The Man Who Sold the World Posted February 20, 2020 Share Posted February 20, 2020 55 minutes ago, digibum said: Also things like claiming spousal social security benefits when she's eligible and so on. Yea, my wife's social security benefits were a big concern to me. She did work in the USA more than ten years so she earns her own benefits. I haven't looked into it for a couple of years but there is a five year and a ten year test which determine eligibility. My wife passes both of the time tests. To collect USA social security in Thailand you apply through the Social Security office at the US Embassy in the Philippines. Should I pass before I/she applies then the Thai Attorney will help her complete the application. Link to comment Share on other sites More sharing options...
StevieAus Posted February 20, 2020 Share Posted February 20, 2020 6 hours ago, digibum said: This is pretty much the plan. I am just trying to get an idea of what the obvious pros and cons might be and see if I'm missing something. Obviously, I would consult with a lawyer before going either route to make sure all of the i's are dotted and the t's crossed. I don't want either myself or my wife to get some shocking news when one of us dies. It's also helpful to see the various advice given because it helps form the questions I can ask the lawyer. Often times, you can read about a lot of this stuff, but some minor twist in your circumstances changes everything. For instance, I don't think I read anywhere that a husband and wife could not enter into a usufruct. There seems to be some debate about that, but I had no idea it was even a question. I have never heard that before, that a husband and wife couldn’t enter into a userfruct as I would have thought they would be the people who most commonly use the provision. I have three userfructs on three different properties My wife also has a userfruct with one of our Farang friends as he isn’t married. We have used an excellent Thai lawyer for over fifteen years and she has told me that some Land Offices do try to apply their own interpretation of the law and that on occasions “she has had to pull them into line” Link to comment Share on other sites More sharing options...
khunPer Posted February 20, 2020 Share Posted February 20, 2020 Concerning Usufruct, you’ll need to check if your province will issue usufruct servitude to a foreigner, or to a foreign husband. Usufruct means “a permission to harvest the fruit of the land”, not really as cover for a foreigner to live in a house. We often see posts about that any contract between husband and wife can be declared void – especially in case of divorce, but could also be by heirs in case of death – so using a usufruct, then the registration of servitude at a land office should be done before any transfer of land into a wife’s name, so the granter of the usufruct is someone else than the wife, and the servitude just follow the land after transfer. Usufruct running until one’s death always makes me think about that in Thailand it’s best, if one is worth more alive, than dead... Another possibility is “right of habitation” servitude, which can run both for a limited period of time, but not exceeding 30 years, or run for life; but again, be aware of what I mentioned above. My thoughts about your idea of having a lease, and if your wife die, selling the land for another 30-year lease. You would firstly need to have you wife to make a last will, where you are sole heir to the land. If there is no last will, you can only have 50%, and then your plan is not working. The new landowner will give a new 30-year lease, but you should check with a solicitor that this will work, and not being considered as a trial to extend a former 30-year period of that particular land beyond 30 years, which is illegal. You can extend a lease, but you cannot extend a lease beyond 30 years; re your comment about renewing it every 5 years, the maximum legal duration is 30 years, and if any longer period is agreed, it shall be reduced to 30 years. If you buy an empty land – or with permission remove and old construction – and build a new house, you can legally be the owner of the house. For that you can use superficies servitude. This will run together with another agreement for using the land, which could be usufruct, or could be a lease agreement. Having the house separated from the land could make it more interesting if later sold to another foreigner. Using a Thai company limited, as landowner – and you can still build a new house and own it – is the most costly solution, but might in some cases be safer than ownership in a Thai individual’s name. Even often mentioned in forum posts, there has so far not been legal action against minor companies as shell-owner a smaller private house. The few public known actions against nominee shell-companies has been against larger projects. A major change in company limited ownership was the elimination of nominee shareholders, when the number of shareholders were reduced from minimum 7 to 3 only, and at same time the Thai shareholders should show proof of funds. That shall be understood as, you need minimum 3 shareholders, and minimum 51 percent of the registered company capital shall be own by Thai nationals (or juristic persons), and they shall prove that they could afford to buy their shares. Some land offices will however not allow land registration to a company limited with more than 39 percent held