Article Category - Legal Sense

An issue that frequently arises in property purchase transactions in Thailand is who should be responsible for the registration fees and taxes payable upon the transfer of property title. The registration fees and taxes can amount to a significant premium on the purchase price and consequently the point is well worth negotiating with the Seller.

Belmont Limcharoen has been monitoring the changes proposed to the Foreign Business Act (FBA) and appreciates that there will be many parties interested in the outcome of the implementation of the changes and their application in relation to foreign investment in the real estate sector.

Media has a significant role to play in life in Phuket and certainly with the number of companies and organisations involved in the distribution of media, an awareness of the boundaries of the laws in Thailand, which are different to laws in other jurisdictions, is valuable. Furthermore, where the ‘grapevine’ or ‘gossip’ forums are now ever increasing through the technology-based forms of communication – email, personal digital assistants and instant messaging chat tools – those that write their thoughts ought to exercise caution before putting pen to paper or, in today’s world, finger to “Qwerty” keyboard.

The use of the word “perpetual” has caused some enquiries in recent weeks. A lease to a foreigner in relation to land is restricted to a maximum term of 30 years. Section 540 of the Civil and Commercial Code, which relates to the hire of immovable property states that “the duration of a hire of immovable property cannot exceed thirty years. If it is made for a longer period, it is to be reduced to thirty years”. The important proviso that foreigners often make enquiries about is “the aforesaid period may be renewed, but it must not exceed thirty years from the time of renewal”.

It is not possible to accurately predict the legal effects of the coup in the coming months. However, from a civil perspective, when parties are in contract with each other and a major event such as a coup interferes in either parties’ obligations, there can be a legitimate analysis of a contract to ensure hat there is provision for unforeseen events, beyond the control of the parties that may interfere with the fulfillment of their duties.

Phuketians and residents often hear of various clubs, associations or organisations that deal with a particular aspect of community or society, and there are some prominent associations in Thailand.

Last month Phuket Post reported on the recent tightening of procedures at the Ministry of Commerce and land offices across Thailand regarding companies in which there are foreign interests and the issue of ‘nominee shareholders’.

There were several questions posed to the Legal Eagles panel at the recent IBAP evening, at Phuja Nirvana on 11 August, but for this article I should like to focus on a few of the key questions and a summary of answers. The answers on the night were obviously more detailed given the time available to panelists to answer. I have written the questions verbatim in the style they were posed.

When acquiring or investing a villa or apartment, in addition to the normal legal considerations relating to an investment, it is worth establishing if there are any additional contractual issues a buyer may wish to deal with before completion of a purchase.

Sales in the off-the-plan market will often involve a construction contract under which the buyer or future lessee is expected to become the employer of the developer who is then obliged to carry out the work. Sometimes, an off-plan sale will be structured as a sale and purchase and in that instance the seller is simply obliged to deliver the unit as agreed.

Land ownership will always be a sensitive issue for Thai people, and there would be controversial political consequences for any government that tried to change the Land Code to accommodate foreign ownership.

From the volume of construction and development, number of real estate agencies and the number of transactions turning over in Phuket, there is the consequence that there must be a proportionately large volume of money ‘at risk’ before and after title transfer.

As Marina Developments and the boating industry progress in Phuket, and as other developments consider placing part of their project near or even in water, it is worth considering the legal procedures underpinning the principle of building into the waterline – always bearing in mind that the actual practice and implementation of these procedures can involve additional rules and regulations not prescribed by law.

When Developers envisage a harmonious luxurious condominium offering foreigners in Phuket a chance at direct ownership in relation to 49% of the units in the condominium, the potential delays between successful completion of the units to a standard and quality that foreign investors will accept as full delivery are not always at the forefront of their minds or, at least, the full extent of potential delays might not be apparent on examination of the procedure for registration, which appears to be quite mechanical.

In Phuket, the most common occurrence or use of the word ‘escrow’ appears in property transactions where one party suggests that monies are held by a third party. As property is such a mainstay of business in Phuket, the history and variety of uses of this word and concept are worth some examination.

“Why when I pay my money can’t I have my title document?” is a question that arises quite often from buyers unfamiliar with off-plan purchases or the Thailand property market.

Often there are issues that attract legal analysis but are essentially commercial concepts. Key money is such an issue. In jurisdictions outside Thailand, ‘key money’ would be referred to as a ‘purchase premium’, ‘lease premium’ or some other form of additional payment relating to a property right over and above the general payment terms.

The editor informs me that Rights of Access is a hot topic at present. For those of you who may be struggling with this problem, or hoping never to have such a problem, below I have detailed some information that may be of use.

In the last issue, I looked briefly at the issue of marriage. Aside from uniting funds and assets, the other issue that frequently arises in Phuket is that of one party loaning or investing funds to another in exchange for a promised return.

Cold hearted lawyers view marriage as being remarkably similar to arrangements between investors, except that sensitivity to relationships should be displayed as an adviser to an individual or couple considering marriage.