Leasehold length

[Shaygate]

I assume that when a foreigner buys a condo he's not actually buying it he's buying a lease. In the UK leases can be differing lengths from 99 years to 999 years and some can even contain a share of the freehold. What are the typical lease  lengths in Thailand and there's much talk about chanotes which I understood to be title deeds but in the case of a lease what does the chanote signify, just a copy of the lease agreement? 

 

[davidge]

You are buying the freehold of the condo. That's why only 49% of the building can be owned by farang as owning land is illegal.

 

[Shaygate]

1 minute ago, davidge said:

You are buying the freehold of the condo. That's why only 49% of the building can be owned by farang as owning land is illegal.

 

How can you be buying the freehold? The freehold includes the land it is built on, if your condo is say on the 20th floor and there are 19 identical units below you, who owns the land below all of the units? 

The only way you can have title to a condo is by owning a share of the freehold and that leads back to my question which I'd really like to see one of the advertising real estate agents answer. 

[davidge]

It's governed by the Condominium Act - latest one was 2008. It lays down the rules for shared spaces etc and for foreign ownership. One of those rules is only 49% of the condo can be foreign owned another is that the money must come from outside Thailand to buy in foreign name etc etc.

[davidge]

The % has gone up and down from one act to another so could, obviously change again - just adds to the uncertainty. e.g. at one point the regulation was eased and more units within condos were registered as foreign owned. No problem keeping ownership when % was reduced again BUT in the odd case people have been told they can only sell to Thais now to bring the condo in line with current law.

Also why you need to send the money when buying a condo with clear reference to the condo you are buying in order to get the correct paperwork from the bank to register in foreign name.

[Shaygate]

I understand all about the 49% rules etc. that's not what my question is about. I'm talking about what are you actually 'buying' when you hand over your money. Shared ownership or a lease?

In there UK Shared ownership implies a share of the freehold. In cases where that isn't the case then leases are sold. Leases can be any length sometimes as much as 999 years or more typically 99 years. I'm interested in what the legal position or situation is in Thailand. 

One of the reasons I'm interested is the question of what happens when a building is life expired, I mean it's maintenance costs become uneconomic or it becomes unsafe. Look at a complex like Nirun, built in 1994 its looking very tired now, it doesn't take much imagination to think of a time when the best solution will be to demolish it and redevelop. What happens then to the residents will be most likely determined by their status as either co-owners or leaseholders 

 

[davidge]

You are buying shared ownership. The unit is freehold. As at least 51% of the entire condo building has to be Thai owned, the land itself isn't then foreign owned.

If you want eg a house, then you can get a lease as you can't own the land outright. The usual lease in Thailand is a maximum of 30 years (hence the recent suggestion by one of the Junta to increase it to 50 years to encourage investment). There has been a practice of signing 30 + 30 leases to get around this but, again, not strictly legal - in the same way as setting up a company to own the house isn't strictly legal either.

 

[david555]

Read this case before brought to attention by some risk can be in a leasehold disaster .....not common , but could also be a scam set up ..you are only sure when on your own name whatever the profit shining in the farang greedy eyes ....later you loose the profit

attachment pdf

Sunbelt Lawyers on Stickman.pdf

[davidge]

7 minutes ago, david555 said:

Read this case before brought to attention by some risk can be in a leasehold disaster .....not common , but could also be a scam set up ..you are only sure when on your own name whatever the profit shining in the farang greedy eyes ....later you loose the profit

attachment pdf

Sunbelt Lawyers on Stickman.pdf

I know from personal experience that 30-year leases can be overturned.

 

[david555]

4 minutes ago, davidge said:

I know from personal experience that 30-year leases can be overturned.

 

So by this way some could make a set up scam to let a farang loose his dream pool house he  think to own by the bypass by lease ....... fraudulence  sale/owning a house by lease ...

[Insomniac]

9 hours ago, davidge said:

I know from personal experience that 30-year leases can be overturned.

