Basic Legal Info

  1. Land Title Deed
  2. Land Measurement and Survey
  3. Property ownership in Thailand
  4. Company Formation
  5. Lease in Thailand

Land Title Deed

There are two types of ownership in Thailand.

1. RIGHT OF POSSESSION

This kind of possession will be issued a legal deed called "Sor Kor 1", "Tor Bor 5", "Tor Bor 6" or "Sor Por Gor 4". This is normally owned by a family for generations. The possession rights will be under civil and commercial code. Such land are only allowed to use for farming and cannot be bought or sold. No building or legal acts would be allowed on the land. Some certain pieces of the land titles can be upgraded to regular title deed, but this is not generally the case. A serious investor will not give any credibility to these titles possession.

2. RIGHT OF OWNERSHIP

This is the a land title deed that give the rights of ownership, not possession. There are three basic title deeds called "Chanote", "Nor Sor 3" and "Nor Sor 3 Gor". The most sought of these 3 types of title deeds are "Chanote" and "Nor Sor 3 Gor " because these both title deeds have legal documents of Rights of Ownership. Both of them can also be sub-divided into smaller pieces and planning permission. Any legal acts can be carried out immediately on the land.

The 2 differences between of "Nor Sor 3" and "Nor Sor 3 Gor" are that "Nor Sor 3" has not been accurately surveyed by Land Department which probably leads to verifying of actual land area and any legal acts occured on the land will have to be published for at least 30 days. However, both of them are issued legal documents for Rights of Ownership.

This is just a guideline for a person who is looking for a land to buy. Please seek legal advise or professional in this field as there are many issues to consider, like servitude, access and rights of ways.

Land  Measurement and Survey

Land in Thailand is measure in Rai, Ngan and Tarang Wah


1 sq. Wah = 4 sq. Meter

1 Ngan = 1 sq. Wah = 400 sq. Meter

4 Ngan = 1 Rai = 1,600 sq. Meter


Thai vs Wester Measurement Standard

2.50 Rai = 1 Acre

6.25 Rai = 1 Hectare


Credit: Department of Land

About Property Ownership in Thailand

Can I own a house and land in Thailand?

Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior. Although Thai law prohibits foreigners from owning land in Thailand, there are various ways in which you can structure your affairs so that you can own land, and still comply with existing Thai laws:

Nominee with lease and option to buy - you can use a Thai nominee to purchase the house/land and have a 30-year lease with a 30 by 30 year option from the nominee. In order to be enforceable, any lease for a period of longer than three years must be registered, which involves payment of a registration fee and stamp duty based on a percentage of the rental fee for the whole lease term. The original registered lease remains in force and effect even if the property is sold. The drawbacks to a lease include the fact that the parties can contractually agree to renewals, but this right cannot be registered and is not effective against a purchaser of the property, and that the lessee cannot (without the lessor's consent) sublease, sell or transfer his or her interest.

Nominee with mortgage - you can use a nominee to purchase the house/land and have a mortgage (registered with the appropriate land department office) on the property in your favors. However, in some circumstances the Thai courts have ruled that this was not a bona fide mortgage, but rather it was a mortgage contrived to circumvent the existing laws of Thailand prohibiting foreign ownership of land. It is important to note that only the owner of the land is entitled to mortgage the land; the lessee of land does not have the same privilege.

Usufruct Interest (Sidhi-kep-kin) - gives you temporary ownership rights to things on or arising from the land. In practice, a usufruct is limited to a 30-year maximum period; like leases, the agreement can be successively renewed. In contrast to a lease, a usufructury interest can be sold or transferred, although it expires upon the death of the holder of the usufruct and therefore cannot be inherited.

Limited Liability Company - this form of purchasing property is the most popular with foreign investors as the Articles of Association can be varied to allow greater protection for foreign minority shareholders where majority Thai ownership is required under the Alien Business Law. Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land will be investigated to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land. This results in the foreign ownership of the company being limited at 39%, but with the recommended changes to the Articles of Association, the foreigner can be the only director of the company, and the only officer of the company who can commit or bind the company in any contractual dealings - effectively giving the minority shareholder control over the company.