by foreigners, which however often can be arranged by share transfers before, and after land registration. Your thoughts about your wife as major Thai shareholder, her shares will in case of death be included in her estate. Again a last will is needed for how that shares shall be divided among the heirs. You need to talk to a solicitor if you legally can be heir; and if yes, within how long time you need to sell or transfer the shares, as you cannot own a majority post. Procedures, and how rules are implemented, can be slightly different from province to province, so always use a local solicitor with experience in dealing with land and property. Preferred shares can be used for control of company limited voting right – the method often used by Scandinavian public limited companies, where the founding family keeps controlling the company with a minor share position – even it might not be the intention of the law; however, I have not heard about any cases so far about challenging the use of preferred shares. A real con for using a company limited as owner is the costs, which can be up to around 40,000 baht a year for tax accounting and auditor, plus often a minor company tax. The company will need to make a lease agreement and fees have to be paid; anyway some money needs to get into the company to cover the expenses. You can keep the fees low, by build and own any constructions on the leased land (see some of the other threads with advises about how to be owner a new build house). A real pro when using the company limited method – which however might not be in your situation – is that you don’t sell the property, you sell shares in the company. Land transfer, and taxes and fees are avoided. Another benefit is that partial offshore payment for shares is an option. My solicitor, an expert if Thai property, mentioned that one could declare loan servitude on the registered property – like a mortgage – which would work as security, because the property (land) cannot be transferred without the loan being fully paid. However, again be aware of any agreement between husband and wife, which are said that could be declared void. The good old advice “never invest more in Thailand than you can afford to loose” often makes sense. Always consider options in worst-case scenario, and plan for longer future possibilities than the nearest tall building. Reminds me of a huge sign in a bar, funded by farang-money: “Thai ladies has been voted as the best housekeepers in the World – you buy, they keep.” The sign is gone now, so is the farang that paid for the bar... I wish you good luck with your future retirement in Land of Smiles…???? PS: For your info, I’m owner of a house on rented land. 1 Link to comment Share on other sites More sharing options...
digibum Posted February 20, 2020 Author Share Posted February 20, 2020 1 hour ago, The Man Who Sold the World said: Yea, my wife's social security benefits were a big concern to me. She did work in the USA more than ten years so she earns her own benefits. I haven't looked into it for a couple of years but there is a five year and a ten year test which determine eligibility. My wife passes both of the time tests. To collect USA social security in Thailand you apply through the Social Security office at the US Embassy in the Philippines. Should I pass before I/she applies then the Thai Attorney will help her complete the application. My wife did work in the US, even got US citizenship, but she didn't work 10 years, so she'll be piggybacking on mine. Which is better anyway, half of my benefits will be more than 100% of hers due to the wage gap between us. Interesting on the Philippines application. I always just saw the phone number on the SS website and figured that's where I would start when I got old enough. Link to comment Share on other sites More sharing options...
digibum Posted February 20, 2020 Author Share Posted February 20, 2020 55 minutes ago, khunPer said: The new landowner will give a new 30-year lease, but you should check with a solicitor that this will work, and not being considered as a trial to extend a former 30-year period of that particular land beyond 30 years, which is illegal. You can extend a lease, but you cannot extend a lease beyond 30 years; re your comment about renewing it every 5 years, the maximum legal duration is 30 years, and if any longer period is agreed, it shall be reduced to 30 years. Thanks for a lot of very detailed info. Very, very helpful. On the quoted section above, I was under the impression that I could terminate the original lease. So, I was thinking this prevents it from being viewed as an extension of a lease. First least was terminated after death or lessor, assuming I inherit the property per the will, I then own 100% of the property (without a current lease) and have 1 year to sell. Then I can sell it to any Thai national for pennies on the dollar if they agree to a 30 year lease, which would be an entirely new lease since the previous one had already terminated. In actuality, I would probably wouldn't sell it to some random Thai person, but maybe my wife's nephew who she would want to get it after my death anyway. Also, per your above, it sounds like maybe I was using the wrong term of extending the lease. We would need to jointly terminate the previous lease and initiate a new lease (and obviously pay the fees associated with that)? Link to comment Share on other sites More sharing options...
