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Posted: 03 Jun 2009 | 2:46 pm
We have received a number of comments on the site about the recently published reports quoting the Director of the Land Department warning that the use of a Thai spouse in owning land for a foreigner was illegal and possible revocation of the title was possible. A number of very nervous foreigners have asked for some clarification of the law and along those lines we spoke to Michael Greth of the International Law Office (ILO) here in Phuket who are one of the islands longest serving firms. His comments are:
'A recent article in the Phuket Gazette discussed the legality of land purchase by a Thai spouse with monies provided by her foreign husband attracted attention and concern in the foreign community residing in Thailand.
The article published in the Phuket Gazette quoted a statement made by a high land department official in Phuket that basically every land purchase by a Thai (spouse) not having sufficient funds to purchase land with her own monies but doing so with monies received by her foreign companion violates and conflicts with the relevant laws of Thailand. It was also stated that the authorities may investigate and in the event that it is disclosed that land had been acquired in the described way the land title may be revoked at any time. As a legal alternative, the official referred to the Condominium Act allowing foreign investors to purchase property in Thailand as long as the foreign freehold quota of up to 49 % of the sellable area in such project has not been sold out yet.
The above statement needs to be read very carefully as the wording used seems to be very broad and may not apply to each and every case. The prevailing view is that the applicable laws of Thailand, particularly the Land code, prohibit foreign persons to acquire freehold interest in land (except very limited exceptions). Further any legal structure which is ultimately designed to circumvent said laws such as "nominee landholding" through Thai citizens or use of Thai company's being a vehicle to acquire (indirect but absolute) control over land may be deemed as illegal.
However, it was also understood that a land purchase by a Thai national using funds which were given to him/her as a gift by a foreign national shall be in compliance with the applicable laws as long as the foreign national does not acquire (indirect) control over the land through execution of additional bogus legal documents between the Thai landholder and the foreign backer. Therefore, the statement made by the land department official may be nothing else than referring to the legal situation which always applied in the past that land purchase by Thai national is legal as long as no legal structure is implemented giving foreign person (indirect) freehold and/or absolute control over the land, and at the same time just "using" funds provided by such foreign investor to purchase land for the benefit of a third party rather than using "own" monies received as a gift enabling him or her to purchase land without acting as third party landholder.'
We hope this gives some level of comfort to those who find themselves in this type of land owning situation and as always recommend that individuals contemplating property purchases seek qualified legal representation.
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