What is a FETF?

A Foreign Exchange Transaction Form (previously and for some still known as Thor Thor 3) is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand. You must request a FETF from your bank when you are remitting funds to Thailand for the purpose of purchasing a condominium, and the FETF must specify that the remittance be solely for the purpose of purchasing a property - Code 5.22

Do they have title deeds in Thailand?

A title deed is the purest form of evidence that an individual owns a piece of land. Title Deeds are given only for areas of Thailand, which are surveyed. For areas, which are not surveyed, there are other documents for land possession such as evidence of the possession of the right to utilize the land or other interests in the land. These documents are called "Nor Sor Sam (3) and Nor Sor Sam (3) Kor". Unlike the title deeds, these Nor Sor documents are issued to show the possessors' exploitation of the land. Though these documents do not provide ownership rights, as do Title deeds, they can still be registered for transfer of the lands for which they are issued.

Can I get a mortgage loan?

Foreigners generally cannot mortgage properties in Thailand, however, most of the financial institutions in Thailand provide loans for real estate purchasing to Thais and Thai companies. It is common for a real estate developer to arrange for his customers to have a financing package from a financial institution. In most real estate development projects, a down payment can be made in installments from 10 to 24 months. After the down payment has been paid, the sale contract will be made and the balance amount is paid through the loan, which is financed from a financial institution. The financial institution requires you to mortgage the property with it as collateral against the loan.

Land appraisals and valuations

Finding the exact appraisal price for land is difficult, since there are generally three different appraisal rates; the government rate, the appraisal company's rate and the rate, which is considered to be fair market value of the land. Over the last few years all of these rates have begun to come closer together.

My wife is a Thai national, can she own land?

Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand. She could, however, still retain land that she owned prior to marrying the foreigner. However, the recent (1999) Ministerial regulation now allows Thai national's married to foreigners the right to purchase land, but the Thai spouse must prove that the money used in the purchase of freehold attractive new designs in furniture land is legally solely theirs with no foreign claim to it. This is usually achieved by the foreign spouse signing a declaration stating that the funds used for the purchase of property belonged to the Thai spouse prior to the marriage and is beyond his claim.

Are there property taxes in Thailand?

There are no property taxes as such in Thailand that are exactly equivalent to the property taxes in the west, however, the most comparable taxes on properties in Thailand are the Land Tax and the Structures Usage Tax. The Land Tax levied on land is so miniscule, that in practice the body charged to collect it, rarely bothers to do so, and if they do, they usually wait several years until the amount accumulates. The second tax, the Structures Usage Tax, relates to buildings, is collected by the municipal office or district office, and is only applied to properties used for commercial purpose.

What taxes and costs are applicable to purchasing a property?

On all purchase/sale of property in Thailand there is a stamp duty of 0.5% of registered value, only payable if exempt from business tax, a transfer fee of 2% of the registered value of the property, a withholding tax of 1% of the appraised value of the property, a business tax of 3.3% of the appraised value of the property if selling within 5 years; this applies to both individuals and companies, and income tax. There is no capital gains tax in Thailand, unlike many countries, and income tax (usually between 2.0 - 3.0%) on property is the comparable replacement. There are no set rules on who pays the income tax, and it is just another part of the bargaining process, as with all the other costs of the transfer of ownership.

Company Formation

There are basically two types of business structures doing business in Thailand:
-  A private limited company (Co., Ltd.) and
-  A partnership

A private limited company is the most popular form of business structures in Thailand. That is not only due to the fact that the shareholders’ liabilities are limited to the amount of the shares they possess, but a private limited company also allows separation between investor’s body and managerial body.

A private limited company requires a minimum of three promoters and must file a memorandum of association, convene a statutory meeting, register the company, obtain a company income tax identity card and has to have a representative office.

The limited company must also follow accounting procedures specified in the Civil and Commercial code, the Revenue Code and the Accounts Act. A balance sheet must be prepared once a year and filed with the Department of Revenue and Commercial Registration. In addition, companies are required to withhold income tax from the salary of all regular employees.

