Buying Land: The Nominees Witch Hunt (1)

January 22 2010 Categories: Land Ownership, Thailand Property No comments yet

As you know a “witch hunt is a search for witches or evidence of witchcraft, often involving moral panic, mass hysteria and lynching, but in historical instances also legally sanctioned and involving official witchcraft trials. The term “witch-hunt” is often used by analogy to refer to panic-induced searches for perceived wrong-doers other than witches.” Now Thailand has been since 2006 affected by a serious political crisis and the successive governments since the beginning of this crisis have been under a lot of pressure.

The best way to distract people in this kind of circumstance is to focus their attention on the “Other” in this particular case the foreign investor that invested part of his life saving to purchase a property in Thailand.

Did a lot of foreign buyers circumvent the law?

Yes, tens of thousands of them by my estimation.

Why did they do it?

Mostly because there are no valid alternative to freehold property in Thailand, the right of superficies or the leasehold are for a limited duration of 30 years only.

Yes there is a renewal clause but they are a lot of legal issues attached to it which make me say that it will be short of a miracle if all the renewal clauses that have been executed during the past years are actually enforced. When you are about to invest part of your live saving into a property in a foreign country you think in terms of legacy. Will my children and grand children be able to profit from my investment? Current leasehold regulation makes sure that they may not.

General Complacency: “All Guilty as Charged”

The successive Thai governments have for nearly 30 years been complacent with the issues of nominees and the issue of foreign buyers purchasing land through companies with Thai shareholders that may be deemed nominees.

I’m aware that the action or inaction of the successive Thai Governments may not be construed as a waiver not to apply the law and that the current government is well within its rights to pursue foreign investors and Thai that have violated the law.

But the fact is that thirty years of inaction create a de facto complicity of the Thai authorities. Indeed the fact is that most of the foreign buyers who have been purchasing land foreign buyers purchasing land through companies with Thai shareholders that may be deemed nominees have consulted 2 or 3 lawyers before to actually do it.

Before 2006 the “moto” of every lawyer in regards to this matter was: “Look, technically it is illegal to do so, but Thai authorities do not care and no one has ever been sued during the past 30 years for doing so. Someone would have been if they did” and “we believe that it indicates that Thai authorities are not in disfavor to the principle of foreign residential land ownership but they know that to pass a law allowing it may not be as easy as we would like it to be”

Therefore the current situation is the result of a collective failure, failure from the Thai Authorities to act for too long creating the expectation of a tolerance, failure from the legal profession (foreign and Thai lawyers are to be put in the same bag) to dissuade foreign investor to “do it”, failure from the Thai sellers who knew they were selling to foreigner and failure from the foreign investor to abide by the law. In this context punishing only the foreign investors and their nominees (who mostly are friends which never get any benefit for the services) would be inequitable and unfair.

I want to kill a legend. The Thai sellers who have knowingly sold so many pieces of beach land to foreign buyers are not the poor uneducated farmers who were unaware that they were selling the Mother Land to foreigners (as I have seen recently in a news paper) but were in many cases the rich or middle class land owners families that knew very well what they were doing. Another legend is that foreigners do not pay for land more than Thai buyers may afford. When a Thai buyer wants a piece of land he will buy it at prices than foreign buyers would never consider.

A problem that has to be solved

The Thai Authorities are however right on one point.

The situation cannot continue as it is. Laws are made to be enforced and people should not be allowed to violate it and go unpunished. But the fact is that we have situation that lead me to believe that punishment is not the right answer. Something has to be done about it. Land has to be returned to Thai.

But it has to be done in a consensual way not through a witch hunt that would only destroy the image of Thailand internationally. How popular would a Thai Government that start to sentenced foreign retirees to huge fine and jail terms and force them to sold their property.

The right move would be to organize a committee with figures from the government, the legal profession, real estate professional and work through a compromise that would permit to solve this problem once for all. Tomorrow I will propose my solution to this issue.

Note: This post is an excerpt of Rene Philippe Dubout next book: “How to Invest Safely Into Thailand” to be published in January 2010

About the Author:

The author Rene-Philippe DUBOUT is a lawyer since 1990 when he was admitted to Geneva bar (Switzerland). He practiced as a litigator there for 10 years until he moved to Thailand in 1999. In 2002 he founded with a group of Thai lawyers Rene Philippe & Partners Ltd a local law firm that specialized in Cross Borders Investments and Real Estate. He has been lecturing in several Thai Universities and a speaker to numerous conferences and seminars. He is the author of a must read book:”How to Purchase Real Estate Offshore Safely: The Case of Thailand”.

http//:www.renephilippe.com

Originally posted 2009-10-28 04:23:27.

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