Property law | inheritance of real estate by foreigners
Inheritance of land by foreigners
Foreigners are not allowed to own land in Thailand and foreigners cannot inherit ownership in land in Thailand. Foreigners married to a Thai national could be confused by the wording in section 93 of the Land Code Act: 'A foreigner who acquires land by inheritance as statutory heir can have an ownership in such land upon a permission of the Minister of Interior. However, the total plots of land shall not be exceeding of those specified in Section 87'.
Section 93 (upon permission of the Minister of Interior) must be read only in relation to section 86 of the Land Code Act, foreign ownership under a treaty, and not in relation to foreigners inheriting land from their Thai spouse as a statutory heir. The over 50- year old section refers to statutory heirs of foreigners who acquired land by virtue of the provisions of a treaty (section 86). The last treaty was terminated in 1970 and there is currently no treaty with any country allowing the Minister of interior to grant permission to foreigners to acquire and own land in the Kingdom of Thailand.
A foreigner married to a Thai national can inherit land, but will not be given permission by the Minister of Interior to register ownership. Therefore, any foreigner who inherits land as a statutory must dispose of the land within a period not less than 6 months and up to 1 year. If the foreigner fails to dispose of the land the Director-General of the Land Department is authorized to dispose of the land and retain a fee of 5% of the sale price before any deductions or taxes.
Note that it is only since 1999 (ministerial regulation) that a Thai national married to a foreigner is allowed to own land after is made sure that the foreigner does not obtain ownership rights in the land (letter of confirmation). Also upon death of the Thai spouse the foreigner will not be give permission to register ownership over land.
Inheritance of a condominium unit
The Thailand Condominium Act B.E. 2522 divides foreign heirs and successors of condominiums in qualified and unqualified for registration of ownership. In practice this means that the majority of foreigners inheriting a condo apartment in Thailand cannot register ownership and must sell the apartment within one year of acquisition by inheritance.
1 - Eligible heirs for ownership over a condominium
Eligible qualified foreign heirs or legatees under section 19 can register ownership over a condominium unless registration in the foreigner's name would exceed the foreign ownership quota within the condominium. In this case it is required by law that the unit shall be disposed by the foreigner within 1 year from the date of acquisition of such condominium unit by inheritance.
Who is eligible or qualifies for ownership under the condo act? Section 19 of Condominium Act B.E. 2522, as amended by Condominium Acts No. 1 – No. 4. foreign natural and juristic persons regarded by law as foreigners may hold ownership of an apartment if they are the following:
- Aliens permitted to have residence in the Kingdom under the immigration law (qualified to hold ownership within the foreign ownership quota of a condominium).
- Aliens permitted to enter into the Kingdom under investment promotion law (qualified to hold ownership within the foreign ownership quota of a condominium).
- Juristic persons as provided in Sections 97 and 98 of Land Code and registered juristic person under Thai law (qualified to hold ownership within the foreign ownership quota of a condominium).
- Juristic persons which are aliens under the Announcement of National Executive Council No. 281** dated November 24, B.E. 2515 and have obtained promotion certificate under investment promotion law (qualified to hold ownership within the foreign ownership quota of a condominium).
- Aliens or juristic persons regarded by law as aliens who have brought in foreign currency into the Kingdom or withdrawn money from Thai Baht account of the persons who have residence outside the Kingdom or withdrawn money from foreign currency account (qualified to hold ownership within the foreign ownership quota of a condominium).
2 - Ineligible heirs for ownership
Ineligible foreign heirs or legatees (i.e. any foreigner who does not qualify under the above section 19) shall notify in writing the competent official (at the local or provincial land office) within a period of sixty days from the date of acquisition of ownership of the apartment unit and shall dispose of such apartment within a period of not exceeding one year from the date of acquisition of ownership of apartment (section 19 septum Condominium Act). If the foreigner fails to do so, the Director-General of Land Department shall have power to sell it on the foreigner's behalf.
Inheritance of leasehold properties
Lease (hire of property) is under Thai law a personal right of the lessee and the general principle under Thai (contract) law is that the lease is terminated upon death of the lessee. As confirmed by the Supreme Court of Thailand the lessee is the essence of the lease agreement, therefore, if the lessee dies the lease contract is terminated.
Succession of the lessee’s rights must be agreed upon and anticipated in the lease agreement. The lease structure needs to include the necessary provisions for succession. The remaining lease term will not automatically transfer to the heirs and the lease agreement must be assigned and registered at the land office in the names of the heirs. If succession is agreed in the lease agreement the lessee's heirs have the right to claim performance directly from the lessor who signed to the contract (section 374 Civil and Commercial Code).
To prevent possible complications it could be recommended to include co-lessees in the lease agreement, who can each independently continue the lease in the event of death of one of the lessees.
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