Popular Post ThaiLawOnline Posted February 20, 2020 Popular Post Share Posted February 20, 2020 OK, let me add my personal experience on that, having setup 50 companies or more and done 100 usufructs. First, it is not company vs usufruct. It is what are you doing, how old are you, do you have a Thai partner, how much will you invest, there, are you legally married, what are your goals on long and short term, to sell, to live there for rest of your life, is that a big amount of money for you, and the most important : WHAT KIND OF TITLE DEED IS THE LAND. You must think about what also do you want what you die, that it goes to Thai people or to foreign heirs? Information on internet is often not accurate, or from one land department to the other, it can be different. This is Thailand. You will read about chanotte, nor sor sam, sor sor sam Kor, Por bor Tor 5, Sor Por Kor, but you won't find many information on "teedin Khun John", Tannarak or other title deed. There are different options: - Mortgage. Not accepted everywhere. It means you loan money to your partner and register a mortgage to protect the money you put in the property. The benefit of that is it protects your money. The downside is that you have to sue for your loan, sell the property in auction, it is long, you have to pay lawyers but it is safe for money. Also, you don't have a right to live in the property, just like if you borrow money at the bank and they register a mortgage, they protect themselves but the bank doesn't live in the property. - Usufruct. A cheap, simple and excellent protection for people that live together for a long time. It is a real rights, attached to a thing. Must be registered at the land department. The contract done at the land department is very short and a law firm will make an addendum giving you more rights. BUT I BELIEVE IT SHOULD NOT BE DONE ALONE. You should do a MOU (memorandum of understanding) explaining who pays for the land, the house, what will happen in case of separation or divorce, etc. If you do a usufruct while married, the MOU is less strong. The usufruct stops when you die and possession, enjoyment returns to the naked owner, or owner of the land that granted usufruct (Unless another right is register in between) - Lease. Can't be done with married couple to my knowledge for a couple of years. Excellent if you are very old, beside a beach, that you want to sub-lease or when you die, that your heirs can benefits for the rest of the term. I would combine with an invoice saying the lease is prepaid in advance and also with a declaration of intention to renew, to bind the heirs for another 30 years. I like to separate the lease and an addendum. The lease is simple, 30 years, given to land department. The addendum add many clauses like options to purchase, automatic renewal, owners can't sell, transfer, mortgage, Lessee can keep the chanotte in his hand, etc....but the land department does not see it. Valid between parties. To sublease, it must be allowed by the contract. If not, illegal. The forms of government are horrible lease agreement and do not allowed sublease and many others. - Right of habitation : Not as good as usufruct. Similar but more limited. - Rights of superficies. Very good for foreigners not married that decide to build a house on the land of their partner. The partner buys the land, gives rights of superficies. By law, the top of land (house) belongs to superficiary. Being married is more complex as it can be 50-50. - Companies: it is illegal to have a nominee in Thailand. Companies are checked more than before. The capital of company should match the value of the property in many land department. Companies are the only way that you can easily sell. Your law firm should setup a company with preferred shares. So you have minority of shares, but majority of votes. With majority of votes, you can control the company. Your law firm should also add other documents to help you out, like power of attorneys signed in advance, copies of IDs of the shareholders but this is up to you and them. Why I don't like companies: You have to do accounting every year. Audit every year. It is a lot of paperwork or you pay for it. If the company is totally inactive, the department of business development could question you but I rarely or never seen any foreigners losing a property because of that. Not saying it is impossible....but with a company, you can sell. - putting the property into a Thai child name: Never liked the idea. The property can't be sold, transferred, nothing can be done until the child is 20 yo and when child is 20, it belongs to him or her. We normally transferred the property to mother that gives it to child. Some land department will not agree when child is too young. I have clients who did that, and regret it. Because one day, they are sick, have cancer, change job, and can't do anything without a court order under 1574 (i say that from memory but I think this is the right article) of civil code. And why you are there, add maybe Last Will as foreigners can inherit properties in Thailand but they need an authorization to keep them. It is never given to my knowledge but you have 6 months to 1 year to sell or transfer, and if you sell, you can keep the proceeds of the sale. I have seen clients that their wives got motorcycle accident, strokes, heart attack, cancer, even under 40 yo. The title deed is most important. I've seen land belonging to the army. I've seen places with no title deed. I've seen it all. One client told me a day that he bought land for his wife, but on title deed, it was bought for his mother-in-law. In case of divorce, that's not easy....I've seen Kaifak (sales with rights of redemption) often when people do not register any rights on chanotte. The wife gambles, the wife is pushed by family for money, the property is used as a collateral for bailing a member of family out of jail. The worst I've seen is 30 million lost in 1 month for a client, and also forged chanotte made by someone of the land department and the foreigner lost about 30 million baht with his friends and family, as he was lending at 3% per months and keeping chanotte (but fake ones) as guarantee. So he started to go well, better, ask his friends to invest, his family, they all put the money and it was just a big fraud. When you invest 2,3,4,5 or 10 million baht into a property, it is wise to consult before you purchase. Not after. I wrote this article very quickly hoping to give other options to people. Double check also maybe with several different lawyers. Prices are different but go with someone you trust. Someone giving you right answers, that has some experience. People recommended and that are real law firms. Not real estate agencies. Thailand can be paradise and can be hell. I do not write often on Thaivisa. Hope you enjoy this one. 3 2 Link to comment Share on other sites More sharing options...