There are three types of partnerships:
- An unregistered ordinary partnership
- A registered ordinary partnership
- A limited partnership

A partnership must consist of at least two members who agree to combine their assets or labor in running a business for their joint profit.

An unregistered ordinary partnership is the most common type of business organization because it requires less formality in comparison with other types of partnerships. The partners have unlimited liability for the debts of the partnership. A withdrawing partner is still liable for the debts of the partnerships incurred up to the time of his withdrawal.

An ordinary partnership may voluntarily be registered according to the provisions of the Civil and Commercial Codes, to become a separate juristic entity from the partners. The liabilities of the partners of registered ordinary partnership are basically the same as that of the unregistered ordinary partnership.

However the registered ordinary partnership enjoys the following advantages:
The liability of partners for debts of the partnership incurred before his resignation is limited to two years from the date of resignation, and the assets of the partnership must be examined before a creditor can claim a debt payment from the partners.

A limited partnership consists of two types of partners, namely partners whose liability is limited to the specific amount which they have contributed to the partnership (similar to the liability of shareholders of a company), and partners who have unlimited liability for all debts incurred by the partnership. Unlike ordinary partnerships, a limited partnership exists only when it is registered.

Lease in Thailand

A real estate rent or lease agreement for land, house or apartment lease in Thailand is enforceable by action if the agreement has written evidence. A lease over 3 years must in addition be registered with the land office. For registration of the lease agreement a registration fee shall be collected by the land office at the rate of 1% of the total rent throughout the lease term. Stamp duty shall be collected at the rate of 0.1% of the total rental throughout the lease term.

Income received from rental properties is assessable income under section 40 of the Revenue Code. Payment of rent is an essential element of a lease agreement. If the right to use and possess the property was given without payment of rent it would not be a lease. In a long term rental or lease the rent is usually prepaid for the entire term.

A lease or rental is under the Civil and Commercial Code a contract and not a real property right or fixed asset attached to the property. This among others means that a lease or rental (registered and unregistered) is in essence attached to the lessee or tenant and therefore, as a contract, terminated upon death of the lessee.

The maximum term an owner can legally burden his property with a lease is by law set at thirty years. Any agreed longer term will by law be reduced to 30 years. A lease can only made longer by renewal of the lease agreement upon expiration or termination of the first term. If the lessee and lessor have executed 2 consecutive 30-year lease agreements it shall by law and Supreme Court judgments be deemed as 1 lease and reduced to 30 years.

A right of renewal of a 30 year lease agreement is not supported by Thai law other than that this is a private agreement between the parties to the lease agreement and not a registered lease right. One of the principles of lease in Thailand is the fact that the leaseholder can only sub-lease or sell (assign) the leasehold interest to another person if this is agreed in the lease agreement. If nothing is arranged the lessee is not allowed to sublet or transfer his rights under the lease agreement.

Transfer of ownership of the property does not break the lease agreement, but it is important to distinguish and separate true hire of property rights (or real lease rights) from other contractual obligations (non-lease rights) in the lease agreement. Only rights and obligations in the lease agreement that are by nature true hire of property rights transfer by law to the new owner.

In any long term real estate interest in Thailand through lease or land leasehold it is important to separate ownership over land and structures upon the land. Ownership of a house separate from the land by the land leaseholder is basically obtained by paying for the construction of the building.

The land lease agreement should
(1) include a provision for the use of the land for building and
(2) the building permit should be issued by the Or.Bor.Tor in the land leaseholder's name, or
(3) for an existing building a land office sale of a structure procedure must be followed. A right of superficies in addition to
      the land lease agreement gives greater security to the foreign leasehold buyer.

Also to limit property tax burdens the building should be owned separate from the land by the land lessee. In a land and house lease agreement building and land tax is collected at the rate of 12.5% over the yearly rental according to the lease agreement or the annual rental value assessed by the Land Department, whichever is higher.

Credit: Thai Legal & Associates