BUYING PROPERTY IN THAILAND
WE CAN
ARRANGE YOUR WORK PERMITS, PARTNERSHIPS, CONTRACTS, COMPANIES
& VISAS THROUGH OUR LAW SERVICE; Title searches, House
inspection reports so be safe.
To date foreigners may
own
- a unit in a registered Condominium
- a
building (as distinct from its land)
- a
registered leasehold of up to 30 years for all types of titled land
(and/or buildings).
- a company can purchase land and buildings but will be inspected and
all Thai shareholders veted.
- more than 49% of a condominium unless in Company form.
- foreigners can own land being 49% in a company but the company must operate a business & shareholders interviewed so not that easy anymore
- if you invest 40m baht you can buy 1 Rai of land in Thailand outright.
Thailand has so many different types of
properties for sale that whatever your dream home is, you can realize it
here if you do the paperwork right. Prices are a lot cheaper than
Western houses but some aspects need close scrutiny especially wiring,
water & most importantly the deed title. Now that you want to buy a
house what should you look for?
The first thing you need to do is obtain the services of a reputable
real estate agent or lawyer on your behalf. The Thailand Realty Industry
is not regulated so watch out for agents forcing you to sign contracts,
& check the title
deed to make sure the property is what it says. Do yourself a big
favour and obtain a House Inspection report which in effect pulls the holes
out of the property! Some buyers have bought
the house only to find the land is on a different title & visa versa
or the cracks have been disguised. Once you buy then its your problem. Many Estates will try to sell a house in a developing block which
has but one title with say 10-20 houses on it. They probably have 2
mortgages and want to unload the houses before they pay off the loan
& secure the titles for their owners. Or will they???--- we had
a case & saved the foreign buyer 2.8m baht that he would have
lost if he did not use our service. The same goes with the boundaries of the property which need to
be the same as the title deed. In Thailand there's no survey pegs as
such but they do use concrete pegs & it is an important point. Sometimes vendors deliberately
understate property area or move so called pegs. If the building is under construction or
the land is having a subdivision look carefully at the provisions for
issuing a title, and easement rights for say roadways. if you are a foreigner you can
lease for 30 years or form a company to hold the house. Remember also
do not start a company for the sake of securing your house. If you do
not carry out business and do not have employees ( and I mean NO
nominees that your law firm has provided) you will find yourself in hot
water. As at 2006 march Immigration and Company Regsitration are not
checking all foreign companies for employees and they will be
interviewed as well as what business you are doing????
WHAT
IT ALL MEANS:
Sor Kor 1This document means that land occupants are occupying or making use of
certain land plots, whose ownership has not been claimed by any entity.
The document does not indicate legal possession of the informer so one
cannot transfer the ownership of the property to any one else. The Sor
Kor 1 is rare now as the government's land ownership legislation has
covered most area of the country.
Nor Sor 2 states the government's permission for person or legal entity
to make use of land temporarily. Need to utilize at least three-quarters of
the land plot within three years after the document issuance. This right is non
transferable. At the finish, land occupants can seek the right to demand
higher privileged title deed.
Nor Sor 3 is a governmental letter certifying a utilization of certain
land plot by certain people and that the plot of land has been surveyed and
its official map created.
Nor Sor 3 A is similar to the Nor Sor 3 certification. The only
difference is the map survey of the land plot based on an aerial-viewed
photograph of the land.
Ownership Title Deed or chanote is the ultimate certification of
land ownership. Holders of the title deed have full rights to transfer
or sell the properties and to bar other parties from violating their
rights over the land protected by the ownership title deed law.
BUILDING
YOUR HOUSE:
Recently in 2007 we have been asked to
help foreigners who have paid too much to have their house built. Please
note the following----there are 3 types of builders in Thailand:
1/. A builder 2/. A broker 3/. a
worker/builder. Those who have been caught out are using (2) which could
be a friend who procures a builder for the foreigner then has a separate
contract with the builder for his cut which is 1/2 of the asking
price. Thus you are giving money away & in fact are being ripped off
as inevitably the actual builder will never be able to meet his
deadlines. Plans & fees etc should not be more than 50,000 baht yet we
have seen charges of 400,000 baht. The fees for 1 sq metre is 1/2 a
satang which is not even a baht. If you need a good builder in Chiangmai
and architect refer to your architect for the prices. You also need to have a builder who can complete
an average house in 3-4 months & check his equipment and formwork
supplies, how many workers he/she has & work he/she has carried out.
Talk to the referrals & your architect to see if they keep to their word.
Remember also
Thai holidays workers will stop work on buddhist holidays and funerals etc. Make sure the contract is overseen by a
lawyer or ask us as we can give you a quote with times etc if you want
us to do. Tel (00-66)019527812. We have seen single storey houses charged
at 6.8m baht when the price should have been 1/2 this. Just remember
having a Thai friend doesn't necessarily mean they are a builder---they
are only getting a commission --when it comes to progress payments and
they ask in advance you could find yourself in a bad situation. Itemize
the materials and also how many men they will have on the job and also
if building multi-stories, their deadlines and time limits.
Prices per sq metre to build are approx:
7-8,000 baht. But, remember this will vary according to the extras and
items like marble and appliances etc.
