Condo Legal Tips

BUY, SELL, RENT, OWN AND MANAGE A CONDOMINIUM IN THAILAND – legal topics for expats. What is a condominium, buying a condo, who can own a condo, transfer tax, inheritance, management of a condo, leasehold condominium, sale and purchase and more. Practical legal questions, Thai lawyer answered. Just scroll down to a subject and click read more…

Are all apartments in Thailand governed by the Condominium Act?
There are 2 types of residential apartment buildings in Thailand: condos registered under the Condominium Act with a condominiCondo Legal Tipsum license and apartments not registered under the Condominium Act. Only condominiums registered under condominium laws and licensed with the Land Department offer full individual apartment unit ownership (with a government issued unit ownership title deed), and are regulated by the Thailand Condominium Act. Legally registered and unregistered condos cannot be compared and when it comes to buying an unregistered (holiday leasehold) apartment or an apartment unit in a registered condominium a completely different set of rules and procedure must be followed.

What are the requirement in size and number of units in a condominium?
The Condominium Act does not specify in any detail the specific requirements necessary in order for it to be identified and licensed as a condominium. As long as the building is able to hold ownership separately according to the area, whereby each area consists of private ownership in the property and joint ownership in the common property (section 4 Condominium Act). There are no specifications in the Condo Act outlining height or space requirements, nor are there any specifications outlining the minimum amount of individual units necessary within the building, but the City Planning Act and Building Control Act puts a limit on what can be built in a location. Technically a condominium can also be a group of attached low rise units (villa condominium). The legal definition of a condominium and requirements for condominium development can primarily be found in the Thailand Condominium Act.

How are condominiums managed?
Condominiums are regulated by 1 – its rules and regulations (internal), and 2 – the Thailand Condominium Act (external). The Condominium Act specifies for example the procedure and requirements for a multi unit apartment building to be licensed as a condominium. The internal regulations (set of Bylaws) of a condominium for example regulate how the building is run (e.g that the units cannot be used as a business or company address, rental restrictions and matters relating pets). The rules and regulations of the condominium are amended by voting of the unit owners in the condominium general meetings.

What are condo fees?
Every condominium must be maintained and managed and for this each owner pays condo fees which are based on the square meters of each apartment (section 18 Condominium Act). The fees/ expenses of juristic condominium are paid in advance according to the condominium regulations and/or according to a special resolution of the General Meeting. Condo maintenance fees are charged monthly or 2 monthly or with longer intervals and are each owner’s share in the common expenses and maintenance of the condominium. Condos can also have a special reserve fund for repairs and upgrades of the building. Condo management and management fees, the size of the reserve fund (sinking fund) and possible future major repairs could be an additional financial burden to consider before buying a condo

Condo manager and condominium meetings?
Every condominium shall have at least one manager who is appointed in the general meetings of the joint owners. Learn more about the responsibilities of the condominium manager, the condominium committee, procedure for meetings and expenses of the condominium in the condominium handbook.

Can a condo building in Thailand be 100% foreign owned?
In case of a condominium building with 100 equal units, each having the same floor area, not more than 49 of the units can be foreign owned, at least 51% of the condo building must be Thai owned. Between April 1999 and April 2004, as a temporary measure and an attempt to reduce the number of empty and newly developed condos for sale, foreigners could under certain restrictions and in specified areas own up to 100% of the units in one single condominium building. This has since (without exceptions) been amended back to 49% of the total floor area of all units for private ownership in a condominium building combined

Can all foreign nationals buy a condo in Thailand?
There are no restrictions on nationality and every foreigner who can enter Thailand legally (there are no visa-class requirements) can buy and own a condo unit within the foreign ownership quota of the condominium, but every foreigner must personally qualify for ownership under section 19 of the Condominium Act. Usually this means that the purchase price for the condo must have been transferred into Thailand as foreign currency and exchanged into Thai baht by a licensed financial institution inside Thailand. Foreign ownership and the foreign ownership quota is governed in the Condominium Act by section 19

