Buying a Condominium: Foreign Freehold Ownership
June 9th, 2010
The easiest and most secure way for a foreign investor to purchase real estate property in Thailand is to purchase a condominium unit freehold because the legal requirements are as we will see below minimal.
In order to be eligible to purchase a condominium freehold foreign investors need only to fulfill the following legal requirements:
- Ability to enter Thailand legally; and
- Proof that the funds used to purchase the condominium were remitted from overseas in foreign currency.
Without such proof, the Land Department will not permit the transfer of ownership of a condominium to a foreign buyer.
Note: Foreigners who have resident status in the sense of the Thai Immigration Act only(Blue Resident Book) are exempted from the obligation to remit foreign currency from overseas. Legal residents are also allowed to buy in baht and even to borrow money with a Thai bank to finance their purchase.
Foreign Quota Requirement:
Furthermore the total ratio of foreign ownership in any condominium building is limited to 49% of the total private area of any condominium building at any one time.
Therefore prior to agree to purchase into a condominium building please check with the juristic person or co-owner association what is the ratio of foreign ownership there.
Foreign Currency Transfer Requirement:
When transferring foreign currency from overseas, you should follow the following rules.
The foreign currency:
- must be of an amount at least equivalent to the purchasing price of the condominium, or the condominium appraisal price; and
- remitted from overseas; and
- brought into Thailand; and
- exchanged in Thailand; and
- either be from a bank account in the name of the foreign buyer; or transferred to a bank account in Thailand in the name of the foreign buyer.
When requesting your bank to initiate the transfer, have them add the following details to the part of the wire transfer form reserved for remarks:
“as payment due on the purchase price of condominium unit no.  in the  Condominium”.
The number of the unit and the name of the condominium are not mandatory, but recommended.
Transfer requirement when purchasing in co-ownership with a foreign spouse
If you are purchasing in co-ownership with a foreign spouse and the money is not sent from a joint account in the names of both spouses, do not forget to mention that the transfer is also made on “behalf of the first name and surname of the spouse”.
Here again, this remark is not mandatory, but recommended.
Transfer requirement when purchasing in co-ownership with a Thai person
If a foreign buyer purchases a condominium in co-ownership with a Thai person, such as a Thai spouse, and if the condominium unit title deed is to be transferred and registered to both co-owners names, then the foreign buyer will only need to remit half of the purchase price of the condominium in foreign currency.
The other half of the condominium price may be paid in Thai baht, because it is the Thai buyer’s contribution to the purchase of the Thai share of co-ownership.
Note: The Thai co-owner could apply for a loan with a Thai bank to finance the payment of his/her share of the condominium unit purchase price. In this case, however, the bank will want the mortgage to apply to the whole condominium unit.
Foreign Exchange Transaction Form and Foreign Exchange Credit Advice
The foreign condominium buyer will have to use Foreign Exchange Credit Advice(s) issued by his/her bank in order to prove that he/she has transfered into Thailand the condominium purchase money in foreign currency.
If the transfered amount is below to 20,000 USD the bank will issue the Foreign Exchange Credit Advice upon request of the foreign investor.
Whenever transfering foreign currency in an amount superior to 20,000 USD or its equivalent the foreign investor will have first to file with the bank a form called Foreign Exchange Transaction Form (“FETF”) before to apply for the Foreign Exchange Credit Advice.
Note: Banks will hold any transfers above the amount of 20,000 USD until such time when the FETF has been filed. It is only after the recipient of the transfer of more than 20,000 USD has filed the FETF that the banks will exchange the money into Thai baht and credit it on the recipient account.
If you transfer the foreign currency directly into the bank account of the developer or of a lawyer, the developer or the lawyer will be handling these formalities on your behalf.
Note: Do not forget. If you transfer the money to Thailand into a third party account (developer or lawyer) the money will have to be sent from an account under your name in order for you to be eligible to purchase a condominium freehold. Do not transfer funds directly from a fund or a company to the developer or the lawyer account. Have the money transit through a personal account.
If you transfer the foreign currency into your personal account in Thailand, you will have to take care of the of filing the FETF yourself. Be careful to do it upon each transfer and don’t wait until the last minute, because banks need an average of 24 to 48 hours to issue an FCEC.
Note: if you are not in Thailand at the time when the transfer is executed on your Thai personal account sign a FETF in blank and remit it to your lawyer. Otherwhise the money transfered will be on hold for as long as you are not able to fulfill this requirement.
Nowadays, minimum amounts are no longer applicable and Thai banks will issue Foreign Currency Credit Advices for any amount (including small monthly installments of 500 or 1000 Euro) and charge a fee for this service of around THB 200 per certificate.
If you lose your Foreign Currency Credit Advice or your FETF before the transaction at the Land Department, you may request the bank re-issue a duplicate, as long as you still have the reference for the transaction. In general, the bank will request that you declare the loss of the FETF or of the Foreign Currency Credit Advice with the police first.
If the transfer took place more than two years ago, some banks will not issue the certificate, but others will. This process will take about 10 days and the bank might charge you a surcharge for the service.
If you lose your copy of the FETF or of the Foreign Currency Credit Advice after the transfer of the condominium at the Land Department, you may go to the Land Department anytime and request a copy of the FCEC that the Land Department will have on file. Here again, you will be requested to pay a small government fee for the service.
Things you must absolutely not do
The following must be strictly avoided when transferring your money:
- Do not exchange your foreign currency for Thai baht on the international market, because you will not qualify to purchase a condominium freehold.
- If you transfer directly to the account of the developer in Thailand or through the account of a lawyer, do not send the money from an account that’s not under your own name (company account, pension fund, and trust fund, etc.). Your name simply must appear at one end of the transaction or the other.
About the Author:
The author Rene-Philippe DUBOUT is a lawyer since 1990 when he was admitted to Geneva bar (Switzerland). He practiced as a litigator there for 10 years until he moved to Thailand in 1999. In 2002 he founded with a group of Thai lawyers Rene Philippe & Partners Ltd a local law firm that specialized in Cross Borders Investments and Real Estate. He has been lecturing in several Thai Universities and a speaker to numerous conferences and seminars. He is the author of a must read book:”How to Purchase Real Estate Offshore Safely: The Case of Thailand”.