 

Any chance of telling us the reasons why a Court overturned the lease. Lawyers over here will normally tell you to " obtain a lawyer", but having studied Thai Law for 4 years it is not exactly rocket science unless there is some scam involved. For example leasing from your wife.

[davidge]

7 hours ago, Insomniac said:

Any chance of telling us the reasons why a Court overturned the lease. Lawyers over here will normally tell you to " obtain a lawyer", but having studied Thai Law for 4 years it is not exactly rocket science unless there is some scam involved. For example leasing from your wife.

Not going into all the details (seems a lifetime ago now) but I was unable to travel due to illness for a couple of years or so & they went to court to overturn the lease as they claimed the property wasn't being looked after.

[Insomniac]

3 hours ago, davidge said:

Not going into all the details (seems a lifetime ago now) but I was unable to travel due to illness for a couple of years or so & they went to court to overturn the lease as they claimed the property wasn't being looked after.

Wow that's interesting but not surprising.Thai Judges at provincial level generally have little knowledge of Property Law and are hugely influenced by Thai lawyers. Prime example finding that a lease was nullified if an "option agreement" was contained in the lease. What a joke!

[CuppaTea]

On 20/04/2017 at 11:08 AM, davidge said:

You are buying shared ownership. The unit is freehold. As at least 51% of the entire condo building has to be Thai owned, the land itself isn't then foreign owned.

If you want eg a house, then you can get a lease as you can't own the land outright. The usual lease in Thailand is a maximum of 30 years (hence the recent suggestion by one of the Junta to increase it to 50 years to encourage investment). There has been a practice of signing 30 + 30 leases to get around this but, again, not strictly legal - in the same way as setting up a company to own the house isn't strictly legal either.

 

Sorry to ask but this has confused me.

Farangs cannot own land so any lease to one cannot include a proportion of land ownership, only rental, is that right ?

Farang buys a condo in the foreign quota, are you saying that condo only has a 30 year lease for him ?

if he has bought it from another farang he only has the remainder of the time left from the original 30 year lease ?, or is a new 30 year lease given to each subsequent farang purchaser ?

If its a continuation of the remainder of the original 30 year lease how does the farang renew it and at what cost and importantly from whom ?, the condo board ?

If those are the cases then a Thai lease, although costing much less than a foreign lease has far more real value as Thais are not subject to the farang limitations of law, such as land ownership.

I ask because the OP was talking about the ownership of the land, not the physical building initially.

Now though you've brought up this 30 year lease issue.

Sorry if these seem dumb questions but it would be really helpful if you could clarify these for me.

Thanks

[davidge]

14 minutes ago, CuppaTea said:

Sorry to ask but this has confused me.

Farangs cannot own land so any lease to one cannot include a proportion of land ownership, only rental, is that right ?

Farang buys a condo in the foreign quota, are you saying that condo only has a 30 year lease for him ?

if he has bought it from another farang he only has the remainder of the time left from the original 30 year lease ?, or is a new 30 year lease given to each subsequent farang purchaser ?

If its a continuation of the remainder of the original 30 year lease how does the farang renew it and at what cost and importantly from whom ?, the condo board ?

If those are the cases then a Thai lease, although costing much less than a foreign lease has far more real value as Thais are not subject to the farang limitations of law, such as land ownership.

I ask because the OP was talking about the ownership of the land, not the physical building initially.

Now though you've brought up this 30 year lease issue.

Sorry if these seem dumb questions but it would be really helpful if you could clarify these for me.

Thanks

Sorry, I've obviously confused you.

You buy a condo FREEHOLD. No lease, no time limit nothing.

The leasehold is only in terms of how some people 'buy' a house - usually with a Thai wife/girlfriend. The house/land is bought in her name and the farang takes out a 30-year lease so they, in theory, have control of the house if the relationship goes tits up.

The Thai Condominium Act lays down the rules governing condos. The developer/landowner tells the authorities they want to register it as a condo development and there are rules regarding shared spaces etc and the % of the development that can be farang owned - currently 49%.

The thread got a bit diverted as the OP just wouldn't accept that a farang buys a condo freehold.

