Buying a condo in Thailand is an attractive option for many foreign nationals, although Thai property law and land code prohibit a foreigner from owning land property in Thailand. However, there are legal ways to at least buy a condominium as there are fewer nationality restrictions under the Condominium Act regarding property ownership of this type of real estate.
It is common practice for some foreigners to take this opportunity to be able to own real estate in Thailand and many condo buyers use it for purposes like residence or investment within the private sector.
Juslaws & Consult's Corporate and Property team will be happy to assist you with all of your property questions and real estate property-related matters.
A condominium building, or as it is colloquially known, a “condo” or "condo buildings", is a type of real estate that is split into multiple units. Each of these units that are owned separately, but the building's common areas are owned jointly. Residential condos are frequently constructed as apartment buildings. But unlike apartments, which are leased by their tenants, condo units are owned outright as personal property.
Additionally, as mentioned, the common areas of the condominium building are owned collectively by the owners of the individual units. These common areas include walkways, hallways, gyms, pools, laundry rooms, etc. This also includes common utilities and amenities such as elevators, water, and electricity. There can be no single legal ownership of communal areas. They have to be shared. These common areas, amenities, and utilities are collectively managed by the individual unit owners through a management association, such as the homeowner association in Thailand called the "Condominium Juristic Person".
A condo and an apartment complex differ only legally. There is no way to differentiate between an apartment and a condo simply by visiting the building and looking at it. Technically, a condominium is a collection of common areas and individual home units, as well as the land upon which they sit. Condos have rules, restrictions, conditions, and covenants that determine how the individual unit owners are to share the condominium building. They are mainly regulated by their rental agreement, their internal regulations and rules, and the Thailand Condominium Act that binds Thailand real estate law. These internal rules determine how to run the building, i.e. rental restrictions, the fact that the units can't be used as business or company addresses, and matters pertaining to pets.
Under the Property Law of Thailand, there are two types of residential buildings in Thailand - condos registered under the Condominium Act with a condominium license, managed by a condo juristic person, and apartments not registered under the Condominium Act.
Only a condominium registered under condominium laws and registered with the Land Department offers full individual ownership with a government-issued ownership title (title deed). The Condominium Act specifies for example the procedure and requirements for a multi-unit apartment building to be licensed as a condo. The latest Condominium Act passed legislation in 2008.
There are no restrictions on nationality for foreigners wishing to become a condo owner in Thailand. Every foreigner who may enter Thailand legally (there are no visa-class requirements) may purchase and own a condominium unit as long as he or she personally qualifies for ownership under section 19 of the Condominium Act. Section 19 claims that foreigners, as well as juristic persons regarded by law as foreigners, may hold ownership of a condominium unit if they fulfill the following legal requirements / criteria:
Given a foreigner personally qualifies for ownership, he can still only buy a condo under his own name if the condo unit can be sold under the foreigner quota. That means that within a condo building not more than 49% of all units can be sold to foreigners, at least 51 % of the condo building must be Thai owned.
Between April 1999 and April 2004, in an attempt to reduce the number of empty and new condos for sale, foreigners could, as a temporary measure and under certain restrictions, own all of the units in a condominium building.
Since then, it has been changed back to 49 % of the total floor area, without any exceptions. So currently a foreigner may only have full ownership in a condo unit in a proportion not higher than 49 % of the total space of all units in that condo at the time the application for registration is being lodged.
When buying an existing or re-sale condo, the seller must supply a letter of guarantee issued by the condominium juristic person that the condo unit falls within the real estate ownership quota of 49 % of the condo building as established by the Thai government. That does not apply to condos that are still under construction. In this case, the condominium juristic person will not be established until after the construction has been completed and then will issue this letter of guarantee. This means that during construction, the seller or developers are not obliged to issue such a letter. A condominium juristic person will be a Thai national and will be bound by Thai law related to the land title deed, building control act, and other real estate-related laws.
A Foreign Exchange Transaction form (FET form), known previously as "Thor Thor 3", is required to register ownership at the Land Department. According to BOI banking regulations, a Thailand authorized financial institution that deals with exchanging foreign currency (which exceeds $ 50,000, or the equivalent in other currencies) have to prepare a Foreign Exchange Transaction form, after which this transaction must be reported to the Bank of Thailand.
An original copy of the FET form with the name of the foreigner buying a condo, either as the foreign currency receiver or the foreign currency sender, is required to register ownership with the Land Department. It is considered proof of the foreign national's compliance with Section 19 of the Condominium Act.
When exchanging foreign currency amounts that are under $ 50,000, an FET form does not need to be prepared by the bank, which means that it will not be issued. In this case, foreign nationals may request a letter of confirmation for the foreign currency transfer and exchange it for Thai Baht through the bank. This confirmation letter can also be used to register at the Land Department as it will contain the FET form's same.
The sale and purchase agreement for a condo specifies in detail the responsibilities of the seller and the buyer of the condo as immovable property. It covers among others the agreed payment schedule, condo price, transfer date, the condo development (exact details), responsibilities for the transfer fees and taxes, warranties, and matters relating to due diligence.
The standard sale / purchase contract must comply with consumer protection laws and the Condominium Act, as well as any other laws related to a land code. Transfer of the ownership takes place at the local or provincial land office branch and a second official Thai script land office sale agreement is signed at the time of transfer, after which the transfer fees and taxes have to be paid into the relevant Thai Baht Account.
When transferring a condo unit in Thailand, here are a various fees and taxes involved. For example the transfer fee (ownership registration fee), withholding tax, stamp duty, and (if applicable) specific business tax. The cost of these condo fees needs to be carefully considered when attempting to purchase condo properties. How to split up these costs between the seller and the buyer during a re-sale will be determined by what was agreed upon in the sale and purchase agreement. This could mean the buyer pays it all, or the seller pays it all. Any such final price and payment terms & agreements will require approval from both parties.
When buying a condo in development, the sellers (condo developers) can only hand over up to half of the two percent ownership registration fees to the buyer, due to consumer protection laws. Thailand has no taxes for general property. House and land taxes do not apply t0 condominiums and there is only a maintenance fee, which is very l0w. In the case of residential condo units, plans have been approved to introduce general annual property tax. These taxes will be 0.1% of the condo unit's appraised value.
After the ownership has been registered, the new owner will get a title deed for their condo unit. Every apartment unit that forms part of the the condominium building has an ownership title deed that belongs to to the original owner, and was issued by the Land Department.
The following, among other information, has to be included in the title deeds:
The Land Department is where the transfer of the ownership and title deed of a condo always happens.
The seller must supply a letter guaranteeing that the condo complies with the foreign ownership quota of 49% and guaranteeing that there are no outstanding maintenance fees for the unit, when buying an existing old condo or re-sale condo. Other documents that are required during the transfer of the property purchased are:
Purchasing a Condominium may sound easy since the Condominium Act allows foreigners to own condominium units in Thailand, however, the transaction itself needs to be overseen by a lawyer who is familiar with the whole process and can carefully close the transaction, otherwise, you as a foreigner may face problems with the condominium unit such as unforeseen problems related to ownership of the land where the condominium is built or exceeding the 49% quota of the foreign ownership of the condominium.
If you want more information on buying land in Thailand, buying a villa in Thailand, on the real estate market, condo management, condo prices, or on real estate due diligence please do not hesitate to contact Juslaws & Consult, a Thai Law Firm located at central Bangkok or Phuket offices, to learn more.
