Buying Real Estate in Thailand
Thai law is different if you buy a condominium (an apartment) or a house and land.
Buying a condominium (apartment)
The legal aspects are clear, simple and safe and it’s easy for a foreigner to buy a condominium and get the deed in his name.
The buyer can trust that after the deed has been registered and transferred in his name there is no dept or any outstanding payments from the previous owner.
Foreigners can own up to 49% of all apartments in an apartment building measured by square meters. When you buy an apartment you therefore need to make sure the seller guarantees that you can be legally registered as the owner.
In order to be registered as the legal owner, a foreigner must fulfill the following requirements:
- The buyer must transfer the purchase price in a foreign currency to a bank account in Thailand and need a statement from the bank that proves the transaction and the amount. This original statement must be presented to the Land Office.
- If the buyer meets at the Land Office in person he needs to present a valid passport with a valid entry stamp or a valid visa.
- If the buyer lets someone else meet at the Land Office then he needs to sign a legal power of attorney, which must be signed by two attesting witnesses who live in Thailand, or by a notary public if it is signed outside Thailand. In some countries the power of attorney also needs to be approved by the Thai embassy.
D2 Real Estate and VIP Real Estate always help our customers with these documents and also accompany the buyers to the Land Office to ensure a smooth and easy transfer.
The procedure at the land office is quite unproblematic, fast and safe. In the Land Office an official agreement between the seller and buyer is produced, or between the seller and the person who presents a power of attorney from the buyer.
After that taxes and transfer expenses will be calculated and must be paid in cash or with a bank check. After payment the Land Office will register the transfer of the apartment and the buyer will be given the legal real estate document. In Thai this document is called a CHANOT and is the original document that was produced when the building was built. After that it is handed over from owner to owner and it is being marked by the Land Office at every change of ownership.
The whole procedure takes less than a day and there is no further waiting time for any documents.
In case of an existing property the buyer usually pays a deposit of 10% which is lost if the buyer doesn’t pay the full purchase amount as agreed. The remaining 90% is usually paid in cash or by a bank check on the day when the property is handed over to the new owner in the Land Office.
Usually a seller accepts a 30 days from the contract is signed until the final transfer can be completed. If the buyer needs more time than that the deposit is usually agreed to be higher than 10%.
A second-hand apartment is always bought “as seen” and no further clauses can be added to the contract at the Land Office, as this contract is 100% standard and cannot be modified.
The procedure when selling an apartment is the same, and when an apartment is sold the owner can immediately transfer the amount registered in the Land Office to any foreign bank account in any currency without problems.
The overhead expenses for a transfer of property are a combination of four or five different taxes and fees and as a general rule they add up to around 6.5% of the purchase price. In some special cases the amount can be different.
Usually it is being agreed between buyer and seller that these expenses are shared equally. If an apartment is bought fully furnished or including other items that must be paid for then buyer and seller can agree on the specific price for these overheads, and that doesn’t have to be included in the contract made by the Land Office and therefore no further taxes or fees will be added to this part of the purchase price.
The procedure is essentially the same as for second-hand condominiums but with the difference that a new-built apartment building must be completed and approved by the authorities before the Land Office can issue the original documents. Therefore the buyer must wait for the building to be completed and the documents to be produced before he can go to the Land Office and register the purchase.
In that case there are a number of different options regarding payments and agreements between seller and buyer and they don’t follow the same easy rules as for second-hand condominiums. Therefore the buyer always should be careful to buy from a seller he can trust, as there is a risk involved when it comes to the expected time for the completion of the apartment building.
Please contact D2 Real Estate Co., Ltd. or VIP Real Estate Co., Ltd. directly for any advice and guidance in such cases.
VIP Real Estate Co., Ltd. was established in 1988 with a net worth of 200 million Thai Baht or around 6.5 million USD and has been involved in thousands of transactions with foreign customers.
Buying a house and land
This is a different case from buying a condominium. In general (with a few exceptions) foreigners cannot buy land in Thailand as the law is today. But the law has the opportunity for foreigners to lease the land on which a house is built. The house itself can be legally owned by foreigners.
There are no special rules regarding foreigners who purchase a new house. A normal contract will be signed and the buyer will be the owner of the house. Regarding the land plot on which the house is built the law has the opportunity to create a 30 years lease agreement, which can be extended with another 30 years. The lease contract is being registered in the Land Office so the owner can be sure that during the agreed lease period nothing can happen to his house and that he alone has the land at his disposal.
It is, however, possible to create some special agreements between seller and buyer. Regarding agreements that D2 Real Estate Co., Ltd. and VIP Real Estate Co., Ltd. are part of, we have some specific requirements that the seller must fulfill. We also offer our customers to hand over the land plot to a land holding company which has no other activities, and that company will then create the lease contract. Such a contract will include agreements that the buyer at any time during the lease period can:
- Present another person as a leaser who gets a new contract of 30+30 years. The agreed payment from the new leaser goes to the previous leaser less a one-time fee of 100,000 THB.
- Present a buyer that according to Thai law can own the land. The agreed payment from the new owner goes to the leaser less a one-time fee of 100,000 THB.
The person who leases the land therefore has the same advantages as an owner when it comes to the added value of the land over the years. At the same time he has some further advantages that he wouldn’t have as an owner, for example that the land is protected against creditors if the contract has been agreed with one person, and the land is protected in case of a divorce. Furthermore, the leaser has the right to at any time present a person who will take over the contract in case of the leaser’s death.
But in this area there are different agreements with different consequences for the leaser, so it is important that the leaser gets advice from professionals and also be careful with the details in the lease contract and the person who he leases from.
The overhead expenses when registering a lease contract are 1% of the agreed lease amount. When buying a house on a leased land plot there are no rules about a statement from the bank that the money has been transferred from another country into Thailand. The Land Office will register the house in the owner’s name and he only needs to present a valid passport and a valid entry stamp or a valid visa.
A lease agreement will be registered on the property document (the Chanot). There are also ways to ensure that the person who owns the land plot and leases it to the leaser cannot sell the land to others.
For a more specific guidance and advice please contact D2 Real Estate Co., Ltd. or VIP Real Estate Co., Ltd. directly. We can draft the lease contract and help our customers with the legal registration. We can also offer to take over the whole process as advisors Our fee is 2% of the lease amount minimum 65,000 Baht.
The above information is for information purposes only and we don’t guarantee its accurateness in any specific case. This information can therefore only be used as a general guideline.