[CuppaTea]

Great, thanks a lot man !

[Shaygate]

1 hour ago, davidge said:

 

The thread got a bit diverted as the OP just wouldn't accept that a farang buys a condo freehold.

Not so I was trying clarify what is bought, to buy something freehold implies that you own the land it is built on. You said, eventually, that a condo purchase is shared ownership which implies the freehold to the land is held in common ownership, in that case great the buyer is in fact an owner. As opposed to a case where the land a development is owned (the freehold) by somebody else then a condo buyer could only buy a lease. 

Interestingly I can now see the logic in the 49/51 rule, as you say the land will always be in majority Thai hands. 

[Insomniac]

5 hours ago, Shaygate said:

Not so I was trying clarify what is bought, to buy something freehold implies that you own the land it is built on. You said, eventually, that a condo purchase is shared ownership which implies the freehold to the land is held in common ownership, in that case great the buyer is in fact an owner. As opposed to a case where the land a development is owned (the freehold) by somebody else then a condo buyer could only buy a lease. 

Interestingly I can now see the logic in the 49/51 rule, as you say the land will always be in majority Thai hands. 

Very rarely will I suggest a Thai Lawyer that specialises in Property, but condo purchases worldwide, not just in Thailand are complex. For instance Communal rights are important and complex. 50k baht for a lawyer may not seem too much when things go tits up.

[KittenKong]

I must admit that I have never seen any advantage (for purchasers) of buying condos leasehold here. It seems to have only downsides for them. Bizarrely it seems to be quite common in Phuket but almost unheard of here.

As for the confusion about freehold, when you buy a freehold condo you buy your own actual unit (for which you receive a chanote with your name on) and this gives you a part share in all the common property which includes the land. In some large old buildings the land is probably worth more than the total value of all the units, so it's quite nice to know that buying a unit also gets you a share in the land. Those who buy leases seem to get sod all in comparison.

[latestarter]

On 4/23/2017 at 10:42 AM, KittenKong said:

In some large old buildings the land is probably worth more than the total value of all the units, so it's quite nice to know that buying a unit also gets you a share in the land. 

As I have been researching the market for nearly 6 months now, I find that encouraging.....but is it true? Are there any article/reports to that effect?

Given the many negative comments I have read about the standard of maintenance in some condos, it would be reassuring to know that even if the building becomes uninhabitable you stand a chance of recovering your original investment.

[Insomniac]

11 hours ago, latestarter said:

As I have been researching the market for nearly 6 months now, I find that encouraging.....but is it true? Are there any article/reports to that effect?

Given the many negative comments I have read about the standard of maintenance in some condos, it would be reassuring to know that even if the building becomes uninhabitable you stand a chance of recovering your original investment.

There is only a chance of recovering your money in theory. If the place is falling down and needs to be demolished you may get back a percentage of the residual land value.For example:- 300 units @ 3 m baht each, less cost of demolition, site clearance, Agents fees for sale of land, etc. Total in excess of 1 bn baht. Depending on land area and location, unlikely to get near this. Especially when land areas are reducing and rooftop pools becoming the norm.

[KittenKong]

It all depends on the individual building. Some older buildings stand on land that could fit three buildings of the same size. And some older buildings are in desirable locations where there is simply no empty land for sale.

When I bought my unit I was satisfied that I was buying somewhat more than just what was on my chanote, and I'm still satisfied about that. Yes, there might be costs related to demolition but it still beats buying a lease which includes nothing, or buying in a very high rise building on a very small plot.

[Insomniac]

50 minutes ago, KittenKong said:

It all depends on the individual building. Some older buildings stand on land that could fit three buildings of the same size. And some older buildings are in desirable locations where there is simply no empty land for sale.

When I bought my unit I was satisfied that I was buying somewhat more than just what was on my chanote, and I'm still satisfied about that. Yes, there might be costs related to demolition but it still beats buying a lease which includes nothing, or buying in a very high rise building on a very small plot.

Correct. A prime example of " caveat emptor". Due Diligence is imperative when considering purchase.