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Can someone explain having a company to own a home here in Thailand


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12 hours ago, Thomas J said:

I am the only American Citizen in the village.  I do not have a company but engaged to a Thai and the home was hers for many years.  All of the others, are from Lebanon, Morroco, China, and Scotland.  They have companies and the homes are in the names of those companies.  The man from Lebanon has a wife from Russia.  The Morrocon man lives alone.  The Chinese couple are absentee owners both from China and The Scotland man does have a Thai wife and a second Scotland man has a Thai girlfriend

You've just described my old neighborhood in Los Angeles

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The key thing to understand is that they do not own the company. At best, they own 49 per cent of the company.

So that could turn sour in an instant.  The second thing is this is allowed for firms needing to own property for business reasons - to use this provision to provide nominal ownership to a foreigner c

I put everything 100% in my wife's name... and I don't feel in the least bit insecure about it...   The worst that could happen is that I walk away... [walk away because the car is in her na

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29 minutes ago, mikebell said:

Go to Malaysia you can own a house 100% there.

There is a whole lot of caveats go along with the 100%, a minimum purchase price, state based approval process, Capital gains tax etc. Yes, a lot better than Thailand but not a free for all.

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15 hours ago, Thomas J said:

Well I am not sure in that regards.  One home I know is owned by a Chinese Couple.  No Thai so they would have to have someone other than the spouse to be the 51% owner.  In another instance the man is from Lebanon and his wife is Russian so again, I don't see how this could work without risking ownership to a non-spouse.  Yet another has the two homes.  He is from Scotland, but has a Thai girlfriend that lives with him.  I suppose they could put the 51% in her name but he has already had one Thai wife leave him and take the house so putting in the company name would seem to equally put him at risk.  Finally if there is not a "legitimate" business isn't the purchase of the home in the name of the company really fraud? 

The other 51% is made up of nominee Thais who let lawyers use their details for a few thousand Bht . There are usually 3 or so and you can pick them if you want , but they usually do not know each other so no way of them getting together to steal the property .

Grey area that is bit dodgy but a lot of people use it although property in Koh samui and a few other areas were being looked into a few months ago as Chinese were suddenly building and buying property and immigration and the army became very interested to point it was on main Thai news . If they want to do something about it then there isn’t much the foreigner can really do to stop them .

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16 hours ago, Delight said:

This topic generates heated discussion on both sides i.e. Using a company as a device to circumvent restrictions in the law with respect to  a foreigner  having rights and responsibilities in relation to house ownership.

Also an apartment in a condo.

 

The governments action only adds to the confusion. The government is very Jekyll and Hyde.

 

See it from the government's point of view.

On the one hand they wish to stop foreigners using land  for residential living.

 

On the other they want foreigners to build houses -buy condos and live in Thailand .Why -money makes the world go around. Governments truly like   lots of foreign money coming into their country.

Copious amounts for preference.

So the government  -if pressed -will state that a foreigner  can lease the land for 30 years.

 

What the government could do is to stop the use of companies at the land office. This would be so easy.

 

In stead they choose  to sit on their hands.

 

To the OP

 

You seek info as to how the company 'work around'  operates

 

Very simple.

 

The foreigner will employ a law company or an accountant to set up the company

 

The foreigner will be allocated  max.49% of the share location. Typically the other 51% are in the names of Thai people. The foreigner usually has no knowledge of the 51%

 

However -and this is crucial. The foreigner will end up with 100% of the voting rights.

The foreigner has the voting rights. That is all that he needs. The foreigner controls.

If the foreigner wishes to dispose of the house he simple transfers both his share allocation and voting rights to the new buyer, The new buyer is now the MD. The price of this transfer is the price of the property.

 

Benefits of this process

 Easy  and very cheap to transfer control   to a  new buyer /beneficiary via a will.. The land office and the other 51% are not involved.

 

Limitations of this process.

The company has to be audited every year. This can cost over 12K Baht .

 

 

Maybe the government will stop the process completely  and potentially declare the every property that employs this process (house and condo) is illegal-and every property  be seized by the government.

 

The expats who reside in property situated in your village are convinced that the loss of their homes will not happen.

 

I suspect that they are right.

 

Other expats live for the day when it actually happens. They wish to see it happen -before they die.

 

Schadenfreude is very common in Thailand amongst  expats

100% correct!  I have lived in my house for 14 years under those conditions.  The Suratthani Land Office even came out to check on my house/land/contract and approved it.  I live in a community of expats on a mountain overlooking the ocean with houses priced from 20 -100M baht.   I don't know of any risk-free assets.  So far, it's been the best investment in my life!

