If you are a potential lessee (i.e. renter), it is essential to acquaint yourself with a few leasing essentials in Thailand to ensure that you will not have undesirable brushes with your lessor and the law.

Primarily, you have to make it sure that you have a duly executed lease contract between you and the Lessor even if the lease duration is only for a year or two.  If the lease period exceeds three years, it is imperative that the lease contract be registered in the Land Office. A lease contract is crucial in the event of future disputes since the law mandates that leases will not be enforceable by action unless there be some written evidence signed by the party liable.  Thus, to ensure that your rights and interest over the leased property are protected, a written contract between you and the Lessor is mandatory.

Also, ensure that your verbal arrangement with the Lessor is faithfully reflected in the contract. This is where the services of a reputable Thai lawyer become crucial.  Not only will the lawyer ensure that the terms of the contract are according to the agreement of the parties, but also ensure that such terms and conditions are protective of your rights and interests.

Lastly, take note that the contract of lease is not extinguished by the transfer of ownership of the leased property.  Thus, despite the transfer of ownership of the property, you should still remain as lessee thereof and the provisions of the contract of lease remains enforceable.

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1. The blue Ta Bian Baan (Thor.Ror.14) for Thai nationals and
2. The yellow Ta Bian Baan (Thor.Ror.13) for foreigners.

Non-resident foreigners can usually only be registered as the owner of the house in a yellow house book.

The house book is not proof of ownership of the house, but merely an administrative document issued by the local Amphur.

A foreigner can own a house, but not the underlying land, in Thailand.  You can demonstrate your ownership of the structure by showing either the official land office sale agreement, as signed at the land office, or the construction permit in your name.  Remember, the Tabien Bahn is not proof of ownership of the house.

In most cases, a Thai friend or family member can help you obtain a Tabien Bahn.  You should, however, speak with a Thai licensed attorney regarding the registration of a house.

Incoming search terms:

• tabien bahn
• thai tabien baan
• thor ror 13
• yellow house book thailand

The draft nature of the bill also sparked some wide concern not just from the wealthy landowners but also from farmers. These farmers who may own a fairly substantial amount of land are concerned of the tax due to the relatively low commercial value of their assets. This appeared to have been addressed with the FPO by having such taxes measured on a fixed benchmark rate with commercial properties assessed on an annual tax of up to 0.5% of the appraised value while residential properties at the rate of 0.1% and agriculture land at the rate of 0.05%. It was also proposed that the tax rate will be based on some zoning demarcations depending on the level of development on the land itself.

Just this week, after some months under the radar, the FPO did announce that Land and Building Tax should be used as one of the two sources of funds used to help low income earners buy property. It is meant to coincide with the launch of the seniors’ savings scheme early next year which aims to target some 24 million temporary workers and low income earners. So it would seem the proposed tax does have some merit in respect to its notion of creating a fairer system, at least, in its intention. It would be some time before this tax, if passed, comes into play and it will be interesting to see how this will help solve the wealth gap of the nation.

Commercial banks, financial institutions or any juristic persons prescribed in the relevant ministerial regulations licensed by the Ministry of Finance are eligible to act as escrow agents.  The escrow agent must further be a neutral party and have no connections to any “concerned party,” either directly or indirectly.  The escrow agent cannot be, for example, also the bank for the developer.  Operating without an escrow license subjects the actor to a fine of not more than 1 million THB.

The escrow agreement must contain the following provisions.

1. Name and address of the parties and the escrow agent;
2. Execution date of the escrow agreement;
3. Title of the reciprocal agreement between the parties;
4. Terms or conditions for the delivery of escrow assets;
5. Requirements for payments out of the escrow account;
6. Rights and obligations of the parties and the escrow agent;
7. Remuneration and other fees related to performance under the escrow agreement; and
8. Other particulars as further specified in the Notification of the Escrow Committee.

The escrow agent has the duty to draft and prepare the escrow agreement.  It is likely, however, that sophisticated parties will prepare the escrow agreement for the review and approval of the bank or other escrow agent.

When an escrow agreement has been terminated, the escrow agent must transfer the monies and interest in the escrow account to the proper party, pursuant to the escrow agreement, within 30 days.  The termination of the escrow agreement does not affect the right of the escrow agent to receive remuneration and fees for the acts performed, unless the termination is the fault of the escrow agent.

When the escrow agreement has ended and the monies have been transferred in full from the escrow account, the escrow agent must close the account and notify all parties.

Incoming search terms:

• thailand escrow act
• escrow accout act
• thailand escrow act 2008
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Superficies is a right to own, upon or under the land, buildings, structures or plantations.  This right is granted by law to all persons, Thai and foreigners alike. This means that although a foreigner is not the owner of the land, his interests over the improvements thereon –e.g. house, building, crops, etc.– can be legally protected through the right of superficies.

Many foreigners — for a lack of knowledge on legally viable options — appoint Thai nominees to own land in their behalf.  The problem with this scheme is, aside from the fact that it is a blatant circumvention of the law, the Foreigner financier is without any legal protection for his or her investment.  There is no stopping the Thai nominee from exercising his or her legally recognized ownership rights over the land.  To avoid this dreadful scenario, a foreigner should have a registered title over the land—e.g. superficies– that can serve as an effective deterrent from unscrupulous nominees.

Primarily, there must be an agreement between the land owner and the superficiary (the grantee) detailing the grant of Superficies.  This Agreement should be registered in the competent Land Office in order to be binding against third persons.  As to the duration of superficies, it can be created for a period not exceeding 30 years or for the duration of the lifetime of either the landowner or the superficiary.

Superficies can be terminated after the lapse of the agreed period or upon the death of the party whose lifetime the superficies is established to last.  Either party can also terminate the superficies at anytime in the event that the other party is guilty of breach of an essential condition.

Superficies is a practical and beneficial scheme to protect a foreigner’s interest over the land.  Taking chances with a nominee’s sense of moral obligation maybe noble– albeit foolish– but employing ways   to protect one’s investment is more reasonable.

Incoming search terms:

• blatant circumvention
• foreign land acquisition for real estate