Thai Nominee Property Ownership

If this structure is put in place both parties risk being fined and jailed.

The Land Code Act prohibits Thai nationals to act as a nominee land owner, agent or owner of land in place of a foreigner (section 96 Land Code).  You could use the same logic for land holding companies created by foreigners to hold the land.

It is not illegal to help or give or loan money to a Thai national to buy land or property.

A structure that sometimes is put in place is that a foreigner loans money to Thai to buy land, and in consideration for the financial loan the Thai national rents the land back to the foreigner under a 30 year land lease agreement. Rent is set-off against payment of interest on the loan. The legal restriction in this construction is that the Thai may not be deemed the agent of or nominee owner on behalf of the foreigner, meaning; if the Thai national can’t be seen as the freehold owner this structure becomes illegal.

The Thai national must have the title to the property, to the exclusion of the foreigner. The Thai must have the right to dispose of the property. The foreigner may have an interest in the property through a lease or usufruct but he will not obtain the title to the property. There are possible tax liabilities for the Thai land owner in these lease structures. Income or assessed income derived from a lease is personal income for the Thai individual.

Practice example; land registration in a Thai girlfriend's name

A foreigner bought land and had title deed issued in Thai girlfriend's name. Later, the girlfriend applied for a mortgage and tried to use the land as collateral, but the Land office refused to allow this because she did not submit the original title deed with her application.

The Thai girlfriend claimed that the foreigner had the possession of the land title deed and applied for a replacement land title deed to be issued to replace the original deed. The foreigner requested the Land Office not to issue a replacement title deed.

The Land Department considered both applications and delivered the following response;  The foreigner's application for the Land Office to deny issue to Thai girlfriend of a replacement title deed is believed to express his intention to prevent her from distributing, selling or transferring the land, or using it to borrow money or as collateral for debt repayment. In this case it must be deemed that the Thai girlfriend has acquired the land under section 96 of the Land Code, but as the owner in place of an alien, which contravenes section 113 of the Code.

In doing so she has provided false information to government officers, which contravenes section 137 of the Penal Code, making her liable, if found guilty, to a term of up to six months in jail or a fine of 1,000 baht, or both. She has also contravened section 267 of the Penal Code, which carries a penalty of up to three years in jail and/or a fine of 6,000 baht.

The foreigner has acquired land by means that contravene section 86 of the Land Code, and so has committed an offense aiding and abetting the commission of an offense under section 111 of the Land Code, which carries a penalty of two-thirds of that of the offense itself.

The Land Department ordered the local Land Office to file a complaint with the Inquiry Officer (the relevant legal authority) and take legal steps against both the foreigner and the Thai girlfriend.

The Land Office was also ordered to inform the foreigner that he must dispose of the land within one year of receiving official notice to do so. If the foreigner fails to dispose of the land within the time given, the Director-General of the Land Department is authorized to dispose of the land and retain a fee of 5% of the sale price before any deductions or taxes.

The Land Office must inform the foreigner and the Thai girlfriend of the following;

1. The person who is to be registered as the new owner of the land - including an person the foreigner consents to selling the land to – must be a person who can lawfully possess the land;
2. The sale price of the land must be fixed by the foreigner, and the foreigner must be the recipient of the money;
3. As the person in whose name the land is registered, the Thai girlfriend's duty will be to manage the disposal of the land. But she will not be involved in selecting the recipient.