign ownership under section 19 bis of the Condominium Act is permitted up to 49% of the total floor space of all units in a condominium complex combined, often referred in an off the plan purchase as 'saleable floor area'. Saleable area is not the use-able floor area as this is measured from the center of the walls of the condominium which are not joint ownership under Chapter II of the Condominium Act. In an off the plan purchase the final purchase price upon completion will be adjusted according to the final floor area as measured by the official land office survey upon completion of the unit. Price differences of up to 10% with the signed sale and purchase agreement generally occur.

• In case of 100 equal condo units 49 can be foreign owned. The remaining units 51 units are restricted for foreign ownership and must be owned by Thai persons.

Foreign purchasers of a condominiums must qualify for ownership under section 19 of the Condominium Act. The following foreigners are eligible for ownership:

1. Aliens permitted to have residence in the Kingdom under the Immigration law;
2. Aliens permitted to enter into the Kingdom under the investment promotion law;
3. Juristic persons as provided in Section 97 and 98 of the Land Code and registered as juristic persons under Thai law;
4. Juristic persons which are aliens under the Announcement of the National Executive Council No.281 dated November 24, B.E. 2515 and have obtained promotion certificate under investment promotion law;
5. Aliens or juristic persons regarded by law as aliens who have brought in foreign currency into the Kingdom or withdraw money from Thai baht account of the person who have residence outside the Kingdom or withdraw money from a foreign currency account.

Foreign Exchange Transaction Form

Generally foreigners qualify by transferring foreign currency into Thailand equal to the purchase price of the condominium unit. The authorized bank in Thailand must exchange the total amount of foreign currency into Thai baht inside Thailand. The bank will issue a Foreign Exchange Transaction Form (FET-form) for this transaction for amounts exceeding 20,000 USD, or a credit note or bank letter of guarantee for lower amount as proof of remittance which must be handed over to the land office in order to register the transfer of ownership. If the remittance from abroad is in Thai baht the bank will not issue a FET-form transaction and therefore is unable to apply for ownership over a condominium unit.

The foreign purchaser must appear on the bank forms either as the sender or receiver of the money. The foreigner should state on the transfer documents from the sending bank that the purpose of the transfer is for buying the condominium and condominium details.

When buying a condominium unit as a foreigner the seller through 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).

Common mistakes when buying a condominium:

• Not having transferred the full purchase price for the condominium in foreign currency into Thailand;
• Not having clearly agreed in an off the plan purchase agreement that the purchase concerns a freehold purchase and not a leasehold purchase;
• Not having included voting right in the lease agreement when purchasing a condo under a leasehold;
• Not having obtained legal advice on how taxes and transfer fees are to be divided and ending up paying more than necessary;
• Not having obtained legal advice on the condominium sale and purchase agreement, required terms and conditions and responsibilities of the parties;
• 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;
• Not having checked the condominium title deed and previous land office sale agreement to ensure that the apartment is free of encumbrances;
• Not dealing with a registered condominium under the Thailand Condominium Act but an unregistered apartment building.

To generate sales in off-plan condominium developments in the tourist areas of Thailand some developers are deliberately offering freehold sale agreements to foreigners exceeding the 49% foreign ownership limits within the project. This sales tactic is used to generate sales and money for the project as leasehold is difficult to sell. Foreign purchasers pre-pay the development project through payment installments.

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 are advised to form a Thai holding company ownership structure.

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.

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 as there is no special law regulating lease of condos by foreigners. 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, but the land office may ask for it and it is recommended to obtain a Foreign Exchange Transaction form.

Condominium units may also be owned by partly (minority) foreign owned but foreign controlled Thai companies, however, a company set up to register ownership on behalf of a foreigner in the Thai side of the condominium is illegal. 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 the company would be deemed foreign under a stricter enforcement of existing laws such ownership would be not allowed by law.

Voting rights in the condominium juristic person and Leasehold

In the tourist areas of Thailand condominium projects are aimed at foreigners and 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 (i.e. the condominium developer), therefore matters relating to the condominium juristic person, like management of the condominium are in fact 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 decisions are made only for the benefit of the condominium.

Ownership of a unit and succession

A foreigner who complies with the Condominium Act can own a condominium unit freehold in his own name, but upon his death the right of ownership won't pass on to the foreign heirs of the condominium. Unless the foreign heir is qualified for ownership under section 19 of the Condominium Act he must sell the unit within one year of acquisition. The unit can be transferred by will or gift to another foreigner but according to the Condominium Act, however the receiving foreigner must again qualify for ownership under the Condominium Act.

An unregistered residential apartment building

Not all apartment buildings in Thailand are registered under the Condominium Act.

Only condominiums registered under the Thailand Condominium Act offer freehold ownership of the unit and co-ownership in the land and common areas. Other apartment structures require extra caution as these buildings do not offer freehold ownership, nor have these units government issued and controlled ownership title deeds. These structures do offer the protection in the law as is offered in a licensed condominium development project under the Thailand Condominium Act.

• An unregistered apartment complex is an allowed concept, however has several drawbacks and offers less legal regulations and protection for purchasers compared to registered condominiums.

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.

Condominium Acts

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 amendments to Condominium Act B.E. 2522: Condominium Act (No.4) B.E. 2551 (2008).