Kinds of Land Ownership in various countries
There are several kinds of restrictions on foreign nationals for purchasing property in various countries, including Thailand, which has a mixture of different schemes. They fall into roughly three categories:
- Permissive countries which allow foreign nationals from owning real estate and other kinds of property, with the exception of those deemed important to national security. These include most developed countries in North America, Europe, Australia, etc., as well as Malaysia in Southeast Asia. Note that in Malaysia there are still some restrictions on foreigners buying property, namely minimum prices, some restrictions on locations, and also restrictions on heritage properties.
- Countries which allow nationals to buy and sell land (freehold/chanote), but restrict in some ways ownership by foreign nationals. (This is most of Southeast Asia.)
- Countries which have a mixture of freehold/chanote and other kinds of use rights (e.g., use but not sell), which is common in some parts of Thailand where people have been granted use but not ownership rights, though they can transfer ownership to other family members.
- In some cases, there are informal sales that can take place, without changing the actual ownership registration, though a community would recognize the sale, even though the local/regional/national authorities would not. This is the case in many hill tribe communities where the government has provided land for immigrants, and actual use rights are managed/recognized by a tribal chief/council.
- Restrictive countries which do not allow land ownership generally (without special permission), such as the communist countries of Laos and Vietnam. While one cannot own land (nearly everyone, everywhere), use rights (usefruct/leasehold) can be granted, including the right to sell such rights as if they were the property (e.g., Vietnam)
Many countries which restrict foreigners from land ownership (though not necessarily building ownership) have exceptions for condominiums, though they may still have restrictions on the percentage of ownership of the condos being restricted to foreigners (e.g., 49% in Thailand, 40% in the Philippines). Singapore allows for foreign condominium ownership but a steep minimum requirement and bureaucratic process for landed property ownership.
Thailand Land Ownership
Land purchase, and especially the real estate business, is restricted to Thai nationals and companies with Thai-majority ownership. Companies with minority foreign ownership (especially in excess of 39%) is also restricted from land ownership, with the exception of property used for headquarters or operations.
There are common exceptions which enable limited land ownership which includes Board of Investments (BOI) companies. Companies which meet BOI criteria may petition to buy land with some restrictions, including the land must not exceed 5 rai (~2 acres) for operations, 1 rai for executive residences, and 2 rai for worker residences.
Individuals who invest 40m THB can also qualify to buy 1 rai for personal residential use, though apparently this is a little-known and rarely used provision, and this provision applies only to residencies in Bangkok and Pattaya, and to Americans under the US-Thailand Treaty of Amity.
Thai Nominees and Legal Risks
Thai companies which are suspected of using Thai nominees -- Thai residents whose ownership is merely on paper (for a small fee) rather than the actual owners and investors. who are not Thai nationals -- are investigated and at risk of lawsuit judgements which could result in siezed property and other assets, fines, and prosecution of company officers.
Thailand Land Leasing
One option for individuals and organizations is to establish a Thai company which buys and then leases land to a foreign-owned (or partially or fully-foreign controlled) entity. Leases can be up to 30 years with a 30 year renewal. Leases are generally well-understood in terms of legal rights, though they must be registered with the land office to be recognized by potential buyers of the property, and the land office and courts.
The foreign individual or company would then build and operate any structures on the leased land, and if included in the lease would have rights to these structures (during the length of the lease). This is the common path for individuals who want to own a residence in Thailand. It is important that the issue of nominees mentioned above be avoided, which may include evidence of the Thai individual or organization owning the land as having the financial resources to do so.
Inheriting Land in Thailand
Property can be inherited by a foreigner, but may not be registered to that individual or organization (unless through exceptions mentioned above), and needs to be transferred to a Thai national or Thai-owned organization within 1 year, or the courts are authorized to sell the land on the inheritor's behalf. See also the Thailand laws on inheritance.
Note that a Thai spouse who buys a property (land or developed property) who is married to a foreign national, through a process at the Land office, declares that property as personal and not marital (and the spouse must also agree). In the case of divorce, that property is not to be divided as marital property is in such a case.
If the property is to be shared between a married Thai national and a foreign national, and equal portions owned by each, it is better to create an organization for such ownership. There is of course added expense for this, unless such an organization is already functioning.
Living at a Company Address
Many Thai businesspeople live at the location of their business, usually on an upper floor of a multi-story building. In some cases, the organization rents space from the owner's privately owned residence. In the case of Thai-majority owned organizations, the organization can own the land, and the owners of the organization can lease the property from the organization, providing a foreigner with the security of a long-term lease, as well as the security of ownership of part of the organization owning the land and leasing it.
Minority Shareholder Control
Even though an organization may be only owned up to 49% by the foreign national, bylaws can require greater-than-majority voting to make decisions (effectively requiring agreement by the minority shareholder. For example: three shareholders of 34% (foreign-owned), 33%, and 33% (thai-owned) could require 67% minimum vote on any legal agreements to be undertaken. It is also possible to have voting shares be different from ownership shares, though that would need to be confirmed, as if the unequal voting rights were nullified by a court then the minority shareholder would have no recourse.