Land Law : How Real Is My Estate Under Thai Laws
October 3rd 2018
This presentation will deal with Thailand’s law or Real Estate System and Procedures in Thailand in a comparative analysis of carrying out a land and property business under a reliable, predictable, efficient and secure Real Estate System and Procedures, with reference to Cambodia and Vietnam, and juxtaposed against other jurisdictions of the Asia Pacific.
Thailand is a single and indivisible Kingdom. Human dignity, rights, liberties and equality of the people shall be protected. The rights and liberties of the Thai people, which are not prohibited or restricted by the constitution or other laws, shall be protected by the constitution, insofar as the exercise of such rights or liberties does not affect or endanger the society of the State, or public order or good morals, and does not violate the rights or liberties of other persons.
Thai’s land law and other related laws recognise that every person, both Thai and foreign nationals, aside from the restriction that foreign nationals cannot own land in the Kingdom of Thailand, except where certain legal provisions stipulate otherwise.
Land in Thailand is governed by the Land Code (the “land law”). Land means the land surface everywhere and includes mountains, hills, streams, ponds, canals, swamps, marshes, waterways, lakes, islands and coast.
The rights in land mean ownership and also include possessive rights. The title deed is the document, issued by the competent official, showing ownership of the land, and includes land title deed with map, pre-emption title deed and pre-emption certificate stamped “ALREADY PUT TO USE”; while the certificate of use is the document showing the possessor’s rights of land from the competent official, certifying that land has already been put to use.
The land law in Thailand has chapters and provisions relating to restriction and prohibition of rights in land, e.g. land allocation for people; delimitation of rights in land; limitations of rights in land for religious purposes; limitation of foreign nationals’ rights in land; limitation of rights in land of some categories of juristic persons, which shall be entitled to the same rights as foreigners; and penalties for violation or failure to comply with the prohibition or restriction of some certain land law provisions.
The Civil and Commercial Code
In addition to the land law, the Civil and Commercial Code (the “CCC”) has the definition of “Things” as corporeal objects and immovable property denoting land, and things fixed permanently to land or forming a body with land. ,
The wordings “land” or “real estate” used in this presentation have the same meaning.
To own, possess land or carry out a real estate business in Thailand; does any individual who owns or possesses the land really enjoy his/her real estate rights under the land law and other related laws?
The answer is yes, provided that every person must, in the exercise of his/her rights and the performance of his/her obligations, act in good faith, and that the objective of such act is not expressly prohibited by law, is impossible or is contrary to public order or good morals of the people of Thailand.
Under Thai law, real rights may be created only by virtue of the CCC or other laws (the applicable laws). Subject to the provisions of the applicable laws, no acquisition by juristic act of immoveable property or real rights appertaining thereto is complete unless the juristic act is made in writing and the acquisition is registered by the competent official.
According to the applicable Thai laws, there are two types of properties: State property and private property. State property is classified into two kinds: public domain of the State and State property. The public domain of the State includes every kind of State property which is in use for public interest or reserved for common benefit, such as: waste land and land surrendered, abandoned or otherwise reverted to the State according to the land law; property for the common use of the people, e.g. foreshores, water-ways, highways and lakes; property for the special use of the State, e.g. fortress or other military buildings, public offices, places of worship, storage of arms and ammunition. Any property which forms part of the public domain of the State is inalienable except by virtue of a special law or Royal Decree. Neither prescription can be set up against the State with regard to any property which forms part of its public domain, nor can seizure of State property be carried out, regardless of whether or not such property forms part of its public domain.
To ensure that a person’s real estate business is protected under the applicable laws, every person must act and exercise rights in good faith, and the objectives of such acts must not be expressly prohibited by law or is impossible, or is contrary to public order or good morals.
Other related laws
In order to protect a person’s real land rights (ownership or possessive rights), every person, both Thai and foreign nationals, must acquire his/her rights in land in accordance with the laws described above.
Furthermore, said person must understand clearly and completely how other related laws are interpreted by the competent authorities or courts, and must take into consideration performance of his/her real estate business in a transparent and accountable manner in order to satisfy the authorities.
