Thailand has long been a popular destination for tourists from all over the world. Some of these tourists end up staying a bit longer and make this their home and naturally one of the first considerations for these people is acquiring a property. According to statistics from the Department of Lands, we have thus far seen over 6000 condominium transactions in 2008 alone. In addition, Thailand has also enjoyed a robust expansion in the property sector with over 20,000 units under construction and demand is still high despite the current global economic conditions.However, there are some important considerations foreign buyers need to keep in mild when purchasing a condominium in Thailand; that is the financial transfer procedures necessary in order to have a foreigner's name registered as the freehold owner.
Under Thai legislation, non-residents who purchase condominium units must transfer the funds to pay the unit from outside of Thailand as foreign currency. This is because the Bank of Thailand controls the flow of foreign currency and every single baht must have a source and grounds for its remittance. In other worlds, to register a unit in a non-resident's name, the money must be transferred from abroad. This is an essential Land Department requirement in accordance with the Condominium Act BE 2522(1979).
Many buyers of property in Thailand often feel concerned about remitting large amounts of money into Thailand for their property purchase. However, in global terms, money transfer is not a new process when it comes to international commercial and banking transactions as telex transfer have been around for a long time. More recently, with the development of the internet we have seen and exponential rise in cross border commercial transactions and banking activities. This growth in global business activity has necessitated the need for effective payment systems to guarantee timely, efficient and secure payment in order to have any market sector function efficiently.
Broadly speaking, the international banking system has become more sophisticated, boosting confidence and reducing the risk and the likelihood of payments going wayward. As such, the expansion in cross-border banking has occurred in both the total number of individual payments on the one hand and the total amounts involved in payments on the other.
Historically, the legal rules which regulate cross border commerce were substantially unclear between different states. There were two primary issues that the banking system every where needed to resolve Firstly, which supervisory authority was chiefly responsible for supervision of each individual bank. Secondly there was little systemic cooperation among international bank and the supervisory authorities by removing the conflicts of cross border regulations through harmonization of banking legislation. This has been achieved largely though international conventions such as UNCITRAL Model Low on international Credit Transfers by which States agree to domesticate international law into national legislation. In other words, government signatories to the Convention have developed uniform legislation enabling sending and receiving bank to harmonize money transfer practices between different States. Thailand enacted the Electronic Transactions Act in 2001.
What this all comes down to in practice is that when non-resident of Thailand wants to purchase a condominium they need to open a bank account at one of the local banks to transfer the funds. However, this process may require the purchaser to hold a valid long term visa and a work permit. Some banks may permit opening of an account to foreign nationals holding just a tourist visa but most require further documentation. Otherwise they can transfer funds directly into the bank account of the developer, seller or real estate agent that is engaged to purchase property on their behalf under a power of attorney. This is itself poses some risks.
Purchasers will then need to acquire a "Foreign Exchange Transaction From" (FET) certificate for each payment from the beneficiary bank and all these certificates must be show to the Land Department in order to register the condominium. This FET form used to be referred to as a Thor Dor 3 form and is still sometimes used. You transfer has to show all correct bank details including the account name, account number, branch name and address, swift code and type of account. They will also need the full address of the receiver and a pertinent description of the reason for transfer. All of the information can and is usually made in English so a foreign national can apply for this on their own and feel confident of its content. An FET from is also required if a foreign national wishes to purchase and register a lease.
In addition, bank will only give FET certificates for amounts over US$ 20,000. For lesser amounts, purchasers must acquire a credit note from the bank in the form of a latter which should also satisfy the Land Department upon registration. Moreover, if the foreign purchaser has a permanent residence in Thailand, they can purchase the condominium in Thai Baht without the need for a FET. Nonetheless, the practical advantage of the FET is that it will permit you to freely remit funds out of Thailand again as it proves that you transferred those same funds into the Kingdom.
A non-resident foreign national can feel secure that their hard earned money will go to the remitting bank or beneficiary into Thailand from their domicile account. International standards are adhered in this process. They can then purchase a condominium or obtain a lease in Thailand as long as they provide that FET form substantiating the source and reason for the transfer along with the sales and purchase or lease agreements to the Land Department. With all the right documentation and some guidance, the process of conveyance is not as elusive as many imagine.
