Last week, we said a property buyer should have an agreement to make sure he or she gets the deposit back if something turns out to be wrong with the title.
But what could be wrong with the title? And why does it matter to you if you are buying or long-leasing property?
Let's look at an example. Suppose you have decided to buy a two-bedroom house at a development close to the sea.
It's a gated community with many facilities, such as a pool and tennis court. Several other foreigners already live there and the place looks well-maintained.
The developer presents you with a set of documents, explaining that what you're buying is a 30-year lease on a piece of land on which he'll build a house for you, once you've paid. You sign all the papers. He does, too. You give him part of the money and he starts work on the house.
But you've forgotten a step. Long before this, somebody has to go to the land office on your behalf and check to make sure the title is clean.
If you don't, you may not be buying anything.
First, let's look at what you're buying. You probably know that with rare exceptions that we'll discuss in a later column, foreigners can't own land in Thailand. Although Article 86 of the Land Code allows foreigners to own land in Thailand if there is a treaty allowing this, there is no such treaty. There were treaties allowing citizens of 16 countries to own land in Thailand but they were terminated on Feb 27, 1970. Since then, Thailand has not entered into any treaty that would allow foreigners to own land.
This goes for US citizens, who are often told that because of the Treaty of Amity between the US and Thailand, they can own land here. In fact, land ownership is an exception to the treaty and, despite the long-standing special relationship between the US and Thailand, US citizens can't own land in Thailand.
What a foreigner can own is a long lease. How long? Generally, it's 30 years, because Section 540 of the Civil and Commercial Code provides that the duration of a lease can't exceed 30 years, and if it does, the period must be reduced to 30 years. Section 538 of the code would allow a lease for the life of the tenant, and if the tenant lives longer than 30 years, the lease will continue for this period.
In practice, life-estate leases like this are seldom done, however.
Section 538 of the code also provides, in effect, that any lease longer than three years must be in writing and registered at the land office. If it isn't, it isn't enforceable beyond three years.
This means that the lease you're getting from this developer must be registered at the land office or you'll only have a lease for three years, despite the fact that it says it's for 30. Even though you've paid your money under these circumstances, somebody, another buyer from your landlord, for example, could throw you off the property _ and have the legal right to do so.
Here's an example of what could be wrong with the title. Let's say the developer doesn't really own it. It might be owned, for example, by a family member of his. He might be working with the knowledge of the family member, an older aunt, for example, with the promise that she will share in the profits of the development. Or the developer might be in dispute with the aunt, believing that he should have inherited it from a beloved grandmother rather than the aunt.
In either case, if the aunt is the owner of record on the certificate of title, it doesn't matter what claim the developer feels he has.
If the aunt doesn't sign as the landlord on your 30-year lease, it won't be registered. If he takes your money before you find out about this, it's unlikely you'll get your money back.
We'll talk about other things that can be wrong with a title next week. These are, of course, more reasons why you should have the title to a property checked before you pay for it.
James Finch of Chavalit Finch and Partners
(finch@chavalitfinchlaw.com)
and Nilobon Tangprasit of Siam City Law
Offices Ltd (nilobon@siamcitylaw.com).
Researchers: Arnon Rungthanakarn and Sitra Horsinchai.
For more information visit
www.chavalitfinchlaw.com.
Questions? Contact us at the email addresses above.