Key takeaways
For foreign buyers, the main options for a condominium are freehold within the 49% quota under Section 19 bis, or leasehold, which can be registered for no more than 30 years at a time. The key risk of leasehold is that the right to renew after year 30 is not automatically guaranteed, and a nominee arrangement is not a lawful option.
Introduction
Condominium sales to foreign buyers are most common in the main tourist areas. Developers should understand the limits of each structure, because an incorrect design puts both the buyer and the company's reputation at risk.
1. Legal principles to understand first
- A condominium unit is the exclusive property of its owner, and the owner holds co-ownership of the common property under the Condominium Act.
- Freehold means holding ownership of the condominium unit.
- Leasehold is a right to lease a unit owned by someone else. The owner remains the developer or a successor transferee from the developer.
Leasehold is therefore not a sale of a "condominium unit" with transfer of ownership, even though the market calls it a sale.
2. Four approaches found in the market
Approach 1: Leasehold in a condominium
The developer holds ownership of the unit and grants a long-term lease. By law, a lease of more than 3 years must be registered, and each lease term may not exceed 30 years. The market often offers 30+30+30, but the renewal portions are contractual commitments, not a 90-year lease term that is guaranteed immediately.
Advantages
It does not use the 49% ownership quota, and the developer can control the document structure.
Risk
If the owner changes or the company is wound up, a registered lease term has statutory protection, but renewal after year 30 depends on the commitment and the validity of the contract terms.
Approach 2: Freehold within the 49% quota
Section 19 bis limits foreigners in aggregate to no more than 49% of the total area of the condominium units. Buyers must meet the qualifications and provide evidence of funds under Section 19. Developers should manage the quota by area, not by number of units. The proposal to raise the ceiling was not law as of the date of review.
The advantage is that the buyer holds ownership of the unit, which can be sold, transferred and mortgaged under the law and the quota conditions. The point to watch is that the FET document or substitute evidence must be complete before transfer.
Approach 3: Usufruct over a condominium unit
The owner of a condominium unit can register a usufruct in favour of the buyer. Once registered, this right is a real right attached to the property, but it is personal to the holder and ends on the holder's death. It therefore suits personal use, but not resale or passing on to heirs.
Approach 4: One Thai company per unit
This structure is more common with villas than condominiums, because several companies must be set up and maintained. The Thai shareholders must be genuine investors. Using Thai individuals to hold shares as nominees carries penalties under Section 113 of the Land Code and may fall within Section 36 of the Foreign Business Act. Developers should not offer or arrange nominee structures.
3. When the developer company is wound up
When a company is wound up, the liquidator is responsible for collecting and disposing of assets to pay debts. Condominium units owned by the company may be sold. A registered lease remains effective for its term, and under Section 569 of the Civil and Commercial Code the transferee takes on the rights and obligations under the lease.
Renewal, however, is a point of risk, because a promise to renew may not directly bind the new owner in every case, and contract terms that make the lease exceed 30 years from the outset may be problematic. This follows analyses of Supreme Court Judgment No. 4655/2023, which stresses strict enforcement of Section 540.
4. Measures before transfer
| Measures | Action | Benefits and limitations |
|---|---|---|
| Register the lease | Register every unit without waiting for the whole project to be completed | Gives the leasehold legal effect against a new owner, but does not make renewal certain |
| Right of First Refusal | Write a right of first offer into the contract | Helps negotiation, but its binding effect on third parties must be checked |
| Renewal fund | Set aside money or a controlled account | Helps with financial readiness, but is not a legal guarantee in itself |
| Certified documents confirming the right | Prepare clear evidence of renewal | Can serve as documentary evidence, but certifying a signature does not change the legal status of the right |
| Transfer of the leasehold | Set out how the right is transferred on the secondary market and how to handle the death of the lessee | Must be checked against inheritance law and with the land office, because a lease is personal in nature |
5. Conclusion
A real estate lawyer should review the template contract before large-scale transfers, particularly on the following issues
- Registration of the lease and its effect on third parties
- The renewal mechanism in years 31 and 61, consistent with Section 540
- Protection when the developer is wound up
- Secondary-market transfers and handling the death of the lessee
- Related taxes and fees
This article is general information. Developers and buyers should seek advice specific to their case before signing or changing the contract structure.