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Foreign Ownership
Foreign nationals may not own land freehold in Thailand. They
may, however, own indirectly through control of a Thai corporate
entity e.g. in the form of a limited company or a limited partnership
as long as Thai nationals hold the shares 51% or more. Also, they
may register long term leasehold over the land consisting of an
initial 30 - year term plus contracts for two further prepaid
30 year leases- for a total of 90 years.
Limited Liability Company - this form of purchasing
property is the most popular with foreign investors as the Articles
of Association can specify conditions to have protection for foreign
minority shareholders where majority Thai ownership is required
under the Foreign Business Act. Thai law requires that 51% of
the shares be held by Thai persons, however, any company with
more than 40% foreign interest that purchases land will be investigated
by the Land Office 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. However,
foreign investors who want to set up a company to hold property
should consult a qualified lawyer.
Leasehold - Leasehold Law at the moment in Thailand
allows leases with a maximum term of 30 years to be registered
with the Land Office. To enable longer periods of lease the standard
procedure is to make contracts between the buying and selling
parties for an additional 2 terms of 30 years effectively making
a total of 90 years. The contract specifies that the purchase
price of the original lease also includes the purchase price of
the two additional leases. At the end of the first lease period,
the second 30 year lease is registered with the land office at
no additional cost and at the end of the second period, the third
period is registered also with no additional cost. The lease and
the contracts give the purchaser complete control of the property
for the entire 90 years exactly the same as a single lease of
90 years would do. You will be able to transfer or effectively
sell or give the remains of the 90 years to a third party at any
time during the 90 years. . This is a standard well accepted practice
in Thailand. We recommend you talk to a lawyer experienced and
qualified in Thai Land Law for further reassurance and clarification.
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