Doing Business in Thailand

As previously explained, the Thai Civil and Commercial Code recognizes possessory rights and/or ownership rights and there are several kinds of documents to evidence various levels of rights to land, ranging from documents evidencing mere squatters or occupation rights to full ownership rights.

The classification of the various types of claims or rights to land available in Thailand is no easy task, because there are many categories and it’s not always easy to determine the exact rights a particular document will confer upon its holder. In addition, the rights attached to certain types of documents may have evolved over time.

In my two previous posts on the subject I reviewed the major claims on land. Now let’s take a look at the lesser rights .

The Por. Tor. Bor. 5:

At the bottom rung of the ladder is the Por. Tor. Bor. 5  a document providing no actual evidence for a claim to land, but merely serving to establish that a person occupying a piece of land has been issued a tax number and has paid taxes for utilizing the land. The issuance of a Por. Tor. Bor. 5 is done without any survey by the authorities and grants no claim to the occupant. The document can be used as evidence towards proving possession against other private individuals, but not against the State. The tax number may be transferred to another person along with the physical possession of the land, but this transfer grants no rights to the transferee on the land against the State.

The “Pre-emption Certificate” (NS-2):

Then there is the “Pre-emption Certificate” (NS-2) or a “Bai Jong” which is a transitional document created under the 1936 Land Code Act. The pre-emption certificate simply serves to establish that the beneficiary has temporary rights to occupy the land. Pre-emption certificates were issued on a transitional basis with the understanding that they would eventually be transformed into a certificate of use or full title ownership. In theory, these documents are non-transferable, except by inheritance.

The claim certificate” (SK-1) or Sor. Kor. 1:

Another transitional document is the claim certificate” (SK-1) or “Sor. Kor. 1” created by the 1954 Land Code. This document serves to notify possession of a land to maintain actual existing rights. Farmers who had occupied a vacant plot of land for at least six months could obtain this document after a 30-day publication providing there was no opposition. The acquisition of an SK-1 was deemed the first step toward the issuance of a certificate of use or a title deed. The Thai Supreme Court has judged the SK-1 as only a claim of ownership and not a right to ownership.

To upgrade a SK-1, the beneficiary must prove the claimant has possessed the land legally and put the land the good use. The right to the upgrade is not associated with or inherent to the SK-1.

The main problem with this type of land is that Sor. Kor. 1 were distributed based upon a “metes and bounds” description of the property. Metes and bounds is a method used to measure land through the description of the boundaries in a prose style for example: A typical description for a small parcel of land would be: “beginning with a corner at the intersection of two stone walls near an apple tree on the north side of Muddy Creek Road one mile above the junction of Muddy and Indian Creeks, north for 150 rods to the end of the stone wall bordering the road, then northwest along a line to a large standing rock on the corner of John Smith’s place, thence west 150 rods to the corner of a barn near a large oak tree, thence south to Muddy Creek road, thence down the side of the creek road to the starting point.” Source: http://en.wikipedia.org/wiki/Metes_and_bounds. The author of the description simply walks the lector around the parcel of land, from a starting point and returning back to the same point. The survey covers only the specified piece of land without reference to a grid or a master map covering adjacent property. In other words, the survey process may not always be very accurate regarding the location and size of the land.

Flying S.K-1

Because of their inaccuracy, S.K-1 documents issued for specific lands have been used by unscrupulous businessmen to make claims for lands at other locations or as the basis for making claims to several lands.

SK-1 documents used to make claims to other lands or many lands are known as “flying” SK-1.

If a flying SK-1 has been used to issue a Certificate of Use or a NS-4, then the title has been unlawfully issued and may be revoked by the government at any time.

Common characteristics of lesser claims

Lesser claims have in common that no official permission to build a house may be granted on such land. While it’s common practice for Thai people to build homes on Por. Tor. Bor. 5 or SK-1 land, those houses are built without any official permission. In theory, none of those documents are transferable except by inheritance. In practice, a person in possession of an SK-1 may transfer physical possession of the land and the new possessor may apply for a new pre-emption certificate or certificate of possession. Finally, SK-1 cannot legally be used as security against a loan or mortgage and it’s impossible to register rights or liens of any sort on the land. For example, it’s impossible to register a long-term lease on land represented by a pre-emption certificate or a claim certificate.

Note: This post is an excerpt of Rene Philippe Dubout first book: “How to Purchase Real Estate Offshore Safely: The Case of Thailand” published in february 2009. Second edition to be published in October 2009 under the title “How to Safely Purchase Real Estate in Thailand”

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

© Copyrights 2009 – Rene Philippe Dubout – This article may be reprinted if information about the author, the websites, and the URLs remain intact.

Originally posted 2009-09-16 04:12:16.

Related posts:

1. Thailand Property: Land Rights Classification: Major Claims
2. Thailand Property: Land Rights Classification: General Issues
3. Thailand Property: How are rights on buildings evidenced?
4. Buying Property: Comparing Foreign Land Ownership in Asia
5. Buying Property: Two issues to consider before buying a land
6. Thailand Property: How to check who owns a building?
7. Thailand Property: Nominees under watch
8. Buying Land: The Thai spouse right to own land freehold