Buying a condo in Thailand is an attractive option for many foreign nationals due to the fact that the Thai property law and Land Code prohibit any foreigner to hold ownership of land in the Kingdom. However, you are legally entitled to buy a condominium unit, as there are fewer nationality related restrictions under the Condominium that governs property ownership of this type of real estate.
It is a common practice for some foreign nationals to use this opportunity to be able to own real estate in Thailand, and many condo buyers use their units for both residence or investment purposes within the private sector.
At Juslaws & Consult's, our corporate and property department is always ready to assist you with all of your property related concerns and real estate property acquirement matters.
A condominium building, colloquially referred to as a “condo”, is a type of real estate that is split into multiple units. Each of these units has its separate owner, but the building's common areas are co-owned by the residents. Residential condos are frequently constructed as apartment buildings but unlike apartments that are leased to the tenants, condominium units are owned outright as personal property.
Additionally, common areas of a 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 public utilities and amenities, such as elevators, water supply system, and electricity supply system. There can be no single legal ownership of common areas - they have to be shared. These common areas, amenities, and utilities are collectively managed by all the individual unit owners through a management association named a "Condominium Juristic Person".
A condominium and an apartment complex differ only legally. There is no way to differentiate between an apartment and a condominium unit simply by visiting the building and looking at it. Technically, a condominium is a collection of common areas and individual residential units, as well as the land on which the building is constructed. Condominiums have rules, restrictions, conditions, and covenants that determine how individual unit owners are expected to share the condominium building; they are mainly regulated through rental agreements, internal rules and regulations, and the provisions of the Condominium Act. Usually, condominium units can't be used as business or company addresses without prior permission granted by the Condominium Juristic Person. Furthermore, you may want to double check the Rules and Regulations if you plan to live in your unit with your pet - many condominiums in Thailand have strict no-pet policies.
Under the Property Law of Thailand, there are two types of residential buildings in Thailand - condominiumss registered under the Condominium Act that require a condominium license and are managed by a Condominium Juristic Person, and apartment buildings that are not registered under the Condominium Act.
Only a condominium registered under the relevant laws with the Land Department offers full individual ownership with a government-issued ownership title (Condominium Unit Title Deed). For instance, the Condominium Act specifies the proceedings and requirements for a multi-unit apartment building to be licensed as a condominium. The Condominium Act has been amended a number of times since its first proclamation, so, it is important to be aware of the latest updates.
There are no natoionality-related restrictions for foreigners wishing to become condo owners in Thailand. Any foreigner who may enter Thailand legally (there are no visa-class requirements) may purchase and own a condominium unit, as long as they qualify for ownership under Section 19 of the Condominium Act. Section 19 states that foreigners, as well as juristic persons regarded by the law as foreigners, may hold ownership of a condominium unit if they fulfill the following legal requirements / criteria:
Given that a foreigner personally qualifies for ownership, they may only buy a condominium unit uon their own name if the said condominium unit can be sold under the foreign quota. That means that within a condominium building not more than 49% of all units can be sold to foreigners - at least 51 % of the condominium building must be owned by Thai nationals.
Between April 1999 and April 2004, in an attempt to reduce the number of empty new condominiums offered for sale, foreigners could, as a temporary measure and under certain restrictions, own all of the units in some condominium buildings.
Since then, the foreign quota has been changed back to 49 % of the total area without any exceptions. Therefore, a foreigner may now only have full ownership of a condominium unit in a proportion not exceeding 49 % of the total area of all units in that condominium building (estimated for the period of filing an application).
When you are buying an already constructed condominium unit, the seller must provide a letter of guarantee issued by the Condominium Juristic Person to confirm that the condominium unit falls within the real estate ownership quota of 49 %. That does not apply to condominiums that are still under construction - in such a case, the Condominium Juristic Person may not be established until after the construction has been completed; only after that, a letter of guarantee may be applied for. This means that during construction, the seller or developers are not obliged to issue such a letter. A Condominium Juristic Person is considered a Thai national and will be bound by the Thai laws governing issue of land title deeds, building control management, and other real estate-related matters.
A Foreign Exchange Transaction form (FET form), known previously as "Thor. Thor. 3", is required to register your ownership at the Land Department. According to BOI banking regulations, a Thai authorized financial institution that deals with conversion of foreign currency (exceeding the amount of USD 50,000, or the equivalent in other currencies) has to prepare a Foreign Exchange Transaction form; after that, the transaction shall be reported to the Bank of Thailand.
An original copy of the FET form with the name of the foreigner buying a condominium unit, either as the foreign currency receiver or the foreign currency sender, is required to register ownership with the Land Department; it is considered a proof of the foreign national's compliance with Section 19 of the Condominium Act.
When foreign currency amounts converted are under USD 50,000, the bank is not obligated to prepare a FET form. In this case, the foreign buyer may request a letter of confirmation for the foreign currency transfer and convert it into the Thai currency (THB) through the bank. This confirmation letter can also be used to register at the Land Department as it will contain the same information stated in the FET form.
The Sale-Purchase Agreement for a condominium unit specifies in detail the responsibilities of the seller and the buyer, covers agreed payment schedules, condominium unit purchase price, transfer date, project development time frame, responsibilities for the transfer fees and taxes, warranties, and matters relating to due diligence.
A standard Sale-Purchase Agreement must comply with the Consumer Protection Act and the Condominium Act, as well as with aother related laws. Transfer of ownership takes place at a local Land Office branch, and an official Sale Agreement (in Thai language) shall be signed at the time of transfer; the parties shall also pay relevant statutory fees, tax, and transfer costs.
The process of transfer of a condominium unit in Thailand involves various fees, taxes, and expenses including transfer fees (ownership registration fees), withholding tax, stamp duty, and (if applicable) specific business tax. The amount of such fees shall be carefully considered during the process of purchase of your condominium unit. Ways of splitting up these costs between the seller and the buyer are negotiated during preparation of the Sale-Purchase Agreement and require approval from both parties.
When buying a unit in a condominium project under construction, the seller (usually, the condominium project developer) can only hand over up to half of the ownership registration fees to the buyer due to consumer protection laws. The Land and House Tax does not apply to condominiums, and there is only a relatively low maintenance fee to pay. In the case of residential condo units, plans have been approved to introduce general annual property tax. These taxes will total to 0.1% of the condominium unit's appraised value.
After the ownership has been registered, the new owner will get a title deed for their condominium unit. Every apartment unit that forms part of the condominium building has a title deed that belongs to to the legitimate owner and is issued by the Land Department.
The following has to be included in the title deed:
The seller must provide a letter to guarantee that the condominium complies with the foreign ownership quota of 49% and that there are no outstanding maintenance fees for the unit (in case where you buy an existing condominium unit). Other documents that are required during the transfer of the property include:
Purchase of a condominium unit 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 may face various problems with your 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 require any assistance with your purchase, please do not hesitate to contact Juslaws & Consult at our Bangkok or Phuket office.