Over the years there has been a lot of speculation about the ways in which foreigners can go about obtaining the legal right to own or enjoy ownership benefits of real estate property in Thailand. Here we discuss how a Foreigner can legally own a home in Thailand.
This article doesn’t propose to discuss all the various methods of property ownership or control by foreigners, but simply focuses on one commonly discussed and considered method which is one in which a plot of land is purchased in the name of the Thai partner and upon which the foreigner constructs a dwelling (usually for the purpose of living in it, although the house could be used to lease out to a 3rd party). This effectively allows the foreigner ownership of a newly constructed house on Thai owned land
This method is completely legal under Thai law and has been regularly used as a means by which the foreigner can construct a home and then enjoy the use of the property for either a 30- year lease period or for the lifetime of the foreigner under a usufruct agreement. The foreigner can also establish full legal ownership of the newly constructed dwelling and thus retain 100% equity ownership of the house/property constructed on the land. This is a reliable and trusted way of how a Foreigner can legally own a home in Thailand
In circumstances where the foreigner wished to invest in a property in which he could rely upon as a residence for a fixed period of time or for his own lifetime, this is possible via the use of either a fixed-term lease (maximum of 30 years) or a usufruct agreement which provides for full use for the period of the foreigner’s entire life until death.
If the dwelling is not yet constructed on the land, then the foreigner can obtain the right to build a construction (such as a house) on the land and enjoy 100% equity ownership in that construction. The land itself would remain the property of the Thai title holder, but the ownership of the constructed dwelling would belong entirely to the foreigner. This is achieved by the creation of a special contract between the parties and then legally secured via a registration of the ownership interest on the land title document. This would alert any prospective purchaser or lender as to the fact that the house on the land was not owned by the registered land owner and as such it makes it impossible to sell or borrow against the land with the improved construction value included.
If the foreigner is legally married to the Thai partner, then this method of 30-year leasing and setting up a Usufruct agreement will not work because, under Thai Family Law, any agreement created between a husband and wife can be nullified upon divorce. Therefore, if such a system was set up using a 30-year lease or usufruct and then a divorce occurred, the foreigner (ex-spouse) would no longer be able to enjoy the 30-year or lifetime use under the agreements dissolved by the divorce. However, it is still a very worthwhile practice to create a usufruct agreement between the spouses anyway because this allows the foreigner to remain resident in the house until such time as a divorce occurs and the usufruct becomes nullified. Without any usufruct in place, the Thai spouse could sell the house without notice or restriction as there would be no restrictive usufruct registered on the title preventing the property from being sold free and clear. It is not uncommon for a married couple to separate and not immediately divorce for various reasons including “abandonment” which requires a 12-month separation period before being able to initiate divorce proceedings. The usufruct protects the foreign spouse during this pre-divorce settlement period. Any newly constructed dwelling/property on land acquired during the marriage would also be considered “sin-somros” 50/50 jointly owned marital property regardless of any contracts or agreements stating otherwise.
Therefore, for a “lifetime” usufruct to be absolutely watertight and survive the process of divorce, it needs to be implemented before legal registration of the marriage. In a marriage scenario, any property assets acquired during the marriage (whether or not financed 100% by the foreigner), are known as “sin-somros” or shared property ownership on a 50/50 basis. So in the case of a foreigner paying 100% for the purchase of the property, upon divorce, the foreigner would only be entitled to 50% equity in that property.
If you would like to be able to purchase property together with a Thai partner or spouse, we would be pleased to assist you in this process whether it is for an existing constructed property or for a house and land construction project. For more information Contact Us. We are located in Ubon Ratchathani Thailand and provide English speaking Thai lawyer legal services to the entire Isaan region. We also have working Thai lawyer associates in Bangkok, Chonburi, Khonkaen, and Chiangmai and provide email and phone support to clients all over Thailand.
DISCLAIMER: The information in this article is intended purely as basic information and is not to be construed as being legal advice or professional legal counsel. You should always consult a legal professional for strategies that are directly suited to your personal circumstances and objectives.
Footnote: A variation on the property leasing method has previously been popular and promoted in places such as Phuket where a pre-existing property (or one custom built as a house & land package) is offered under a 30-year lease with two additional 30-year lease options being written into the contract and thereby giving 90- year “ownership”. However, this method has never been challenged in the courts and was actually recently ruled against by the Phuket Provincial Court as being contrary to Thai Law and as being unlawful. That’s mainly because the additional 30-year lease options cannot be legally enforced and thus it renders them inoperable.