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As far as the 49% Foreign Ownership goes - I have witnessed circumstances where the other 51% Thai Ownership is split up between the Thai Lawyer (2% or 3%) and the remainder to a Thai National of choosing.  The Thai held Shares give Power of Attorney to the 49% shareholder who serves as Managing Director of the Corporation who has the right to act on behalf of the corporation, including transfer shares to another Thai if things go Sideways - This also requires an annual filing that costs several hundred Dollars or Euros to the Lawyer.  Just Say'n and Good Luck with that.  Cheers - G 

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As many have said, If the intent of the company is for a foreigner in practice to own the land and live on it, it is illegal but seen with leniency by most local authorities (they simply doesn't care) but that can change anytime. best thing is to do the 30 year lease thing, expletively making a statement in the contract that the house on the land is the property of the farang, make the house movable so that it can be removed after the 30 years. A friend of mine actually did this and moved the house to another location after falling out with the landowner who tried to take over the house.

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18 hours ago, ThailandRyan said:

Owning the home freehold, and then a 30+30+30 Chanote leasehold is how I have seen it done to be legal by a few of the expats I know living in Hua Hin.

Isn't legal. Any contract valid until  its sold again... 

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You have to pay taxes. And the other 1 or 2 lawyers that you need to fulfill the quota 49/51 

Really not worth it since government always have some mission to try and find these fake companies etc etc. Just buy a condo or house in a community instead. 

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19 hours ago, ThailandRyan said:

Owning the home freehold, and then a 30+30+30 Chanote leasehold is how I have seen it done to be legal by a few of the expats I know living in Hua Hin.

 

18 hours ago, Delight said:

Foreigners cannot own freehold n the land.

They can -however-lease the land for 30 years.

So lease the land -build the house -after 29.75 years -die.

Very neat and tidy

 

The concept of a 30 plus 30 plus 30 leasing arrangement is not legally possible.

Such an arrangement can be legally drawn up. However after the 1st 30 the land owner  has to sign.

This he will not do. He will simply take back the land with  a FOC house  sited on it.

 

18 hours ago, ThailandRyan said:

You can own the home freehold, you just do not own the land if you are not married to a Thai or have a Thai girlfriend/boyfriend in whose name the land was put in at the time of purchase.  You are absolutely correct in saying the maximum legal leasehold on the land is 30 years but then

under the Civil Commercial Code as it states, only the first 30 years is guaranteed valid for the tenant’s rights to the lease (once the lease is registered at the local Land Office). However, there are court decisions which indicate that the renewal clause is personal to the landlord and thus may not be binding on his heirs or future landlords (Lessor). Also, a lease contract can contractually bind the lessor to agree to a second term of 30 years, but again this is only enforceable after the owner of the land goes with the tenant to the Land Office and registers a 2nd term of 30 years. If the owner of the land does not wish to register the second term of thirty years, the tenant could file a lawsuit with the civil court against the owner, the reason being a breach of a contract between two individuals.

As by law the longest lease period is 30 years, any contract that stipulate a longer term (ie 30+30+30) is illegal and can't be enforced by court. The court will actually throw out any such case. Moreover, if such contact is brought up to the court's attention, the court might even rule the first 30 years period void. 

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17 hours ago, topt said:

 

So are you saying that @Delight version of the company "work around" above is incorrect and if so how?

Why not give your version on here so we can all learn.........

it makes it more cloak and dagger... lol

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2 hours ago, AlQaholic said:

As many have said, If the intent of the company is for a foreigner in practice to own the land and live on it, it is illegal but seen with leniency by most local authorities (they simply doesn't care) but that can change anytime. best thing is to do the 30 year lease thing, expletively making a statement in the contract that the house on the land is the property of the farang, make the house movable so that it can be removed after the 30 years. A friend of mine actually did this and moved the house to another location after falling out with the landowner who tried to take over the house.

good one////

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Or rent a bulldozer and level your house at the end of the first 30 years if the landowner will not re-lease.  Who needs the aggravation....

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20 hours ago, Airalee said:

From what I understand, only the first 30 year lease is enforceable and after that, it’s at the lessors discretion as to whether or not they want to extend.  A usufruct is good until death if set up correctly but who’s to say what kind of accident one might have if the landowner wants to regain control of said asset.

I do worry about those kitchen knives, when wifey is in the kitchen.

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21 hours ago, Delight said:

Foreigners cannot own freehold n the land.

They can -however-lease the land for 30 years.

So lease the land -build the house -after 29.75 years -die.