Apart from the land law and the CCC as described above, every person who is considering owning or possessing land, or performing a real estate business in Thailand, must take into account other related laws, as follows:
- The National Park Act, B.E. 2504 (1961),
- The National Reserved Forest Act, B.E. 2507 (1964),
- The Town Planning Act, B.E. 2518 (1975),
- The Investment Promotion Act, B.E. 2520 (1977), amended (No. 2) in B.E. 2534 (1991), amended (No.3) in B.E. 2544 (2001), and amended (No.4) B.E. 2560 (2017),
- The Condominium Act, B.E. 2522 (1979),
- The Building Control Act, B.E. 2522 (1979),
- The Industrial Estate Authority of Thailand Act, B.E. 2522 (1979),
- The Factory Act, B.E. 2535 (1992),
- The Improvement and Conservation of National Environmental Quality Act, B.E. 2535 (1992),
- The Foreign Business Act, B.E. 2542 (1999),
- The Land Appropriation Act, B.E. 2543 (2000),
- The Hotel Act, B.E. 2547 (2004),
- The Mineral Act, B.E. 2560 (2017),
- The Eastern Special Development Zone Act, B.E. 2561 (2018)
Thailand’s reason for promulgating other related laws
The main reason to enact other related laws is for Thailand’s development and conservation of environmental qualities for utilisation and development of land.
Each of the other related laws can be briefly summarised for your information as below.
(a) The National Park Act
For the protected land under this Act, which is determined to be a national park area, e.g. land including mountain, rivulet, marsh, canal, swamp, waterway, lagoon, island and sea shore; it is prohibited for any person to, among others, hold or process land, including construct, destruct or burn forest; collect, remove or act in any way to harm or decay timber, timber-gum, gum-turpentine, turpentine oil, mineral resources or other natural resources.
A person in violation of this Act shall be liable to imprisonment.
(b) The National Reserved Forest Act
Forest is land determined to be forest under this Act. It is the land including mountain, rivulet, marsh, canal, swamp, waterway, lagoon, island and sea shore, over which no person has legal rights under the law.
No person is permitted to hold or possess forest land for whatsoever purpose unless permission is received from the competent official.
Any person who violates provisions of this Act shall be liable to imprisonment.
The Town Planning Act
This Act was enacted for the town planning objectives of preparation, making and implementation of a general plan and a specific plan in the area of a town and related areas, or in the countryside, in order to build or develop a new town, a part thereof, or to replace a damaged town or a part thereof, for the purpose of; providing or improving sanitation, amenities and convenience, orderliness, beauty, use of property, public safety and social security; improving the economy, social affairs and the environment; preserving a place and an object of interest or value in the field of art, architecture, history or antiquity; and preserving natural resources, landscape of beauty or natural interest.
In addition, there is a provision on “general town planning” regarding a plan, policy and project, including a measure of general control, to be used as guidance in the development and maintenance of a town and related areas, or of the countryside, in the fields of use of property, communication and transport, public services and the environment; for the purpose of achieving the objective of town planning.
Furthermore, there is also a “specific plan” regarding a plan and operation project for the development or maintenance of a specific area, or related affairs, in a town and related areas, or in the countryside, for the benefit of town planning.
The construction for town planning is construction under the law on the control of building construction, including every kind of structure or any other things placed on, under or over the surface of land or water.
(d) The Investment Promotion Act
This Act has empowered the Board of Investment (BOI) to consider and grant promotion to the activities eligible for investment promotion by the BOI, and to ensure that they are those which are important and beneficial to the economic and social development, and security of the country. For example, activities which involve production for export; and activities which have a high level of capital, labour, services or activities which utilise agricultural produce or natural resources as raw materials, provided that, in the opinion of the BOI, they are non-existent in the Kingdom of Thailand, or existent but inadequate, or use out-of-date production processes.
The BOI shall make an announcement designating the types and sizes of investment activities eligible for promotion, and may stipulate such in the conditions as to which promotion is to be granted, as well as amend or abolish those conditions at any time.
In the case where the BOI is of the opinion that, if any activity announced to be eligible for promotion under paragraph two no longer requires said promotion, it may announce a temporary or permanent cancellation of promotion for that activity.
