Foreign Owned Condominiums – Ownership and Inheritance Laws
Owning property in a foreign country can be both an exciting and daunting prospect with the rules and regulations often very different to what we are used to in our ‘home’ countries. Not surprisingly, most of the questions that we get asked are surrounding the foreign ownership laws in Thailand and also the rules regarding inheritance. Below we have produced a short guide to these laws which will hopefully make you feel more at ease with making an investment in Thailand.
Can anyone buy property in Thailand?
Foreigners can own property in Thailand but they CANNOT own land. Therefore, in this article, we are only considering the laws governing the ownership of condominiums. The law concerned with this is the Condominium Act B.E. 2522 and its subsequent amendments. The Act states that both foreign nationals and juristic persons who meet prescribed criteria are legally permitted to own units in condominium projects in foreign ownership. There are two fundamental aspects to the Act that need to be fully understood.
i. How much of the overall property can be in foreign ownership?
As outlined in Section 19b of the afore mention Act, a minimum of 51% of the total floor area (units not including communal areas) of the condominium must remain in Thai ownership. That means that the maximum floor area (not percentage of units) that can be owned by foreigners is 49%. It is crucial that when purchasing a unit in foreign ownership that you check that there is still foreign quota available.
i. Do you qualify for foreign ownership?
There are certain rules that must also be met to ensure that you are entitled to purchase a unit in foreign quota. To qualify for foreign ownership as outlined in Section 19 of the Condominium Act, individuals must fit into one of the following categories:
- Foreign individuals possessing a Permanent Residence permit.
- Foreign individuals residing in Thailand under the laws governing investment promotion
- Foreign individuals who have a foreign currency bank account, or withdraw money from a non-resident bank account, or who bring foreign currency into Thailand.
Most individuals will fall into one of the above categories so in practice purchasing a unit, so long as you have the available funds, is quite straightforward.
Inheriting a condo in Thailand
This can be where potential problems lie as many foreign nationals have Thai spouses and there can also be potential issues with other foreigners inheriting a condominium. These problems can soon be solved so longer as you are aware of them beforehand and everything is registered in the correct manner. Here are some issues that you may need to be aware of, either if you are the current owner of the property or the heir.
What is the CURRENT Thai-foreign ownership quota in the building?
In theory, this shouldn’t be an issue as foreign ownership should never exceed 49%. However, if you inherit a unit from a Thai national the condominium Act States: “when a foreigner who falls under Section 19 (1) and (2), has obtained a condominium by legacy in the capacity of statutory heir or inheritor under a last will and testament or by other means, that foreigner can own the unit provided that foreign ownership in the condominium project does not exceed 49% when they register ownership of the condominium.”
What happens if you don’t qualify for foreign ownership or the foreign quota in the building exceeds 49%?
It is first important to understand that anyone inheriting a condominium unit that is held in foreign ownership needs to qualify for the entitlement under the foreign ownership criteria outlined above. If for instance, if a Thai national is set to take ownership of the property they would need to transfer the property into Thai quota at the Regional Land Office within one year.
The next potential issue could be if taking ownership of the property would take the total foreign ownership of the condominium project over 49%. In this case, once again the new owner would be required to dispose of their newly acquired asset within one year. This can be tricky if you are not living in the Kingdom or when markets are not favourable to a sale.
Section 19 (5) of the Condominium Act B.E. 2522
When property is purchased in foreign ownership in Thailand, the funds for the purchase must be remitted from overseas. A common question connected to this matter would be regarding whether those who inherit the property would need to remit any funds in order for the transfer to take place? Assuming that the monies had be transferred initially from outside of the Kingdom and qualify under Section 19 (5), the rules regarding succession would be covered by Sections 1599 and 1600 of the Thai Civil and Commercial Code (CCC).
Sections 1599 and 1600 of the Thai Civil and Commercial Code (CCC)
These important two sections of the CCC establish that an individual’s estate passes to their heirs upon death. For clarity, the term estate as defined by the CCC is:
- Every type of property the deceased individual possessed.
- Their rights, duties and liabilities (except those which under law are considered purely personal to the individual).
In laymen’s terms, this means that so long as the original owner (the deceased) was a qualified foreign individual under Section 19 (5) of the Condominium Act, then their legal heirs inherit (if foreigners) the same rights.
Such a legal foreign heir or inheritor specified in the deceased individual’s last will and testament, is legally required to register the unit with the relevant Land Office, and present the following documents to the land official:
- The deceased former owner’s death certificate.
- The Last Will and Testament.
- Any other documents requested by the Land Office.
If no estate administrator (Executor) is appointed, the registration of the inherited property will be subject to a 30-day public notice period. All transfers will be subject to a transfer fee and specific business tax (if applicable).
For those looking for a good investment in Thailand that doesn’t not require all the afore mentioned paperwork, you will be pleased to know that Emerging Trend Advisors now only recommend products guaranteed by a US company. The foreign name investment remains unaffected however the company buys and sells loan notes to guarantee the returns for investors security. Please to speak to one of our team if you would like more information on this subject.