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As a foreigner looking to buy land or property in Krabi Province, it is essential that you understand your rights before entering the marketplace. There are many laws (and many ways around them) that you should be aware of. This brief guide will introduce you to some of the issues.YOU’VE been there, done that and bought the T-shirt, but what about a more permanent reminder of how good life can be? More and more foreigners are choosing to leave stress and colder climes for the sun and relaxed lifestyle of Thailand, either permanently, or for the winter months back home.
Before you make such a decision, though, it pays to be informed. The two-week holiday romance rarely turns into a lasting affair; nor is it meant to. A paradise where you don’t speak the language or understand the culture can turn out to be harder than expected. Add to that a property market in Krabi that is explosive and unpredictable and you potentially have a recipe for heartbreak soup.
Real estate in Thailand: a brief introductionThis page is meant as none other than a rough guide, dealing with some of the issues you are likely to come across in your Thai property-buying adventure. Please seek advice from as many different sources as possible to build up a complete picture, including Krabi expats, lawyers, estate agents, and the press and other websites.
The first thing to remember is: do not take the decision to buy lightly; and when you have made it, never take your eye off the ball - especially if you are new in town. Two words: caveat emptor. Buying a house, or having one built for you in Thailand can be a complicated - and risky - business. As a foreigner, your investment options are limited by the protectionist policies of the Thai state, which forbids foreign individuals from owning any land in Thailand. Circumventing this jurisdiction is a matter for professionals, of whom there are few in Krabi.
So what are your options?
While there are clear restrictions on land ownership by foreigners, there are other options available that may provide an adequate level of security.
For example, foreigners are allowed to own the freehold on new or existing buildings built on leased land. Land can be purchased leasehold for a period of up to 30 years, with options to renew twice. The lease should be registered at the Land Office (otherwise it can legally be declared void after 3 years) and include clauses that automatically allow freehold ownership for the lessee if the law should change in the future, as well as the right to sell or transfer the lease for capital gain. If such a lease is drawn up for the full term of 90 years, this can effectively be classed as ownership.
Foreigners are also able to buy outright apartments in registered condominium buildings, if they prove that they brought the funds used from overseas into a Thai bank. This is a popular option in Bangkok and Pattaya. As yet, however, there are no such buildings in Krabi.
NOTE: Since summer 2006, it is no longer possible to buy land in the name of a Thai company, in which you then make yourself the sole director and control all decisions pertaining to the property. The Land Department is quick to check the credibility of Thai shareholders in any company with foreign partners, to make sure they are not nominees and have the means to buy their shares. A legitimate partnership of equals is allowed. Please see our article on the new rules for buying property in a company name for further information.
Despite the existence of at least one alternative, buying in the name of a trustworthy Thai friend, partner or spouse is still the most common route to 'owning’ property here, as it involves the least bureaucracy. Be aware, though, before you hand over your money to someone you barely know, that all holdings will be in the Thai national’s name. Further, in the case of a married couple, the foreign husband is obliged to sign a declaration affirming the property was bought entirely with his wife’s own money and that he has no claim to it. This means that in the case of a falling out, divorce or pre-deceasment, in the eyes of the law, you have no rights whatsoever to your holdings.
Paperwork is key throughout the process. Certain types of land titles do not allow building on the site; or land may have disputed ownership. It sounds obvious, but all documents pertaining to the ownership and use of any land or property must be thoroughly checked at the local land office by a competent lawyer - use a professional from Phuket or Bangkok if necessary. Then, as one experienced farang buyer advises, “before you make any agreement, make sure every single piece of paper involved is translated into your language by someone trustworthy. Your embassy can do this, for a price, but you know it will be reliable and unbiased.”
He advises not to cut corners. “Trying to save 2,000 Baht on a translation could end up costing you millions later. The Thai government is quick to act when it finds discrepancies in foreign-leased property papers.”
If you are buying a house in Krabi from a plan, make sure the initial contract with the builder is water-tight. Ideally, the constructor should provide you with detailed plans before building has started, with all materials to be used listed (if a project goes over budget, a common money-saving measure involves switching to inferior grade products) and, if possible, you should be around to monitor the progress of your home as it goes up.
You should also establish in the contract what exactly is included in the price, to avoid wrangles over, say, telephone lines or street maintenance later. At the time of buying, there may be many things you don’t think of, but your lawyer should be able to suggest things you may have overlooked. It goes without saying that there is no reason to sign anything, or hand over any money until you are completely happy with the deal.
Other than a good lawyer, the other essential when buying property in Thailand is a healthy supply of patience. “Schedules? Forget it”, shrugs a seasoned investor. “Contractors will always be late - in my experience, about 2.5 times longer than they say. It’s not worth pushing them, either, as it’s an incentive to cut corners.” This advice applies equally to buying land or a house. Everything needs to be in order and, in Thailand, this takes a long time.
Finally, a brief word about finance. The market here is mainly cash-driven and you should bear in mind that it is almost impossible for a foreigner directly to obtain mortgage financing in Thailand - all the more reason to check out the paperwork before handing over a lump sum. As a rough guide, be prepared to pay an additional five percent over and above the property value to cover extra costs, which include government charges (both official and unofficial), building inspection costs, legal expenses, insurance and any repairs required.
One other important detail to understand before you move into your dream home, is this: the fact that you own, or long-term lease property, even if it is in your name, does not change Thailand’s immigration laws. You will still have to leave the country periodically when your visa expires - see our long-stay practicalities page for more information. It is very difficult for foreign ‘residents’ to actually acquire legal resident status.
Above: When building a house in Krabi, patience will be a virtue - everything takes at least twice as long as you think it will.
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