khunPer Posted February 20, 2020 Share Posted February 20, 2020 2 hours ago, digibum said: Thanks for a lot of very detailed info. Very, very helpful. On the quoted section above, I was under the impression that I could terminate the original lease. So, I was thinking this prevents it from being viewed as an extension of a lease. First least was terminated after death or lessor, assuming I inherit the property per the will, I then own 100% of the property (without a current lease) and have 1 year to sell. Then I can sell it to any Thai national for pennies on the dollar if they agree to a 30 year lease, which would be an entirely new lease since the previous one had already terminated. In actuality, I would probably wouldn't sell it to some random Thai person, but maybe my wife's nephew who she would want to get it after my death anyway. Also, per your above, it sounds like maybe I was using the wrong term of extending the lease. We would need to jointly terminate the previous lease and initiate a new lease (and obviously pay the fees associated with that)? Thanks for your reply. I cannot comment further on your questions, as I don't know a right answer; you really need to consult a solicitor with experience in property and inheritance. Link to comment Share on other sites More sharing options...
mark131v Posted February 20, 2020 Share Posted February 20, 2020 11 hours ago, Pib said: Was married (and still married) when the Thai wife and I bought our house/dirt here in Bangkok and I have a Usurfruct on the chanote. Me too in Pattaya, they did not want to do the usufruct and the fist bloke tried to say it was not available and also tried to charge extra money but I simply went back another day and spoke to another officer there and was all done for a minimal cost ?B60... 1 Link to comment Share on other sites More sharing options...
ThomasThBKK Posted February 20, 2020 Share Posted February 20, 2020 I find it important to note that all these options can be combined and even be combined with pseudo holding structures. You can have a usufruct, superficies and a company all at the same time, obviously. Link to comment Share on other sites More sharing options...
topt Posted February 21, 2020 Share Posted February 21, 2020 On 2/20/2020 at 8:21 PM, mark131v said: Me too in Pattaya, they did not want to do the usufruct and the fist bloke tried to say it was not available and also tried to charge extra money but I simply went back another day and spoke to another officer there and was all done for a minimal cost ?B60... How long ago as I heard that they stopped allowing them completely - this was from a lawyer. They would not have had an axe to grind as I already had one. Link to comment Share on other sites More sharing options...
mark131v Posted February 21, 2020 Share Posted February 21, 2020 1 hour ago, topt said: How long ago as I heard that they stopped allowing them completely - this was from a lawyer. They would not have had an axe to grind as I already had one. Reckon would have been about 2013 so guess it could have changed but as I said the first bloke we spoke to was adamant you could only get a 30 year lease and I can't remember but he wanted a few thousand to do it I had checked on here and read all the threads so was sure we could do it so waited a few days and went back and this time made sure we got someone different and had no problem at all getting it sorted Earlier somebody mentioned it's like banks and tbh that is exactly what I have found with this, it's all about little fiefdoms who make their own rules because they are often too dim, lazy or prejudiced to do their jobs properly 1 Link to comment Share on other sites More sharing options...
mark131v Posted February 21, 2020 Share Posted February 21, 2020 this was the op on doing it: Link to comment Share on other sites More sharing options...
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