Free Report – Building Rights & Regulations 

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Description

  • When considering a construction project in Koh Phangan, Thailand, be aware there are Building Rights & Regulations governing what you do, what you can own, how you can do it and where you can do it.
  • Contact us today to get FREE building report according to your project location.

Introduction
In order to allow foreigners a wider participation, many changes have been proposed for what concerns the law on foreign ownership of land, buildings and condominiums

Land ownership Building Rights & Regulations

The title deed is known in Thailand as “Chanote” and is normally issued in duplicate, one for the owner and any creditors, and one for the “Land Department”, Land Registry Office.

The property contains a description of the land (extension, perimetry, etc.), a map and the history of all previous transactions recorded concerning the same. The title of ownership of the Cadastre, or at least the copy of the original, represents the clearest evidence of ownership.

The owner can carry out property transactions or grant other rights by presenting the original title in his possession at the Cadastre Office together with the contract of sale, rental and registration of any mortgages. Under these conditions, property or property rights transactions are usually carried out in a very short time. Title deeds are mainly issued for land in urban areas and other building areas.

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Types of Title Deeds in Thailand

 

Confirmed certificate of use
This certificate, known as “Ngor Sor Saam Gor” is similar to the title of ownership. It certifies that the person to whom it is registered has the right to use the land, that this right has been confirmed, that all requests for the issue of the title have been carried out and that this title is in waiting for the “Chanote” which will take place at the time of the issue of all the titles owned by the area in question. These certificates are usually transferred to the relevant district office rather than the land registry office.

Certificate of use
This certificate, known as “Ngor Sor Saam”, is similar to the “Confirmed Certificate of Use” but does not certify the evidence of the ownership right of the holder as all the requests necessary for the certification of the aforementioned right have not been still performed. Before the “Certificate of use” is recognized by the competent District Office it is necessary to submit a note of intent and wait 30 days, if no one claims rights or submits objections, the aforementioned “Certificate of use” can be confirmed.

Certificate of possession
This certificate, known as “Sor Kor Nung”, indicates that a person is in possession of a certain land but the certificate itself does not imply that there are rights associated with that possession.

A “certificate of possession” cannot be transferred but the holder of this certificate can physically transfer the possession of the land to a new owner who will have to request a new “Certificate of possession”.

“Certificates of Possession” are quite common in rural areas. Their issue must precede that of the Certificate of Use. A person paying the “Local Development Land Tax” can use the payment receipt as proof of possession. The receipt does not provide any rights but is useful when applying for the “Certificate of possession”.

Mere possession
A person can own land even without any documentation. Apart from the type of land in question or the hypothesis of any entities that claim or have rights over it (including the State), the mere possession of land can, step by step, lead to obtaining a document of possession and subsequently a real title. Mere possession can be transferred from one person to another by means of a written contract (which cannot however be registered). The recipient thus gets nothing more than the mere possession of the land from the previous owner.

Prescription
The ownership of a property can also be obtained through de facto possession for a period of 10 years. The property obtained in this way is superior to that demonstrated by any documentation. The court may order the issuance of a new title to the de facto owner upon presentation by the same of proof of de facto ownership according to the established terms.

Usufruct
This is a right granted by the owner of a property in favor of a usufructuary in which the latter has the right of possession and use of the land and the benefits of the property. The usufructuary usually has the right to exploit the forest and mineral resources of the land. The rules governing usufruct are similar to those concerning leases.

Preliminary sales
contracts Preliminary contracts concerning the transfer of real estate at a future date are legitimate, but these types of contracts generally cannot be registered, thus making it possible for the seller to transfer the title to more people, or in the meantime to a third party buyer. It becomes risky for a potential buyer to sign this kind of contract.

