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Koh Samui, Thailand property - Legal FAQs

What are the ownership options for foreign Buyers of Thai Houses?

Thai law states that foreigners cannot own land, they can own buildings only. So, if a foreigner wants to buy a house, (or duplex/townhouse), which includes land, he has two basic ownership options for acquiring the land.

1. Set up a carefully structured Thai limited company to hold the freehold of the land. The freehold of the land is put in the company name. The minimum requirement for the company is for two Thai shareholders. These Thai shareholders will be provided by the lawyer setting up the company. The foreign buyer is made a director, and a shareholder, in the company. You can also have more than one foreign shareholder or director but the total foreign shareholding must not exceed 49%. Crucially, there are a number of protective measures always put in place by the lawyer setting up the company to create a very safe structure for the foreign directors. These give the foreign directors complete control and they typically include, but are not limited to, the following: the foreign director(s) is the only officer who can commit or bind the company in any contractual dealings; the director’s shares are preference shares and hold 10 times the voting rights of the nominal shares, giving the directors 90% of the voting power; when the company is set up, all of the Thai shareholders sign an open dated share transfer form. This means that they can all be signed out and replaced with other shareholders whenever the foreign director(s) wishes.

The company owns the freehold of the land and the investor(s) is free to build on the land, sell or lease property and transfer their rights to next of kin.

Note:The company must comply with the law and money should pass through the company books, shareholder meetings must be held, minutes of meeting prepared, and yearly accounting must be filed. But a good local accountant can take care of all of this for you. It is easy to put some expenses for running the property through the company books. The accountant will also submit annual accounts for a typical fee of around 20,000 THB.

2. Lease the land on a rolling 30 year lease. An alternative to setting up a Thai limited company is for the foreigner to purchase a 30 year lease for the land. Options to renew the lease for 2 further periods of 30 years are built into the contract to make a total lease period of 90 years. The contract can also include a fixed option to purchase the freehold whenever the foreigner wishes.

Note: The house itself (i.e. the building) can be owned directly by the foreign buyer. However, if the freehold of the land is held in a Thai company, then the house will typically be held in the same company. This is for reasons of tax efficiency and ease of resale.

What are ownership options for foreign buyers of condominiums and apartments?

Condominiums in Thailand are distinct from ‘standard’ apartments in that they have a condominium licence which means that up to 49% of the private living space of the condominium building can be bought by foreign investors on a freehold basis. The remaining 51% can be directly owned by Thai individuals, held in a Thai company or leased to foreigners.

Regarding ‘regular’ apartments (i.e. where the development has no condominium licence), these can only be leased on a rolling 30 year lease. Options to renew the lease for 2 further periods of 30 years are built into the contract to make a total lease period of 90 years.

What is the difference between the various land titles in Thailand ?

There are two types of land titles in Thailand over which registerable right of ownership can exist. These are Chanote and Nor Sor Sam Kor. They are the only types of land title that a careful foreign investor should consider.

Chanote (Chanote ti din)

Chanote titles are issued by the Thai Land Department and are accurately surveyed and plotted in relation to the national survey grid. They are also marked by unique numbered posts set in the ground. The ownership of the land title can be transferred within a matter of hours. This is the best type of land title for a foreign investor.

Nor Sor Sam Kor

These titles, though still measured relatively accurately, are less accurately measured than Chanote titles. Transfer of ownership can take longer than the case of Chanote.

Nor Sor Sam

The predecessor to Nor Sor Sam Kor was Nor Sor Sam. The boundaries of Nor Sor Sam titles are only recorded with relation to neighboring plots and survey errors of up to 20% are not unusual. Unlike Nor Sor Sam Kor, Nor Sor Sam titles also require 30 days public notice before any change of land ownership can occur. There are many types of land title less recognised than Nor Sor Sam such as Sor Kor Nung. These are basically and form of squatters or settlers claim. You cannot even apply for or obtain approval to build on such land.

Is it easy to form a Thai limited company ?

Yes. You need the proper legal assistance and to pay a small fee. We can provide the all the assistance you need and the whole process will take a maximum of two weeks.

How many shareholders do you need for a Thai limited company ?

The minimum requirement for the company is for two Thai shareholders. These Thai shareholders will be provided by the lawyer setting up the company. So, if you have 1 foreign director, you still need 2 Thai shareholders.

What are the visa options for long term stay in Thailand ?

There are 3 types of visa that allow long term stay:

1. Tourist Visa - issued by a Thai embassy abroad. These are valid for 60-90 days depending on the country of issue. You can simply leave the country when the visa expires and come straight back in another 60 or 90 days. Many quasi resident visitors to Thailand use this approach to stay for years. This approach is fine as long as you are solvent and not engaging in business in Thailand.
2. Non Immigrant Visa - issued by a Thai embassy abroad. These are for a maximum of 1 year but you have to leave the country every 3 months. There are 3 basic ways to qualify for a non immigrant visa:
   1. You are employed (or own a company) with at least 2 million baht capital value.
   2. You have a Thai family.
   3. You are retired and can prove adequate financial means to support yourself. We give you legal assistance to obtain a non immigrant visa.
3. Resident Visa - Hard to get and rarely issued. To qualify you need to read and write Thai along with strong local financial status and influential Thai references.

What are the different land measurements in Thailand ?

Land prices are normally quoted in baht per Rai but sometimes baht per Talang Wah for smaller plots:

1 Rai = 1600 sqm ie 40M * 40M
1 Acre = 2.53 Rai
1 Hectare = 6.25 Rai
Talang Wah = 1 sq Wah = 4 sqm
1 Rai = 400 Talang Wah = 400 sq Wah
1 Ngan = 100 sq Wah

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