Can a Thai company own a condominium unit on my behalf?
Since the initial 2006 Land Office regulations issued by the Land Department and Ministry of Interior preventing the misuse of Thai nominee shareholders by foreigners and a series of new regulations this practice in less common. A company set up to circumvent foreign ownership restrictions (buying a condo in the Thai side of the condominium) and dormant holding companies are not allowed under Thai law. Even though generally considered illegal this structure is often still pushed to sell the remaining units to foreigners in the Thai side of expensive condos in the tourist resort areas of Thailand

Can ownership of a condo be passed on to my children?
The right of foreign ownership of a condo in Thailand is granted to the individual foreigner and not also to his foreign successors. Any foreigner who receives a condo in Thailand by inheritance or through a gift must again individually qualify for ownership of the condo under section 19 of the Condominium Act, or he must (section 19 under 7) sell the unit within one year of acquisition by inheritance. Ownership can be passed on to foreign heirs, but generally they cannot register ownership and must dispose of the apartment unit within 1 year

Can I buy a condominium leasehold?
When the foreign freehold ownership in a condominium reached the limit of 49 percent the remaining units may be leased to foreigners under a 30 year lease agreement. One of the major disadvantages of Thai property law is that Thailand does not know lease or leasehold laws as a real property right, but only lease as a hire of property contract with limited real rights associated with it. Under hire of property laws a condominium leasehold purchaser in Thailand in essence becomes a tenant with a pre-paid tenancy contract and having a personal right of use and possession of the unit for the registered term of the contract. Similar to a condominium under a usufruct a lease contract in Thailand is not freely transferable during the term of the lease and as a tenant the leasehold purchaser has no vote in the joint owners meeting and matters relating to management of the condominium. In addition, as a personal tenancy, a leasehold contract is under Thai law terminated upon death of the lessee and not automatically transferable to the heirs of the lessee. The financial drawback of lease is that it is a diminishing asset and creates through the contract a yearly rental tax for the lessee

Can I buy fractional ownership?
Time-share and fractional ownership schemes almost always sell an interest in unregistered leasehold apartment buildings and not in a licensed condominium building offering individual apartment unit ownership. Timeshare and fractional ownership apartment or hotel buildings are usually unregistered leasehold (holiday) apartments

Can a foreign company own a condominium?
Foreign juristic entities (e.g. a (BVI)-company) can register ownership within the 49% foreign ownership quota of a condominium just as any natural foreign person. A minutes of meeting is required approving the purchase, company documents of incorporation must be prepared, notarized, translated and submitted with the land office (all or specific company documents, depending on the local land office requirements), together with documents such as a foreign exchange transaction form, as when a foreign individual is buying a condo in Thailand.

Is joint ownership with my Thai wife foreign owned?
When the condo is registered in your Thai wife’s name or both your names as joint ownership between husband (foreign) and wife (Thai) this will count as full foreign freehold ownership of the unit. A condominium apartment purchased by a Thai national married to a foreigner falls within the foreign ownership quota of the condominium, unless there is a legal document (like a letter of confirmation) that the money expended on the condominium is personal property of the Thai national. In this case the condo falls within the Thai side of the condominium. Some condominium sale contracts offered to foreigners married to a Thai national are worded as an ‘and/or contract’

What is a FET-form?
FET form means Foreign Exchange Transaction form, previously known (and for some still) as Thor Tor 3 (Thor Tor Saam). An authorized financial institution (bank) inside Thailand dealing with the exchange of foreign currency exceeding 50,000 USD (or an equivalent in any other currency) must under BOT banking regulations prepare a FET-form and report this transaction to the Bank of Thailand. For foreigners buying a condominium an original copy of this form with their name either as the receiver or sender of the foreign currency is part of the required documents for registration of foreign ownership at the Land Department (proof of compliance by the foreigner with section 19 of the Condominium Act)

I do not have a FET-form?
For the exchange of foreign currency in amounts less than 50,000 USD the bank does not need to prepare a FET form and therefore will not issue a FET form copy. In this case foreigners can request from the bank a confirmation letter for the transfer of foreign currency and exchange into Thai baht. This letter contains the same information as the FET form (e.g the transferred amount in foreign currency, the exchanged amount in Thai Baht, the name of money sender, the name of money receiver, the purpose of transferring the money) and can be used as proof of compliance with section 19 of the Condominium Act. This proof must be submitted to the Land Department when registering foreign ownership.

