Buying Property in Phuket

Buying property in Thailand for personal use or as an investment is a more complicated process than in many countries. Before proceeding, it would be best to obtain advice from a reputable real estate agent or from a lawyer. This will save you time and avoid frustration.

A good start would be to read a book called "Laws governing the Acquisition of Immovable Property by Aliens in Thailand". Yes, foreigners are called Aliens. This publication has been compiled by Sansiri Public Company Limited and is available for Baht 450 in most bookshops. If you cannot find it, call Sansiri PCL, Legal Department, at 201-3812 and ask how you can get a copy of it.

Since 1971, a foreigner (an alien) or a majority-owned foreign company cannot own land or land with buildings in Thailand. Foreigners can own condominiums. In May 2001, however, the Amendment Land Code Act came into force and does make an exception. The Act's relevant points translate as follows:

"Aliens wishing to acquire land in Thailand must bring foreign currency into Thailand for certain types of investments in an amount to be specified in ministerial regulations which shall in no event be less than 40 million Baht and obtain permission from the Minister of Interior. Any aliens meeting such requirements may be granted permission to own land in an area not exceeding one (1) rai for residential purposes."

Land Measurements in Thailand

Land in Thailand is measured in talang wah, ngarn and rai.

1 talang wah = 4 square meters

100 talang wah = 1 ngarn or 400 square meters

1 rai = 4 ngarn or 1,600 square meters

In other words:

1 acre = 2.529 rai

1 hectare = 6 rai and 1 ngarn

There are broadly 4 types of Land Title in Thailand, they being Title Deeds (Chanote), Confirmed Certificate of Use (Nor Sor Saam Kor), Certificate of Use (Ngor Sor Saam) and Certificate of Possession (Sor Kor Nung) are common evidence of land ownership, possessory rights and other interests in land. An explaination of each follows.

Chanote (Title Deeds)

Freehold title with the owner able to leave the land unattended. Title deeds are registered at the Land Department in the province in which the land is located, and there is no wating time required to transfer title. Chanote titles are accurately surveyed, plotted in relation to a national survey grid and also marked by unique numbered marker posts set in the ground. It is the long term goal of the Land Department, that all land in Thailand will be covered under the Chanote title system.

Nor Sor Saam Kor (Confirmed Certificate of Use)

This certifies that the person named on the certificate has the confirmed right to use the land, implying all requirements for the issuance of title deed have been met, and issuance of the title deed is pending. They may be sold, leased, used as mortgage collateral etc. The holder of this certificate cannot leave the land unattended for more than 12 years.

The Chanote and the Nor Sor Sam Kor are the only titles over which registerable right of ownership or lease can exist, and are as such the only ones that a prudent foreigner should consider.

Nor Sor Sam (Certificate of Use)

Similar to the above Confirmed Certificate of Use except that not all of the formalities to certify the right to use have been performed. Before a transfer can be made, a notice of intent must be posted and then 30 days public notice is necessary before any change of status over the land can be registered.

Sor Kor Nung (Certificate of Possession)

This recognises that a person is in possession of land but the Certificate does not imply that there are any rights associated which the possession. It is not transferable, but a person in possession may transfer physical possession and the new possessor may apply for a new Certificate of Possession.

Look Before You Leap

After reading through the different types of title to land, buildings and condominiums and the methods by which a foreigner may acquire ownership or lease rights in these properties. you may feel that you now know all that you need to take the plunge and commit to the purchase of your "Dream Home".

Start your search by all means, but before you set pen to paper, take a short pause to consider what you are doing. While most developers and private vendors are ethical, there are, as everywhere, a number who may not meet your expectations.

The following steps will help minimize any risk.

Ask to see a copy of the front and back of the land or condo title deed. A faithful translation of this will show you who the current owner is; if the property has any endorsements or liens; the shape, area and orientation of the property and border to a public property (such as a road, stream or the ocean). Use a measuring tape and compass (or a steady pace and the location of the sun) to ascertain if the title appears to accurately represent the offered property and be sure you are dealing with the owner of the property or his appointed representative.

In the case of a building under construction or land undergoing subdivision look carefully at the provisions for issuing a title, and easement rights. Also look out for a clause providing for the sale price to be adjusted pro-rata with the final titled area. There have been instances in which vendors deliberately understate the area of a property.

Verify the access to the property

If the property in question is not adjacent to a public road it is essential that there is evidence of a registered easement for vehicle access and all utility connections. It has been known for vendors to grant an easement for vehicular access and then later when the property is developed refuse to allow the connection of electrical cables until further payments are made.

Read the sales contract

This may sound obvious, but it is truly astonishing how many people sign first and ask questions afterwards. Unlike most of the Western world, Thailand has no Consumer Protection Act (or the equivalent). "Caveat Emptor" is the order of the day. If the contract is not in English or a language that you understand, insist upon a translation by a competent, independent professional.

If you see a clause which you don't understand seek professional advice. If you see a clause as patently unsavory as, for example, "During the period of this contract the Buyer may not take legal action against the Seller" (which amazingly more than a few people have signed) stop! Just because you are in contact with a seemingly "friendly" vendor don't overlook the precautions you would take at home.

For a condo purchase, be sure the unit qualifies for foreign ownership

Only 40 percent ** of the units in a condominium may be sold to a foreigner. Be sure that the unit you are buying is covered under this allowance. There are ways that the rights to the units outside this 40 percent allowance may be offered. Should you choose this option make sure you understand how this will work. Also look closely at the total number of units that have been sold in the building - and in the event that the property is less than half sold and the management of the building is still in the hands of the developer, be particularly prudent. With majority votes a bad manager can be removed by owners, but in a building still majority owned by the developer, you will be stuck with his choice of manager.

** Legal Update

The Condominium Act has recently been amended and it is now possible for 49 percent of the units in all condominiums and for 100 percent of the units in condominiums with a total development area of under 5 rai located in Bangkok, all municipal districts and such other areas as shall hereafter be announced by the Minister of the Interior (which is expected to include rural Phuket) to be foreign owned, provided always (this is unchanged) that the funds for the purchase have been remitted from aboard.

None of the above is intended to warn you off making an investment in property in Thailand. With due diligence you will be able to acquire a trouble free and secure investment that will bring you great rewards.