The investment project to which the BOI may grant promotion shall be one which is economically and technologically sound. Consideration will be given to:
- a) The existing number of producers and production capacity in the Kingdom of Thailand, and the size of production capacity to be created under promotion compared with demand estimates;
- The prospect that such activity will expand the market for the products or commodities produced or assembled in Thailand, and will encourage the production or assembly in Thailand;
- The quantity and proportion of the resources available in Thailand, including the capital, raw or essential materials, labour and other services utilised;
- The amount of foreign currency which may be saved or earned for Thailand;
- The suitability of the production or assembly processes; and
- Other requirements which the BOI deems necessary and appropriate.
(e) The Condominium Act
This Act allows any foreigner, who is so qualified and permitted, to reside in Thailand under the immigration laws, etc., to own condominium units However, in each condominium building, foreign ownership must not exceed 49% of the total area of the condominiums in each building at the time of applying for registration of the condominium building.
(f) The Building Control Act
The Building under this Act means a townhouse, house, home, hall, shop, raft, warehouse, office and other construction in which people may live or utilise, and shall also include:
a) A grandstand or other construction for public assembly;
b) A dam, bridge, tunnel, waterway or drain, dockyard, waterside pavilion, pier, fence, wall or gate built next to or near a public place or construction for general public use;
c) A signboard or the construction for fixing or holding the signboard:
1) on or standing on public land, sized at one square metre, or weighing, including its structure, of at least 10 kg; or
2) on or standing near public land, wherein the horizontal distance from the public land is less than the height of such signboard when measured from ground level, and with the size or weight exceeding those prescribed in the Ministerial Regulation;
d) An area or construction to be used as a car park, car reversing space, and car entrance and exit for the building prescribed in the Ministerial Regulation; and
e) other constructions prescribed in the Ministerial Regulation.
Any person who wishes to construct, modify or move a building must be licensed by the local competent official.
Alternatively, any person may construct, modify or move a building without applying for a licence to the local competent official; however, they must inform the local competent official in the form prescribed by the Building Control Committee, and attach the document and evidence as specified in such form, i.e. at least informs the data, and submit the document and evidence prescribed by the competent official.
(g) The Industrial Estate Authority of Thailand Act (IEAT)
This law was enacted to establish the IEAT as a juristic person, having the following objectives, among others:
- 1) Procurement of suitable land for the establishment or expansion of an industrial estate, or for other business beneficial to or connected with the IEAT.
- Improvement of land under (1) in order to provide services as well as other facilities for an operation of industrial operators, traders for export and other operators beneficial to or connected with industrial operation or trading for export, such as providing roads, drainage system, waste-water treatment plant, electricity, water works and telecommunications systems.
- Letting, sale by hire-purchase and sale of immovable or movable properties in an industrial estate, or for the direct benefit of the activities of an industrial estate.
- Carrying out of other business beneficial to or connected with the activities which are within the scope of the IEAT’s objectives.
- For cooperation with other persons in carrying out the objectives under (1), (2) or (3), including being a partner with limited liability in a limited partnership or a shareholder in any juristic person, the whole objectives must be beneficial to or connected with the activities which are within the scope of IEAT’s objectives.
(h) The Factory Act
A factory, under the Act, is defined as a building, place or vehicle which uses a machine of at least five horse power or an equivalent thereof, which employs seven workers or more with or without any machine for manufacturing, producing, assembling, filing, repairing, maintaining, testing, improving, altering, transporting, keeping or destroying anything in accordance with the type or kind of factory as provided for in the Ministerial Rules.
There are three types of factory prescribed in the Ministerial Rules: group 1 factory; group 2 factory; and group 3 factory.
1) A Group 1 factory is of the type, kind and size to be capable of engaging in a factory business immediately upon the desire of a person engaging in a factory business.
The operator of the factory business of Group 1 must comply with criteria provided in the Ministerial Rules.
2) A Group 2 factory is the type, kind and size where, when engaging in the factory business, it must be notified in advance to the Grantor (Permanent Secretary of the Ministry).
The operator of the factory business in Group 2 must comply with criteria provided in the Ministerial Rules and, upon commencing the engagement in a factory business, must notify the relevant authority in advance.
