Last week we talked about how the government can expropriate private property. The government does this when it needs to use private land for a public purpose, such as roads, land reform or parks.
Here's the practical problem for you if you're buying or long-leasing property in Thailand: If you buy or long-lease after the government has decided to expropriate land and you don't know about that decision, there's really not much you can do. You can try to claim against the seller, especially if the seller knew but didn't tell you. But if the seller already has your money, you may not be able to get it back.
A few years back a buyer of a very nice little hotel complex came to us.
After he'd paid most of the money to the seller, he introduced himself to us and asked us for a title report. After looking into it, we had to tell him that the Highways Department had planned a road right through the middle of the property.
He never got his money back.
So practically speaking, if you're buying property, how do you figure out whether the government already plans to expropriate it?
You should have a lawyer check this before you buy or long-lease. If you're buying or long-leasing property this issue should be covered in the report. And you shouldn't buy or long-lease property in Thailand without a title report. Period.
Many buyers gasp when they hear what Thai lawyers charge for a title report. Doing this can add well over 10,000 baht to the cost of the property. Imagine, though, if in the case mentioned above, the buyer had a check before he paid. He eventually lost more than 20 million baht on the deal.
Here is what should be checked by your lawyer and covered in the title report. If the property is in Bangkok your lawyer should check with the following agencies:
Parcel Survey and Land Acquisition Division, Bangkok (to see if general road construction is planned through the property)
Expressway Authority of Thailand (to see if there are future expressways planned through the property)
City Planning Department
Mass Rapid Transit and Bangkok Transit System.
An example of property that will be taken by the Expressway Authority might be that on the the Sri Rat Outer Ring Road Expressway. An example of planned expropriation by the mass transit systems might be that for transit buildings or stations around the Hua Lamphong temple.
If the property is outside of Bangkok your lawyer should check:
The Provincial Office of Public Works and Town and Country Planning
The municipality or subdistrict administrative organisation responsible for the area in which the property is located
The Highways Department
The Rural Roads Department
If you're thinking of buying or long-leasing property in Thailand, please get a title report that covers government expropriation. It's an easy way to avoid a host of problems. It's essential.
James Finch of Chavalit Finch and Partners (finch@chavalitfinchlaw.com)
and Nilobon Tangprasit of Siam City Law Offices Ltd (nilobon@siamcitylaw.com).
Researchers: Arnon Rungthanakarn and Sitra Horsinchai.
For more information visit www.chavalitfinchlaw.com.
Questions? Contact us at the email addresses above.