Property transfer’
Ownership is normally transferred by signing a written contract in the presence of the Land Registry Office or the District Office. The transaction is recorded under the title deed or other document and copies of the supporting documents as well as the contract of sale, lease or mortgage loan are kept in the official records. The buyer, if a natural person, must prove that he has the right to purchase land by proving his Thai nationality. For example, if the father of the buyer is not Thai, the latter must show the documentation concerning the fulfillment of his military service in Thailand. Thai women with a foreign father must prove that they are not buying land in their father’s name. In theory, every Thai married to a foreigner is denied the right to buy land, but if the Thai bride or groom can prove that they personally own the necessary funds to purchase land, the permit is granted.

Foreign ownership
Generally speaking, the law in Thailand prohibits foreigners from buying or owning land properties unless specific agreements or special permits exist otherwise. Today, all agreements or treaties regarding foreign ownership of land have been repealed and some special permits are granted only in limited cases and under the supervision of the Investment Promotion Act, the Industrial Estate of Thailand Act or the Petroleum Act for projects. however already approved. Recently, in order to solve some internal liquidity problems, a less restrictive use of the law on foreign ownership of land has been introduced by banks and other financial institutions owning funds that have become foreign through official permits. .

These institutions can now own land funds on the same basis as their corresponding local institutions. In some cases where a foreigner imports a large amount of funds, the purchase of land for residential purposes is permitted, with more or less restrictions. Building Rights & Regulations  Lately, many foreigners have been able to purchase large quantities of land using Thai-majority companies. Under this law currently being amended, a company controlled at least 51% by Thais can buy land. Lately, the Land Registry Office tends to act more restrictively, rarely allowing transfers of this kind to a company in which foreign capital is greater than 40%. Anyhow,

if the real equity of the shares held by foreign citizens and Thai citizens is not respected, the Land Registry Office has the power to refuse authorization to purchase land, even in the event that the shareholders Thai people are not in reality only nominal and therefore serve the exclusive interest of the foreigner.

In compliance with this, the Land Registry Office can carry out investigations on the conditions of Thai shareholders in order to verify whether they actually have the necessary resources to purchase the shares of a company. One of the most used ways for this purpose is to check the tax returns of Thai members. this is also the case in which the Thai shareholders are not in reality only nominal and therefore are in the exclusive interest of the foreigner.

Building Rights & Regulations In compliance with this, the Land Registry Office can carry out investigations on the conditions of Thai shareholders in order to verify whether they actually have the necessary resources to purchase the shares of a company.

One of the most used ways for this purpose is to check the tax returns of Thai members. this is also the case in which the Thai shareholders are not in reality only nominal and therefore are in the exclusive interest of the foreigner. In compliance with this, the Land Registry Office can carry out investigations on the conditions of Thai shareholders in order to verify whether they actually have the necessary resources to purchase the shares of a company. One of the most used ways for this purpose is to check the tax returns of Thai members.

Housing
This is the right to live and use a house or building as a residence without paying the rent. It can be granted for life or for a period of time not exceeding 30 years and is renewable for an additional period of additional 30 years. The rules governing the home are generally similar to those concerning the rent.

Rentals
Natural or legal persons who register a lease of land, buildings or condominiums (or even other rights such as surface, usufruct or housing) must pay a tax of 1% on the value of the rent. There is also the payment of a tax equal to 0.1% based on the above and an additional tax of 0.5% based on the rental receipt or on the prepaid rent present in the contract. If there is no prepaid rent, this last stamp must not be paid until the rent is actually paid and a receipt for payment of the same is issued.

Rental contracts
Although foreigners are generally not allowed to own land, they can still rent it for the short or long term. Rents up to 3 years can be agreed by entering into simple contracts that do not require registration. Rental contracts with a duration of more than 3 years must be registered on the Property Deed or on the Certificates of use, otherwise the contract will be invalid. 3-year leases with the renewal option are normally treated the same as those over 3 years and the renewal option may not be valid unless the lease with the renewal option inside be registered. Lease agreements can have a maximum duration of 30 years.

In the contracts of this duration a clause can be inserted that allows a renewal for a further 30 years, but the renewal cannot take place automatically, in fact the parties must present themselves at the Cadastre Office to register the renewal.