No FET-form because I sold my old condo?
When a foreigner sells his condo apartment and he wants to buy a new one he can use the proceeds from the sale to buy a new condo apartment in Thailand, however he must again comply with the condominium act section 19. When this is under section 19/5 he can transfer the money out of Thailand and back into Thailand in foreign currency, or he can exchange the Thai baht received into foreign currency inside Thailand and transfer it into a foreign currency account and withdraw the money from this account and use it for the purchase of the new foreign owned apartment unit.

Buying a condominium off-plan pre-construction?
The most common problems foreigners encounter when buying an off-plan condo unit in Thailand are; the developer goes bankrupt or becomes short of money (often because of failing sales), a substandard product is delivered, the project takes far longer to complete and finish than originally planned. In off the plan property developments in Thailand the developer usually requires that during construction all payment under the sale and purchase agreement are made directly into his bank-account and not into a third party escrow account. Payments into the developer’s bank account as opposed to an escrow account (i.e. money held in the account of a licensed financial institution in Thailand that receives and disburses money depending on the escrow agreement) has serious risks and disadvantages for the buyer

How to pay for my condo?
Price per square meter is one of the key elements to determine the value for money and is the basis to compare affordability of projects in an area. In case of and existing condo the price for the condo usually paid at the time of transfer of the condominium at the land office by cashier’s check (a check issued and guaranteed by your bank in Thailand – i.e. the bank that will also issue your foreign exchange documents). In case of an off-the-plan condo the purchase price is usually paid to the developer’s bank in Thailand in installments with a final payment at the time of transfer (note importance of escrow arrangements). Payment terms in the contract are negotiable

What are the property taxes in Thailand?
There are no general property taxes in Thailand. There is a very low local maintenance tax, with as tax object land and a land and house tax. Land and house tax will not apply to owner occupied properties (condo or house). There are approved plans to introduce a more general (yearly) property tax for land, land and house or condominium apartment with a tax rate of 0,1 % of the appraised value (government assessed value) if the unit is used for residential purposes and a higher rate if put to commercial use

Can I rent out my condo and do I have to pay tax?
Unless restricted in the bylaws of the condominium (the adopted rules and regulations of the condo) a foreigner is free to rent out his unit. Only if it is considered operating a business of renting out properties in Thailand by a foreign investor the foreign owner would be restricted by the Foreign Business Act (list 3) and possible the Foreign Employment Act. A non-resident individual (foreigner in Thailand) is subject to tax only on assessable income from Thai sources, regardless of payment location. If the received rent is over 50,000 baht (year) it is subject to personal income tax (Revenue Code section 40 under 5) and over properties put to commercial use or rented out by the owner ‘housing and land tax’ must be paid.

When I sell my condo do I have to pay taxes?
When you sell your condo taxes must be and are paid at the Land Office at the time of transfer. This includes transfer fee, business tax or stamp duty and income withholding tax. With the land office tax-receipt, sale documents and documents confirming the previous transfer of foreign currency into Thailand, the bank is allowed to transfer the full amount received from the sale of a condominium by a foreigner out of Thailand without any deduction

What are the transfer fees and taxes?
There are a variety of taxes and fees involved when transferring a condominium unit in Thailand; transfer fee, stamp duty, withholding tax (personal or corporate) and specific business tax (if applicable). How these costs are divided between the buyer and seller in a re-sale depends on what is agreed in the sale and purchase agreement and can vary from buyer pays all to seller pays all. When buying in a condominium development the seller (developer) can under consumer protection laws only pass on up to half of the 2% ownership registration (transfer fee) to the buyer

The government program to stimulate condominium sales business by reducing the transfer tax and fees ended in 2010

What is a condo unit title deed?
Each apartment unit in a condominium building has an ownership title deed issued by the Land Department. The title deed must among others contain the following information: 1 – position and location of the land and area of the land of the condominium 2 – position and location, area and plan of the apartment showing the width, length and height 3 – ratio of ownership of common property (ratio of voting rights) 4 – name and surname of the person having the ownership of the apartment 5 – index for the registration of rights and juristic acts (if there is for example a mortgage registered it will show on the backside of the title deed and should be removed prior to the transfer of ownership) 6 – signature, position and seal of the Competent Official. Transfer of ownership of a condominium and amendment on the title deed always takes place at the land department

