Foreign Ownership of Unregistered Apartments in Thailand
Residential apartment structures in Thailand have two (2) types:
- Registered and Licensed which offers absolute ownership over the individual units comprising the condominium, and
- Unregistered and unlicensed under the Land Department of Thailand which does not offer individual ownership over the units.
Registered condominiums are licensed with the Land Department of Thailand and must conform to the legal structure as provided in the Thailand Condominium Act. These condominiums can propose outright ownership over the individual units. The legal structure laid down in Thailand Condominium Act is constructed around individual unit ownership, joint ownership over the common areas and joint management of the building by all the unit owners.
On the other hand, apartment structures which are not registered and licensed are also not regulated by specific condominium laws. Moreover, the developer of an apartment structure can sell possession under his own terms and conditions.
More so, that these apartment buildings are sold under various contract structures which vary from time-sharing schemes, mere apartment leases wherein the developer retains full ownership over the units to leases combined with shares in a holding company.
Being a buyer, one must be aware that the contract structures must be double checked. Contract clauses on the lease structure, management system of the building, and ongoing financial costs through maintenance and management contracts must be scrutinized.
Apartment buildings which are not registered and licensed, like that of a condominium, can offer individual lease agreements over the units as part of the building. Also, foreigners do not have to qualify for lease registration under a special law and there is no foreign lease quota.
Selling of the apartment necessitates the cooperation of the owner of the land or property. In addition, the occupants of the building are merely tenants and must conform to the rules set by the owner of the property. Consequently, control and management over the land and building set by law to the owner of the land and the building.
The contract sale structure used for selling the leasehold apartments could go either way, pro lessee or pro lessor/developer depending on terms or conditions stipulated in the contract. Lastly, these units are subject to housing and land tax in accordance with the housing and tax regulations mandated by law in Thailand. In connection to this, apartment buildings require registration of a lease agreement over part of the building at the provincial or local Land Department branch office.
Difference Between Condominiums and Apartments
Legally speaking, there is a big difference between condominiums and apartments in Thailand in relation to foreign ownership. Condominiums registered and licensed under Condominium Act offer ownership title deeds. These ownership deeds are issued and administered by the government and are legally recognized under the law.
The lease agreement must clearly mention that the purchase of a condominium is an apartment project under the Thailand Condominium Act B.E. 2522 and that the transfer of ownership will take place at the land department. This lease agreement will further show if the purchase concerns a leasehold or freehold purchase.
A true titled condominium will have a government issued title deed for each condo. Leasehold apartment sale structures will usually involve a lease agreement and/or maybe a share transfer and management agreement. Furthermore, a leasehold apartment could have separate house books stating the address of the unit. However, this house book is different with the ownership document or ownership title deed.
Foreign Apartment Ownership
It is mandated under Section 19 of Condominium Act B.E. 2522 (1979) that Aliens or foreigners and juristic persons regarded by law as aliens may hold ownership of an apartment if they are allowed to have residence in the Kingdom of Thailand as approved by the Immigration Law of Thailand. Moreover, these foreigners are allowed to possess ownership if they are allowed to enter into the Kingdom of Thailand as governed by Investment Promotion Law of Thailand.
As provided in Section 97 and 98 of the Land Code, juristic persons under Thai law may possess ownership of an apartment in Thailand. More importantly, if these juristic persons (aliens) brought in foreign currency into the Kingdom of Thailand or withdraw money from Thai baht account of the person who have residence outside the Kingdom or who withdraws money from a foreign currency account.
Moreover, Section 19 of the Thailand Condominium Act provides that “In transferring of ownership of an apartment to an alien or juristic person as specified in Section 19 shall the applicant for transfer of ownership of apartment shall notify the Competent Official of the name of the alien or juristic person as specified in Section 19 together with the proportion of space of apartments already owned by such aliens or juristic persons.”
Additionally, fractional ownership seems to be on the rise in the real estate market of Thailand. In some instances, companies enter into a lease contract with a registered leaseholder and then entice potential clients to view and stay in the apartment. After which, these companies sell weeks of fractional ownership to the clients.
While according to the laws in Thailand, aliens (foreigners) cannot own real estate other than condos registered under the Thailand Condominium Act, still these foreigners vend fractional ownership of these apartments though basically, they don’t own the apartment.
Fractional ownership apartments are commonly not registered and licensed as condominiums in accordance with the provisions stipulated in Thailand Condominium Act. These fractional ownership apartments are referred to as leasehold apartments. This type of ownership usually involves a rental element in some part of the lease agreement.
Likely, fractional ownership is sold as an interest or shares in a foreign (non-Thai) company that owns the lease or the building on the rented land. Legally, foreigners cannot have fractional ownership in the lands of Thailand but most likely, they will just become fractional tenant of the apartment for a maximum period of thirty (30) years.