Congratulations on your decision to purchase your piece of property. The reasons behind the decision will in most cases determine the type of property you will be taking on. By now, your due diligence has pointed out that the only kind of property foreigners or foreign companies can legally and directly own in Thailand is a condominium. And that is possible due to an amendment to the Condominium Act made in 1991 (No.2) which gave foreign buyers the right to have freehold title and their name written in the title deed. A freehold title is the absolute ownership of real property.
The Condominium Act is the law that regulates both the property developers and condominium buyers; recent amendments to the law (2008) being introduced as to clarify and further the protection of the buyer. Let’s take a quick look at some important points here.
The proper certification of the condominium is done towards the end of the construction when the building has been completed and inspected. This is relevant because until that moment, the building does not qualify under the Condominium Act therefore is unable to issue freehold titles to foreign owners.
The 49% – 51% quota is applicable here as well, meaning that only 49% of the total space of the condominium can be owned by foreigners on a freehold title. In case the quota is used, foreigners can still purchase units under the condition that whatever exceeds the 49% must be purchased under leasehold or through setting up a Thai company. The difference between the aforementioned being substantial in rights, one of the important actions to be taken before the purchase, is checking the ratio of foreign ownership in the building. An increase in price is practiced when reselling of foreign owned units on a freehold title in buildings where this foreign-quota has been reached.
In order to alleviate abuse to the consumer and discourage exaggerated and unwarranted claims made by the developers in the marketing and selling of properties, the law encourages the incorporation of the brochures and advertisements into the sales contract. These are required to correspond with the ones submitted with the Land Office upon the registration of the property developer. As these materials are being considered part of the purchase agreement, any inconsistencies between these and the sales contract, will be interpreted in favor of the buyer.
Another stipulation by the law is regarding the purchase contracts for the sale of the condominium unit by the developer that need to be standardized as prescribed by the Ministry of Interior. In addition, there must be specified in detail the way the spaces are intended to be used.
The same law regulates the existence of any businesses found on the premises. Such enterprises should not disturb the peace of the other inhabitants a separate entrance is required for the exclusive use of these businesses.
Another benefit of purchasing a condominium is that the units receive a five year structural guarantee and a two year non-structural defects warranty. This is to limit the unfair contract terms and any liabilities arising from the negligence or fault of the developer.
The obligation of paying taxes, common service expenses and common upkeep fees for yet unsold condominium units belong by law to the developer.
With the introduction of the new Condominium Act, buying a condominium became a regulated, straightforward process leading to an unequivocal property ownership type. Because of been granted greater benefits and protections put in place, currently this is the foreigner property ownership of choice.
About the Author – Sorin has more than a decade of experience in Sales and Entrepreneurship in South East Asia, has completed BA studies in Journalism and Social Studies and a MBA in Hospitality, currently co-owning Shambhala Realty Co., Ltd. in Bangkok.