OFFERS FROM DEVELOPERS
All developers in Thailand can
and will offer you discounts and extras just to get your business. If
youre not happy with some detail ask to change or add on to. Compare what
they might offer you with what you would like. Look for Special
home loan packages, Extra loan rate -- nowadays, local banks offer home
buyers rates that are even below their minimum lending rates (MLR),
Discount on land price, Gift voucher, extra room etc & ground
maintenance. Have everything in writing. If the phone doesn't work and
they say it will be installed next week or month don't believe a word same
with the water, gas lines if any etc. Do not pay a booking fee as then you
are locked in. Never put deposit down until your lawyer has searched the
title out.
ESCROW SYSTEM When making a down payment on unfinished project, protect your
money from fraud by the Escrow account system which will ensure
your money will not be paid, unless the developer completes construction
of your new home and meets the agreed requirement on specification. If
you decide to build use a [ lawyer ]
FORMING A THAI COMPANY Some people will say this is the best
idea for a foreigner to hold a house in ones name. However with a Thai
company yes you can hold a property within the structure of the company.
However be warned that if your books show nil profit after 3 years then
you may be asked especially by immigration & the Commercial Reg via
the tax dept why?? This may affect your visa and the status of your
company after that period so be warned if you are told its easy to do.
It is, however its also easy for the Commercial Registration Dept to
fine you if you are not in profit mode or even take the property from
you??? Wait and see.
USUFRUCT OR SUPERFICIES THE BEST
Usufruct Interest (Sidhi-kep-kin) - gives you temporary ownership rights to structures on or arising from the
land. In practice, a usufruct is limited to a 30 year maximum period;
like leases, the agreement can be successively renewed. In contrast to a
lease, a usufructury interest can be sold or transferred, although it
expires upon the death of the holder of the usufruct and therefore
cannot be inherited. This is better than a lease which by law can only
be for a period of 30 years.
PAYMENT:
A deposit of 10- 30% is usually required to
secure a property and total payments should be made within 30-60 days
(see your lawyer first) but normally once the transfer has gone through. If signing a purchase
agreement then up to 30% down & 70% following transfer. Normally the
seller will pay the changeover tax which starts at 2.5%. However if the
seller has owned the house longer than this [period it is discounted.
Some Land Offices will charge up to 8% depending on the area and office.
An agreement can be made between buyer and seller than each pay 50%. You can obtain longer periods but you will probably be required to
pay a higher deposit. Deposits are normally non refundable, except by
default of the vendor, so bear in mind that once the deposit is placed
you are committed.
This situation also prevails for the vendor. He must refund your deposit
and pay a penalty of an equal amount if he defaults on the contract.
Deposit in escrow is still rare in Thailand, but it is becoming an
increasingly recognized way of proceeding. It generally trades off
greater security for the buyer's deposit versus a weakened claim for
damages in the event of vendor default.
Beyond the price, payment and closing schedules, it's important that a
contract includes clauses to cover who will pay the legal fees, transfer
fees and taxes (there is often a business tax and always an income tax
assessment made at time of sale) as well as an understanding of the
value at which the sale will be declared - this is typically (for tax
reasons) at or close to the government minimum assessed value.
A foreigner buying a condo must transfer
funds from a bank account out of Thailand in foreign currency and verify
the transfer on paper. The transfer of funds must be in the same
name as the name that will appear on the final purchase contract ie. the
buyer. Funds must be transferred into a Foreign Currency Account in
Thailand opened in the Buyer's name. Use Bangkok Bank, Thai Farmers Bank
and Siam Commercial Bank and make sure you tell them that the purpose of
his or her opening a Foreign Currency Account is to purchase a condo in
Thailand. This law is somewhat a catch 22 situation as the Foreign Banks
usually will not write such a letter but don't worry. You can remit as
much as you like to Thailand via your bank. Transfers out of this Foreign Currency Account in Thailand
into a Thai Baht Account or some form of Thai Baht draft or check to the
Seller must be made in amounts US$5000 or more in order to qualify for a
"Tor Tor 3" Certificate issued by the Buyer's bank to verify
that the originating funding came from outside Thailand in a currency
other than Thai Baht. On the "Tor Tor 3" Certificate, it
should state explicitly that the Thai Baht funds are used "to
purchase a condominium" in Thailand. Taxes are payable by the buyer
or seller of a condo in Thailand such as the Transfer Fee/Stamp Duty Tax
of 0.5% usually payable by the seller upon the date of the actual sale
or a Special Business Tax of 3.3% which is usually payable by the seller
if the property has been owned for less than 5 years. By the way there
is no limit on how much you can remit into a Thai account from overseas
and no tax. Tax levied at 15% is on interest earnings only.
REMITTING FUNDS: If sending over funds to
purchase a house you must tell the National Bank what you are using this
money for with sums exceeding 2,000,000 baht quantities. If remitting
funds from abroad to purchase property which is the law over sums of 2m
baht it may save you when it comes to a divorce situation of whose funds
were used to purchase the property. If you wish to
know more than ask us.
LEASE COSTS & WHAT YOU WILL PAY:
The cost of the lease is approx 1% of the purchase price separate from the house purchase price and this is a one off payment so with filing fee for a 3m baht home look at approx 33,000 baht. Lawyers transfers costs etc and to register at the land office can be anywhere from 20-35,000 baht depending on where the location is etc. BUT REMEMBER BANGKOK CHARGES ARE DEARER THAN SAY CHIANGMAI
COMMISSIONS
Are normally 3% -5% but some charge 10%.
Watch out also as some realties charge both the seller and the buyer
& even hike the price up and have deals with the owners. We do not
do this.
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