Very neat and tidy

 

The concept of a 30 plus 30 plus 30 leasing arrangement is not legally possible.

Such an arrangement can be legally drawn up. However after the 1st 30 the land owner  has to sign.

This he will not do. He will simply take back the land with  a FOC house  sited on it.

Exactly

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55 minutes ago, Seeall said:

let the barstool whingers have their say..  makes them feel better when riding their 2nd hand scoppy beck to their rented little <deleted>hole apartment..

so true 

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Its quite straightforward:

 

A Thai company can own land. In normal circumstances the maximum foreign shareholding of that company is 49% but some land offices will not accept more than 39% if the company owns land. However, there are ways in which a foreigner can have total control of a company even if they are a minority shareholder.

 

To be legal, the company needs to trade and it should have a reason to own land - therefore, many of the companies that have been set up as a way for foreigners to 'own' land are in fact illegal. A clause in the Thai land laws refers to circumvention and a company set up purely as a way for a foreigner to own land is certainly circumvention.

 

You will hear from many people who think they own the land their home is built on - they probably don't and if the sh&t hits the fan, they may lose it.  Many of these 'company owners' think their company is 'trading' because they pay a little tax every year - it would not take much of an investigation to establish that the company does not in fact trade. So basically, the vast majoirty of cases where companies have been set up purely to facilitate foreign land 'ownership' are illegal.

 

Given the size of the investment, you have to ask yourself, is it worth the risk?

 

On the other hand, if you set up a Thai Ltd company that owns land on which several houses are built and rent those out, provided the shareholding requirements are met, that would be perfectly legal. The company has invested in property and rents them out so therefore it trades.

 

I don't know of any law that prevents a director from renting a house that his company owns but in all cases, you should be mindful of the circumvention law.

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21 hours ago, Pilotman said:

Not true of course, but when have the facts got in the way of a good story.

You really need to keep up with Thai cases.

 

It has been thought to be legal in the past but case law has overtaken that.

 

certainly there are plenty of lawyers and wannabe barstool authorities who will proclaim that it’s still legal and take your money or give incorrect advice and if unchanged you are probably OK, but “probably OK” is not a way I am comfortable with.

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4 minutes ago, sometimewoodworker said:

You really need to keep up with Thai cases.

 

It has been thought to be legal in the past but case law has overtaken that.

 

certainly there are plenty of lawyers and wannabe barstool authorities who will proclaim that it’s still legal and take your money or give incorrect advice and if unchanged you are probably OK, but “probably OK” is not a way I am comfortable with.

There is no such thing as 'case law' in Thailand, as that term is used and understood  in the west. The law here either 'is' or 'is not', it is not interpreted into law by the Judiciary.    

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I don't know if you have a GF or a wife, so, sorry if I'm mistaken

What I remember from an ex GF 10 years ago, when she ask me to build house in village and I told her I didn't want because I cannot own the land, she told me that can make an agreement for "usufruct" in my name and can be last for lifetime.

I found this on the web: https://www.thaiembassy.com/property/usufruct-in-thailand

Maybe can try this way instead of risky company

 

Only for info, my story end before we buy the land (lucky man) :smile:

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On 3/1/2021 at 10:29 AM, Thomas J said:

However in my village numerous people are foreign, and have their homes in the name of the company they own. These people really don’t have a functioning business.

The law changed about a decade ago, so today it's little more complicated to use a company for owning property, as the use of nominee shareholders is illegal.

 

In principle you establish a Thai company limited og which a foreigner is allowed to own up to 49 percent of the shares, while the remaining majority of 51 percent shall be owned by Thais.

 

There shall be a minimum of three shareholders.

 

The company limited buys and owns the property, and lease it out to the use, which often is a foreign shareholder, or the foreign shareholder. Some land offices will only register land to a company limited with maximum 39 percent foreign ownership, but shares can be transferred to 49 percent foreign ownership after the land registration.

 

The company will need an accountant to take care of book keeping, and an auditer to make the annual tax statement. The income is the lease paid for the property, and often the accountant will make sure there is a small profit, so little company tax need to be paid.

 

In principle it's against the intention of the law, and thereby illegal; however, so far nothing has been done against small companies with one property for lease as only activity.

 

Today the Thai shareholders might be asked to show proof of their funds for shares, so the old system with more-or-less anonymous nominee shareholders will not work anymore. You need to find real shareholders.

 

In principle the foreigner only owns 49 percent of "his company" and thereby also only 49 percent of his/her home.