Some decisions taken by the Court indicate that the renewal clause is personal and the only owner able to allow such renewal is only the owner of the land and not any successors.

Land lease contracts for commercial or industrial purposes can be registered for up to 50 years with a renewal clause and in this case also the heirs, through transmission by the owner of the property, can exercise the right to grant renewal. in fact, the parties must report to the Land Registry Office to register the renewal.

Some decisions taken by the Court indicate that the renewal clause is personal and the only owner able to allow such renewal is only the owner of the land and not any successors.

Building Rights & Regulations

Land lease contracts for commercial or industrial purposes can be registered for up to 50 years with a renewal clause and in this case also the heirs, through transmission by the owner of the property, can exercise the right to grant renewal.

in fact, the parties must report to the Land Registry Office to register the renewal. Some decisions taken by the Court indicate that the renewal clause is personal and the only owner able to allow such renewal is only the owner of the land and not any successors.

Land lease contracts for commercial or industrial purposes can be registered for up to 50 years with a renewal clause and in this case also the heirs, through transmission by the owner of the property, can exercise the right to grant renewal.
Natural or legal persons who register a lease of land, buildings or condominiums (or even other rights such as surface, usufruct or housing) must pay a tax of 1% on the value of the rent.

There is also the payment of a tax equal to 0.1% based on the above and an additional tax of 0.5% based on the rental receipt or on the prepaid rent present in the contract. If there is no prepaid rent, this last stamp must not be paid until the rent is actually paid and a receipt for payment of the same is issued.

Buildings and apartments

It is common in Thailand to own buildings separately from land. Since there are no restrictions on nationality on the ownership of buildings, it is common for foreigners to rent land on which to build factories or other buildings.

The ownership of a factory or building can be transferred to the Land Registry Office at the same time as the transfer of ownership of the land covered by the Title of Ownership or the Confirmed Certificate of Use. Lease agreements sometimes take unusual forms. Due to the Land and House Tax of 12.5% ​​of the total rental value, landlords often prepare separate contracts to minimize the impact.

Condominiums

The rules regarding ownership of condominiums are similar to those regarding land. The ownership of a condominium is represented by the Title of Ownership which is transferred to the Land Registry Office. Since each condominium also implies ownership of land, the ownership of a condominium by foreigners is strictly controlled Building Rights & Regulations

Foreigners, be they natural or legal persons, can own up to 40% of the area of ​​a condominium project. Non-resident foreigners, or those with “Non Immigrant” visas of any kind, must prove that they have imported the capital necessary to purchase the condominium unit from abroad Building Rights & Regulations

Different rules are applied to those foreigners operating in companies promoted by the BOI and to those with full Residence Permits. However, a trend is underway to increase the possibilities for foreign ownership. As far as the rent is concerned, condominiums can be rented by foreigners in the same way as for land.

Mortgage
A mortgage can be granted by an owner in favor of a person, bank or financial institution to ensure the fulfillment of an obligation. While there is no specific law prohibiting the right for a foreigner to benefit from a mortgage on land, the Land Registry Office does not usually allow foreigners to receive mortgages as this system could be used by the latter as a way to own property. landed. Foreign banks are still allowed to receive mortgages. The fee to be paid for a mortgage on the land, building or condominium is equal to 1% of the amount declared in the mortgage agreement (200,000 baht maximum). Proof of payment of the 0.05% stamp duty on the loan agreement (10,000 baht maximum) must also be presented.

Sales tax
The taxes on the transfer of ownership of land, buildings and condominiums are attributable to 2%. Furthermore, payment of an additional 0.5% deriving from taxation on the difference between the declared value and the real value of the assessment is required.

Owners of land or buildings for less than 5 years who intend to sell the property in question are subject to a 3.3% surcharge temporarily reduced to 0.11%. For legal entities wishing to sell land, buildings or condominiums, there is a 1% deduction payable at the registration office. Building Rights & Regulations The entire income tax by a corporation must be paid on the profit at the time the company selling the asset files the tax return. Credit for 1% withholding is allowed.