Many lawyers are recommending to add an ability to change the form of ownership from leasehold to freehold in the sale-purchase agreement of apartment with a developer. Why is this necessary if you have already choose on the form of ownership?
The purchase of an apartment in Thailand in leasehold has a number of advantages, such as: low taxes on the transaction, there is no need to declare real estate in the country of citizenship, since the apartment is not legally considered property, low taxes on further resale.
But Leasehold has a number of drawbacks. So, for example, if you buy apartments in Thailand for the purpose of further resale, many buyers prefer to buy apartments in Freehold, and Leasehold can become an obstacle to the deal. The ability to transfer an apartment from the ownership from Leasehold to Freehold, in this case, will be a significant advantage.
However, under the condominium ownership rules in Thailand, only 49% of the total living space of apartments can be acquired in full ownership by foreigners. And if this quota is fully selected, then even if there is a clause in the contract, the developer will not be able to transfer the apartment you bought from Leasehold to Freehold. In this case, the right of full ownership can be issued only for a company registered in Thailand.
To avoid such a situation, it is better to immediately reserve with a developer a foreign quota for your apartment, then, if necessary, it will be possible to register the right of full ownership in your own name, or in the name of the buyer of the apartment.
The possibility of re-registering the apartment in full ownership may come in handy in the event of bankruptcy of the developer. If the developer, for some reason, became bankrupt, all property owned by him will be put up for auction. If you own an apartment in full ownership (Freehold) - you have nothing to worry about. But if your apartment is purchased in Leasehold - you may have problems. If a foreign quota is reserved for you, you can always hedge yourself and transfer the ownership right from a long-term lease to full ownership at the first sign of a financial problem of the developer.
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