 

An often used trick to control such a company limited is that the foreign shareholder has so-called preferred shares, where each share gives 10 votes, whilst two Thai shareholders owns normal shares with 1 votes pr share. In that way the foreigner has the majority of votes.

 

Another way is the let a Thai shareholder have the preferred shares. That could be with 49 percent owned by a foreigner and 48 percent owned by a Thai (or a number of Thais), whilst the remaining 3 percent are preferred shares also owned by a Thai. The preferred shares will pay a guaranteed dividend of for example 4 percent of the nominal share capital in return of no voting rights. Thereby the foreign shareholder holds the majority of votes, i.e. 49 percent against 48 percent.

 

Some use a spouse or partner as a Thai shareholder, and a their child or children as minor shareholders under a guardian (often one of the parents, or both parents); minor can legally own shares. A spouse or child can be gifted the funds for the shares.

 

Best is, if the company has more activities than just being owner of one property leased out to a shareholder, including having someone employed and paying social security of the wage.

 

Using a company to own property includes extra annual expenses to run a company, which can be from around 30,000 baht and up.

🙂

 

 

 

 

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30 minutes ago, khunPer said:

Best is, if the company has more activities than just being owner of one property leased out to a shareholder, including having someone employed and paying social security of the wage.

That is the best explanation I have heard.  However here in my village there are about 30 homes and upwards of 10 of them are owned by "companies"  The people who have the company are living in the homes and have for years.  One man has two homes.  He rents one out and lives in the other.  The others strictly live in the home.  One man has a Thai girlfriend so I suppose that could be the other shareholder"  The other two, one is Lebanese and he has a Russian Wife.  The other is a single man, who is is Moroccan but a French citizen.  The latter two for sure don't sound like the description of companies legally allowed to own land since they don't engage in the rental of the home.  Another home is an absentee owner has not lived here for years.  He and his wife are both Chinese.  

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36 minutes ago, Thomas J said:

That is the best explanation I have heard.  However here in my village there are about 30 homes and upwards of 10 of them are owned by "companies"  The people who have the company are living in the homes and have for years.  One man has two homes.  He rents one out and lives in the other.  The others strictly live in the home.  One man has a Thai girlfriend so I suppose that could be the other shareholder"  The other two, one is Lebanese and he has a Russian Wife.  The other is a single man, who is is Moroccan but a French citizen.  The latter two for sure don't sound like the description of companies legally allowed to own land since they don't engage in the rental of the home.  Another home is an absentee owner has not lived here for years.  He and his wife are both Chinese.  

I Think you have already your answer

Good luck 👋

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On 3/1/2021 at 4:19 AM, Thomas J said:

I know I have read about the 49% rule before.  I never heard about the exception for American Citizens.  I do know this.  I am the only American Citizen in the village.  I do not have a company but engaged to a Thai and the home was hers for many years.  All of the others, are from Lebanon, Morroco, China, and Scotland.  They have companies and the homes are in the names of those companies.  The man from Lebanon has a wife from Russia.  The Morrocon man lives alone.  The Chinese couple are absentee owners both from China and The Scotland man does have a Thai wife and a second Scotland man has a Thai girlfriend   So in 3 of the 5 instances the companies would not have the wife as a 51% owner.  I "thought" that if the sole purpose of forming a company was to buy land, that action was prohibited.  The Morrocan man and Lebanon man work.  The Lebanon man for some oil company I am not sure about the man from Morroco.  The Scotland men are both retired, and the Chinese couple as mentioned don't even reside here not do they lease the property.  That is why I raised the question.  It seems so common that this is being done yet these clearly are not "companies' engaged in any business that employs people which is what I thought the intent of the exception of allowing companies to own land was all about. 

 

They don't need a Thai girlfriend or wife. The law office will handle it and provide Thai nominee that will own the 51%. So all your friends their houses are really owned 51% by Thais they dont know. 

 

This has been going on for decades. The Thai government just like all other rules will make a big deal about it and crack down once in a while, get a few foreigners in the headlines to look good and then will be quite again.  However you never know. you used to be able to overstay with no problems but a small fine and allot of time immigration would tell you to overstay.

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24 minutes ago, ericthai said:

They don't need a Thai girlfriend or wife. The law office will handle it and provide Thai nominee that will own the 51%. So all your friends their houses are really owned 51% by Thais they dont know. 

I suspect you are right.  I don't know how the law office would handle the matter of distribution of assets upon sale of the property and dissolution of the company.  I would guess relative to voting rights they could have different share classes and voting rights.  Now beyond my pay grade in terms of how it could be structured so that the 49% owner receives 100% of the proceeds from the sale of the property if/when the property is ever sold again.  

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