3) A Group 3 factory is the type, kind and size as to be granted a permit prior to the engagement.
The operator of the factory business of Group 3 must obtain a permit from the Grantor and must comply with criteria provided in the Ministerial Rules. No one shall be allowed to establish a factory before obtaining a permit.
The Act empowers the responsible minister to consider the necessity for control, prevention of nuisance, damage and danger in accordance with the gravity of impact on the public or environment, as classified in each group.
(i) The Improvement and Conservation of National Environmental Quality Act
This Act was enacted with its main objectives to protect, preserve and reserve the environment. It has provisions relating to setting up the Natural Environmental Board with the power and duty to, among others: submit a policy and plan for enhancement and conservation of the quality of the natural environment to the Cabinet for approval; to prescribe environmental quality standards; set up an environmental fund; provide environmental protection for quality standards and management planning; provide conservation and environmentally protected areas; conduct environmental impact assessment; carry out pollution control of emissions or effluent standards, area, air and noise, water, other pollution and hazardous waste, monitoring inspection and control, service fee and penalty, promotional measures, civil liability and criminal offences.
The environment is a natural thing which forms the physical and biological conditions surrounding people and people-made things.
Any person who uses land in performing a real estate business must not perform his/her business in a way that may cause impairment to the quality of the environment.
The balance of nature, which is composed of animals, plants, natural resources and people-made objects for the benefit of the subsistence of humankind and the sustenance of human-beings and nature, must be always protected, preserved and reserved.
The parameters of quality standards for water, air, noise and other conditions of the environment, which are determined as the general criteria for enhancement and conservation of environmental quality, must be taken into consideration by every land and property operator.
The business performance of the operator must not cause pollution as the consequence of wastes, hazardous substances and other polluting substances, as well as residues, sediments or remainders of such matters as discharged from point sources of pollution or naturally occur in the environment, which have or are likely to have impacts on environmental quality or cause conditions poisonous or harmful to the health and hygiene of the public; and shall mean to include radiation, heat, light, noise, odour, vibration or other nuisances emanated or discharged from point sources of pollution.
Any person who causes pollution impact to the environment atmosphere that has been affected, charged or contaminated by pollutants, resulting in deterioration of environmental quality, such as water pollution, air pollution and soil pollution, shall be prosecuted with civil liability and criminal offences.
(j) The Foreign Business Act (FBA)
The FBA defines “foreigner” as: (1) a non-Thai natural person; (2) a juristic person not registered in Thailand; and (3) a juristic person registered in Thailand whose share capital is held by persons under (1) and (2), or a juristic person whose share capital is held by foreigners in the ratio of more than half of the registered capital.
The FBA prescribes the qualifications of foreigners and activities which foreigners are prohibited from engaging in, as follows:
- Businesses in which foreigners are not permitted to engage for the special reasons prescribed under Category One;
- Businesses relating to national safety or security, businesses affecting arts and culture, tradition and local handicrafts, or businesses affecting natural resources or the environment as prescribed under Category Two, unless permission is obtained from the Minister with the approval of the Cabinet;
- Businesses in which Thai people are not ready to compete with foreigners as prescribed under Category Three, unless permission is obtained from the Director-General with the approval of the Committee.
(k) The Land Appropriation Act
A person who has rights on land (ownership or possessive rights) and wants to perform land appropriation must receive permission from the committees of Bangkok Metropolitan and Provincial Land Appropriation.
The land appropriator shall have obligations to perform, among others, the projected improvement of land appropriation, as well as arrange to have public utilities and public service inclusive of other improvements suitable for local condition, showing lay-out and details of construction with estimated value and scheduled time for completion of the job.
The land appropriator has the duty to maintain and preserve the public utilities arranged by the appropriator for land appropriation according to the permitted lay-out and project, e.g. road, garden, play-ground, which shall be under servitude by law for the benefit of land appropriated. In such regard, it shall be the duty of the land appropriator to continually maintain the public utilities in good condition, and it shall not cause reduction of benefits in servitude and facilities.
