Thailand remains one of the most popular locations for property investment as tourism grows each year. For many foreigners, buying a condo in Thailand trending. While Thai property laws prevent a foreigner from purchasing a property in Thailand there are legal ways of buying a condo in Thailand as there are fewer constraints on nationality under the Condominium Act on ownership and other areas.
Understanding what a Condo is in Thailand
A condo, a word typically shortened from a condominium, is a form of real estate divided into multiple units, each of which is owned separately. Residential condos are also built as apartment complexes, but condo units are wholly-owned, unlike apartments rented by their tenants. In addition, individual unit owners also generally own the common areas of the property, such as hallways, walkways, swimming pools, gyms, laundry rooms, etc., as well as common facilities and amenities, such as lifts. The distinction between a condo and an apartment complex is strictly legal.
Difference in Residential Buildings in Thailand
In Thailand, there are 2 types of residential buildings, condos approved under the Condominium Act, and apartments unregistered or not approved in accordance with the Condominium Act. Only condos registered under this Act and registered with the Land Department give complete individual ownership with a title (title deed) provided by the government. The Condominium Act, for example, defines the process and criteria for authorizing a multi-unit apartment building as a condo.
When buying a condo in Thailand, the location of the condo really matters. There are plenty of locations across Thailand to find your dream spot, from booming Bangkok to Phuket. There will be condos in almost every city and town, but there are a few main areas in which most foreigners purchase.
Process of Buying a Condo in Thailand
There is no prohibition on nationality, and any foreigner legally admitted to entering Thai territory can purchase a condominium which is generally a freehold property. The process of buying a condo in Thailand is fairly easy, and only a few requirements must be met:
- The property purchased must be part of the project’s 49% surface that could be owned by foreigners. This can be easily verified at the developer’s office directly with the juristic responsible. Section 19 of the condo act governs foreign ownership and this section restricts foreign ownership to 49% of the total floor area of all units together in a condo building. When buying a condo in Thailand as a foreigner, it must be checked that there is foreign ownership available in the condominium building.
- Under the Condominium Act, the project must be registered. At the Land Office, this is verified quickly.
- The purchasing of the condo has to be made with money sent from overseas to Thailand, i.e. It should be from your foreign country account, and converted to Thai Baht. You will need an official bank statement (‘Foreign Exchange Transaction Form’, FET form). Without this paper, you won’t be able to register your name with the condo.
Why is the FET form required?
FET stands for Foreign Exchange Transaction, formerly referred to as Thor Thor 3. For the registration of ownership in the Land Department, the FET form is required. An authorized financial institution within Thailand dealing with foreign currency exchanges of more than US$ 50,000 (or equivalent in any other currency) must prepare a FET form under BOI banking regulations and report this transaction to the Bank of Thailand. In the case of a foreigner buying a condo, the original copy of this form, with its name either as a receiver or as the sender of a foreign currency, shall constitute the required document for the registration of ownership in the Land Department, as evidence of the compliance of the foreigner with section 19 of the Condominium Act.
Foreigners eligible for ownership
Following are the foreigners eligible for ownership in Thailand:
- Foreigners allowed to live as per the immigration law of Thailand;
- Foreigners allowed under the Investment Promotion law to join Thailand;
- Juristic entities as provided in section 97 and 98 of the Land Code and registered under Thai law as a juristic person;
- Companies in terms of section 4 of the Foreign Business Act and having obtained an Alien business license;
- Foreigners or legitimate entities deemed to be foreign by law who have entered Thailand in foreign currency and have exchanged and withdrawn Thai baht from a Thai baht account or a foreign currency account.
Do I need a Sale and Purchase agreement?
The sale and purchase agreement, which is the most significant element of a condo purchase in Thailand, must be planned by foreigners when purchasing a condo in Thailand. This contract deals with the needs of the seller and buyer as a way of finishing them before closing the deal. The agreement drafted must be according to the law and provide some protection to the buyer. In a private resale of a condo or a leasehold sale, the contracts are controlled by general contract law and the parties may agree on various conditions that may benefit one party more than the other.
Many condo buyers in Thailand want to explore their options with a lawyer before committing. Lawyers can help clarify the legalities of purchasing a condo and can also review your sale and purchase agreement.
Other considerations to follow
When buying a condo in Thailand, remember that a Thai script sale agreement is signed at the time of transfer and registration of ownership at the Land Department’s branch office, but this does not impact the private agreement which took between you and the seller. You will also be required to pay the fee which may include transfer fees, duties, or revenue taxes. The cost may be split between the buyer and seller or as per what has been agreed between the parties. The developer is only permitted to ask for up to half of the 2 percent ownership transfer registration fee from the buyer when purchasing from a developer under consumer protection rules, but not more, and all other expenses are for the developer.
Thailand Property Lawyer
Siam Legal International is a law firm in Thailand that offers various services that are designed to protect the rights and interests of foreigners wishing to acquire or buy property in Thailand. Our firm offers a wide array of property-related services to best suit our foreign and Thai clients’ property needs. Should you have any property questions or issues that need to be addressed, our team of Thailand property lawyers invite you to contact us through the link below: