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Legal Aspects Of Leasehold Apartments And True Codnominiums In Thailand

A multi-unit residential building in Phuket could be registered and licensed as a condominium building and an exact copy of the building in Koh Samui could be a leasehold apartment complex. There is no way to see from the outside if it is a licensed condo or unregistered apartment complex.

The sale and legal structure of a condominium registered under the Thailand condominium Act is completely different from sale and legal structure of an unregistered apartment complex. The main difference is that apartment complexes do not offer freehold ownership over the individual units and are not regulated by specific condominium laws. Apartment complexes are sold under various contract structures which vary from mere apartment leases (where the developer retains full ownership) to leases combined with shares in a holding company. Beware, purchasers of units in apartment complexes do not find protection in the law as with registered condominiums and the contract structures and intention of the developer of an apartment complex should be triple checked.

The main differences are:

A condominium REGISTERED under the Condominium Act offers:

1. Legally recognized government issued and administrated individual ownership title deeds.
2. Foreigners must qualify for ownership within the foreign ownership quota of the condominium.
3. The owners are free to sell, encumber and dispose of their condominium unit.
4. Co-ownership in the common areas of the condominium, including the land on which the building sits.
5. Management and control over the building lies by law with the unit owners and have a legally set democratic voting right system.
6. A condominium development is a contract controlled business and must offer minimum consumer protection.

An apartment complex NOT REGISTERED and licensed as a condominium offers:

1. Individual lease agreements over the units as part of the building.
2. Foreigners do not have to qualify for lease registration under a special law and there is no foreign lease quota.
3. Selling (assigning their interest) requires cooperation of the owner of the building (developer).
4. The occupants of the building are basically tenants and have to comply with rules set by the owner of the building.
5. Control and management over the land and building lies by law with the owner of the land and building.
6. The contract sale structure under which leasehold apartments are sold could go either way, pro lessee or pro lessor/developer.
7. These units are subject to housing and land tax.

Legally there is nothing against leasehold apartments and generally these apartments are less expensive, but these apartment structures do not offer the same protection in the law as is offered in a licensed condominium development project. One offers government control, actual ownership and protection under the Thailand Condominium Act and Consumer Protection laws, the other offers possession through a lease agreement under the Civil and Commercial Code, and if any offer individual protection through private agreements.