(l) The Hotel Act
The Act prescribes that “hotel” is a place of accommodation which has been established with commercial purposes so as to provide temporary accommodation for travelers or any other person with remuneration in return. However, said definition excludes the following:
- A place of accommodation established for providing temporary accommodation, operated by an administration agency, a State enterprise, a public organisation or other government agency, for charitable or educational purposes, which is NOT for profit making or sharing of income;
- A place of accommodation established with an objective to provide accommodation by charging a monthly service fee only; and
- Any other place of accommodation as prescribed by the Ministerial Regulations.
No one shall operate a hotel business unless he/she receives a licence from the Registrar. The Registrar is a person appointed by the Minister.
(m) The Mineral Act
Any person who has rights in land (ownership or possessive rights) and wishes to perform a mining business must act or perform according to this Act.
The provisions of this Act are to systemise the permission and collection of the mineral royalty by prescribing the national mineral resources management policy, in order to achieve an equilibrium in the development of the economy, society, environmental preservation and public health; by prescribing the criteria for granting licences and the monitoring over the mining to be suitable with the type and size of the mining.
This shall be achieved by promoting the involvement of the local government and the community in the mineral resources management, prescribing the criteria to allocate the benefits from the minerals resources to the local government and the community in the area where the mining zone is located, and the area which is affected from the mining, as well as prescribing the payment of compensation to the person who has the ownership or the right of possession over the land where the underground mining is located, including prescribing the criteria and method for collecting the mineral royalty.
(n) The Eastern Special Development Zone Act
The current Thai government has the policy to promote the use of land situated in the eastern part of Thailand in order to boost the high economic potential of the Eastern Region of Thailand.
If the region undergoes a continuous and systematic development in line with the principles of sustainable development, the use of the land in the Eastern Region of the country will be appropriated considering the true nature and potential of such land. This will, in turn, enhance the country’s competitiveness overall, particularly in respect of the promotion of the engagement of commercial and industrial activities which apply advanced and modern technologies; the creation of innovationsl and approaches that are environmentally-friendly and compatible with traditional agricultural practices and the ways of life of the communities in the area.
However, the fact is that the law currently in force and effect does not facilitate development in line with the aforementioned principle and there is a lack of macro land management planning results in isolated and non-cohesive improvements. This non-integrative environment thus obstructs the ability to develop the Eastern Region to its fullest potential.
Furthermore, considering the lack of continuity and synchronisation of the basic public utilities of the various Government Agencies, it is appropriate to prescribe the Eastern Region as the Eastern Special Development Zone (ESDZ), with the following goals;
- To engage in clear and definitive land use planning that is appropriate for the nature and potential of the land as well as in line with the principle of sustainable development;
- To engage in the continuous and synchronised integration of the civil infrastructure and public utilities within and outside of the Eastern Special Development Zone;
- To engage in urban development to enhance the modernity of the cities in order to meet the international standards of land used for residential and commercial purposes;
- To provide a one stop government service, and to grant rights and benefits specifically to the Special Economic Promotional Zone Operators.
The ESDZ comprises the areas in Chachoengsao, Chonburi and Rayong Provinces and is prescribed by a royal decree for the following objectives:
- Development of modern and environmentally-friendly economic activities to enhance the country’s competitiveness;
- Provision of comprehensive and integrated government services to reduce obstacles and minimise costs in business operations;
- Provision of infrastructure and public utility systems that are efficient, interconnected, easily accessible by the general public, and fully and systematically linked;
- Identifying land uses suitable to the conditions and potential of the areas in line with the principle of sustainable development; and
- Urban development and modernisation of cities to meet international standards, which are suitable and convenient for safe living, and are accessible by the general public and for quality business operation.
The rights in land or real estate (ownership or possessive rights) are very real issues to you (both Thai and foreign nationals) and must be protected, provided that you are carrying out a real estate/land and property business in Thailand.
In addition, you must act or exercise your rights, and perform your obligations in accordance with the applicable Thai laws as cited above.
Last but not least, you must act or use your real rights in good faith; the business’s objectives must not be expressly prohibited by the applicable Thai laws or be impossible, or contrary to public order or good morals of the people of Thailand. In such case, your estate is real in Thailand.