Q: Isn't it against the law for a foreigner to
own a house in Thailand?
A: A foreign person or entity cannot directly
own land in Thailand per Thai law. That means a foreigner can directly own a
condo for example, since owning a condo doesn't imply land ownership.
Recently I've heard that all condo developments (again) have to be 51%
owned by Thais, so this means you may or may not be able to by a condo
in your name, depending on the percentage makeup of the other owners.
As far as a house, it is possible for the foreigner to own the house
itself, but not the land it sits on.
Q: So if a foreigner cannot own
land how would buy and register the land to allow him to build a house?
A: There are a number of ways to control
the land that the house is built on.
One is to put the house in your Thai spouse or partner's name, although this can for
obvious reasons be problematic. Another way is allow your Thai partner
to own the land and give you a thirty year lease on the land. This
is a common technique use. The most common (and recommended)
method used is to form a Thai company and have the company hold the land
Q: But doesn't the company need to be majority
owned by Thai nationals?
A: There is a special category of
company allowed for American citizens (under the Treaty of Amity and
Economic Relations Between the Kingdom of Thailand and the United States
of America), but these cannot own land. Therefore, a regular Thai
limited company is used. This must be 51% owned by Thai nationals,
or in the case of land ownership the Thai percentage must be greater,
depending on the land office where the deed is to be recorded. In
and around Pattaya, 61% is used as the percentage which must be owned by Thai nationals (no
more than 39% by a foreign entity). Seven shareholders are the
minimum number of shareholders required for a limited company.
There need be only one director, who can be a foreigner. Normally
in this type of setup the foreigner will be the sole director with
signatory ability for the limited company.
Q: Then the foreigner can really only own 39%?
A: In effect the way it is normally done is
that the foreigner owns 39% of the shares and then has proxies for the
other shareholders. These proxies in effect allow the foreigner
control over the remainder of the shares.
Q: Can there be problems with this setup?
A: Normally not, but sometimes. What can
happen is that if the foreigner is out of the country, the remaining
shareholders can call a meeting. Since the proxies are not legally
filed anywhere, as to everything filed and
officially known about the company these remaining shareholders jointly
hold and control majority of the shares. At the meeting they can declare that
director (with signatory powers) has gone missing and elect a new slate
of directors with signatory powers.