What is a house book in a condominium?
A house book or blue book or Ta Bien Baan is a residential address registration book issued by the local government municipality. It states the location and apartment address and registers the Thai persons having their legal residence (domicile) at the address. For foreigners a house book (Tambien Baan) is not an important document and is less relevant as it is not an ownership document but merely a house and resident registration document, and, unless a foreigner is a resident in Thailand, he is not registered in the (blue) house book. In official registration procedures foreigners can use a letter of residence issued by the local immigration to proof their address in Thailand or the owner of the condo registered on the condo title deed can use the (empty) blue book together with the condominium ownership title to proof his residential address in Thailand

Sale and purchase agreement?
The sale and purchase agreement for a condominium specifies in detail the responsibilities of the buyer and seller of the condominium. A sale and purchase agreement covers among others the agreed price and payment schedule, transfer date, exact details of the condominium, responsibilities for transfer fees and taxes, warranties and matters relating to due diligence. A sale and purchase agreement with a developer in a condo development is a contract controlled business (not the leasehold sale agreement), and the standard sale contracts must comply with the condominium act and consumer protection laws. For a re-sale of an existing condominium the parties do not have to make a sale and purchase agreement but making a sale and purchase and specifying in detail the responsibilities of the buyer and seller is strongly recommended (template contract). Transfer of ownership takes place at the provincial or local Land Department’s branch office and at the time of transfer a second official Thai script land office sale agreement is signed and transfer fees and taxes must be paid.

Financing and mortgage for the condo?
Normal mortgage financing from a Thai bank for the purchase of a condo is generally not an option for foreigners in Thailand. Basically only foreigners with residency, income and an employment history in Thailand can, depending on the bank’s policy, obtain a mortgage for the (part) financing of a freehold condo (and then only for a real condo as this is the only immovable property foreigners can obtain outright ownership of in Thailand). But even if the foreigner meets the criteria Thai banks are generally reluctant to lend money to foreigners. Banks will not give a mortgage for a condo to non-resident foreigners. Foreigners can also not register ownership without having complied with the Condominium Act section 19 which usually means having transferred foreign currency into Thailand for the purchase of the condo. If the foreigner is married to a Thai national the bank’s requirement could be that the condo is registered as a personal property of the Thai spouse where the foreigner is merely the guarantor of the loan without ownership rights in the condo.

Saleable floor area?
The apartment price in the contract for a not yet completed condominium is based on the size of the condo according to the plans of the building with a price adjustment based on the final size of the unit. Sale-able area in the sale contract means the area on which the contract price is based, and registered area (upon which the final price is based) means the exact floor area upon completion of the condo as measured by the Land Department surveyor. The final size of the unit mentioned in the unit title deed could be significantly larger than the size mentioned in the contract which is based on the building plans. A maximum price adjustments should be agreed in the sale and purchase contract for the condo

Other documents
When buying an existing or re-sale condo the seller must supply a letter of guarantee issued by the condominium juristic person that the condo unit falls within the 49% foreign ownership quota of the condominium and a letter that there are no outstanding fees for the unit to the condominium juristic person. Other documents required at the transfer are among others the ID-cards or passports, a marriage or divorce certificate (if applicable), a land office Tor Dor 21 power of attorney if you are not going to the land office yourself for the transfer of ownership, check guaranteed by a bank for payment of the balance of the purchase price to the seller (if applicable) and cash to cover the transfer fees and taxed.

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I would like to thank you for your excellent service and advice. Unlike many other agents I have spoken to, you listened to my requirements and up with the goods. My oceanfront condo at View Talay is super. Thanks you again for everything, I would recommend your services to anyone looking to rent or buy a condo or villa. - Tom

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I would like to thank you for your excellent service and advice. Unlike many other agents I have spoken to, you listened to my requirements and up with the goods. My oceanfront condo at View Talay is super. Thanks you again for everything, I would recommend your services to anyone looking to rent or buy a condo or villa.

- Tom & Cha

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