More ways to secure Thai land – Phuket Property

PHUKET: For those of you who read my article on obtaining Thai citizenship and aren’t going down that road, I promised to come back and write about the other ways of “buying” property in Thailand (click here for article).

The fact is you can go right ahead and pay for land here, but the law is clear that the land office will not be registering the title in a foreigner’s name. I am often asked by people in Phuket about how to secure the land under the property they wish to own, and in my normal line of work , I get to sit down with many people from various walks of life and hear what they have in fact done themselves.

Obviously purchasing a freehold condo is the most straightforward, although if your heirs are not Thai citizens they will have trouble inheriting it from you. Most of you, I would assume, are more interested in buying a house in paradise, and this is where things get much more tricky. Knowing what not to do is almost as important as knowing what to do in this case.

Many people simply find a Thai person they think they can trust and register the property in their name. Others set up shell companies to hold the title at the land office, and some actually form companies that in reality do some sort of business. Some people get a thirty year lease with the promise of multiple extensions. No one way is fool-proof, as I will explain below.

It should go without saying that if you trust putting the title into someone else’s name, you have no legal recourse should they decide to rip you off. I have recently heard about an expat likely losing his property because he put it into someone’s name and they borrowed against it to develop a property that didn’t exactly turn out as expected. Even your wife or mother in law, or maybe I should say especially your mother in law, may do unexpected things that could see your property taken away from you.

The government has continuously threatened to crack down on the practice of nominee shareholders and companies which are only set up to skirt property laws. It seems to me that the majority of people I have come across throughout the country use this method and the government has never made good on its promise to root them all out. It would still worry me personally that someday there may be a reckoning.

To me it seems that if you can actually have a “real” business here this is ideal and would be a legally acceptable means of owning a property, but of course then you have the risk that business goes bad.

The major problem with the lease method to me is that legally you have rented the property for thirty years. The land office will only register that bit of the contract, the rest of it is technically illegal and if the original seller decides not to give you the next thirty years, it is hard to know if that would stand up in court.

Also, if you die, the lease dies with you, and if the seller dies it is likely their heir could try to claim the property back after thirty years despite a contract for two additional thirty year extensions.

Since none of the methods are fool-proof on their own, I think a prudent thing to do is to mix them up. I would never get a 30-year lease from the seller, you could instead put the title into the name of a Thai person you think you can trust and then lease it from them.

Alternatively, you could start a company and then lease it back, giving you a second layer of protection securing your usage rights should something go wrong with the company.

Some use an offshore company to hold the Thai company so that they can pass shares on to their loved ones to avoid a taxable event in Thailand or any other scrutiny at death. Of course it may be overboard and a little expensive, but at least you can secure the right to use the property even if you can never technically own it.

— David Mayes