Title Deeds in Thailand. In Thailand, title deeds are the most crucial documents when purchasing or selling property. They determine the type of ownership, rights, and legal claims to a specific plot of land or condominium. The Land Department of Thailand is responsible for issuing and maintaining title deeds, which include several types, each offering different levels of ownership rights and responsibilities. Understanding these title deeds is essential to avoid legal pitfalls and ensure smooth property transactions.
1. Types of Title Deeds in Thailand
There are several types of title deeds in Thailand, each providing varying degrees of ownership rights. Knowing the differences between them is crucial before engaging in any real estate transaction:
a) Chanote (Nor Sor 4 Jor)
The Chanote is the highest and most secure form of title deed, offering full ownership. It is the only title that provides freehold ownership and allows the owner to sell, lease, transfer, or mortgage the land. The land is accurately surveyed with GPS technology, and its boundaries are well-established. This title is ideal for any buyer looking for maximum security in property ownership.
- Ownership Rights: Full ownership, transferable, and can be used as collateral.
- Usage: Suitable for both individuals and businesses looking for long-term property investment.
b) Nor Sor 3 Gor
This title offers a significant level of ownership rights but lacks the precision of a Chanote. The land under a Nor Sor 3 Gor title is surveyed but not as accurately as Chanote lands. While it offers transferable rights, the buyer should consider upgrading this title to Chanote, especially in long-term investments.
- Ownership Rights: Possessory rights with ability to sell or transfer.
- Usage: Can be used for property purchases, though it carries a lower level of security compared to a Chanote.
c) Nor Sor 3
The Nor Sor 3 title grants possessory rights rather than full ownership. The land boundaries may not be well-defined, and the land has not been fully surveyed. It is not considered a secure title for high-value transactions, though it can be upgraded to Nor Sor 3 Gor or Chanote.
- Ownership Rights: Possessory rights, not full ownership.
- Usage: Should be used with caution, especially in high-value or long-term transactions.
d) Sor Kor 1
This title is essentially a land claim document and does not confer ownership rights. The land can be occupied, but it cannot be sold, transferred, or mortgaged. Upgrading this type of title is essential for further development or sale.
- Ownership Rights: No ownership, only land use rights.
- Usage: Commonly found in rural or agricultural areas and offers limited security.
2. How to Verify Title Deeds
When purchasing property in Thailand, conducting a title deed verification is essential to avoid fraud, disputes, or other legal complications. A title deed verification involves:
a) Conducting a Title Search
A title search is done at the Land Department to confirm the legal owner of the property. This ensures that the seller has the legal right to sell the property and that the title is free of liens, mortgages, or other encumbrances.
b) Surveying the Land
For titles like Nor Sor 3 and Nor Sor 3 Gor, a land survey may be required to clarify the property boundaries. This ensures that the land being sold corresponds with the property listed in the title deed.
c) Checking for Encumbrances
Encumbrances, such as mortgages, leases, or easements, must be noted on the back of the title deed. Buyers must ensure that all encumbrances are cleared or addressed before completing the transaction.
d) Upgrading the Title
If the title deed is Nor Sor 3 or Sor Kor 1, it is often advisable to upgrade it to a Chanote to gain full ownership and avoid future disputes over boundaries or ownership.
3. Foreign Ownership Considerations
Thailand’s property laws place strict restrictions on foreign ownership of land. While foreigners are prohibited from owning land outright, they can own condominiums as long as the foreign ownership in the building does not exceed 49% of the total floor space.
a) Foreigners and Condominiums
Foreigners can legally own freehold title deeds (Chanote) for condominium units, making it the most common route for foreign ownership in Thailand. However, buyers must ensure that the building complies with the foreign ownership quota before finalizing the purchase.
b) Leasing Land
Foreigners may lease land for a period of up to 30 years, with the possibility of renewal. Leases must be registered with the Land Department to be legally enforceable. Any buildings constructed on leased land can be owned by the foreigner, but the land itself remains the property of the lessor.
c) Establishing a Thai Company
Another common method for foreign ownership is through the creation of a Thai majority-owned company. The foreign investor holds a minority stake, while Thai nationals hold the majority. However, strict regulations govern this structure to prevent misuse of loopholes in the law.
4. Common Issues and Legal Risks
a) Fraudulent Sales
In some cases, sellers may present forged or fraudulent title deeds. It is crucial to conduct a thorough title search and engage with legal professionals who can verify the authenticity of the documents and ensure that the transaction is lawful.
b) Disputed Boundaries
For titles like Nor Sor 3 and Nor Sor 3 Gor, unclear land boundaries may lead to disputes with neighboring landowners. Conducting a new land survey and upgrading the title to Chanote can help mitigate this risk.
c) Undisclosed Encumbrances
Failure to check for encumbrances such as mortgages, leases, or servitudes can result in significant legal and financial complications after the purchase. Buyers must ensure that all encumbrances are either cleared or agreed upon before transferring ownership.
5. Legal and Administrative Process
a) Transfer of Ownership
The transfer of property ownership must take place at the Land Department. Both parties must be present, or a legal representative may act on their behalf through a power of attorney. The transfer fee, typically 2% of the property’s appraised value, is paid at this time.
b) Tax Implications
Several taxes and fees apply to property transactions in Thailand, including:
- Transfer Fee: 2% of the appraised value.
- Withholding Tax: Based on the appraised value and length of ownership.
- Specific Business Tax (SBT): Applies to properties sold within five years of ownership at 3.3%.
Foreigners should also be aware of capital gains tax implications, particularly for profits made from selling property.
Conclusion
Understanding the different types of title deeds in Thailand is essential for both Thai nationals and foreigners looking to buy property in the country. The Chanote title offers the highest level of security, while other titles like Nor Sor 3 and Nor Sor 3 Gor can involve more risks due to unclear boundaries or possessory rights. Thorough due diligence, including title verification, land surveys, and legal consultations, is critical to ensure a safe and secure property purchase.