Land & Property
Land and property are important to all people’s lives as a residence, a means of productions such as farms and factories, as an income-generating tool such as offices, shopping centers, or as a recreational activity such as resorts, amusement parks, or even as a public utility such as roads, expressways, dams, etc.
However, even though land and property in Thailand has become an important part of people’s lives in any aspect as mentioned above, everyone is subject to the Thai laws. The land and property laws are, therefore, essential for life including doing business. If you, as a consumer, an entrepreneur or an investor, do not review information or legal restriction on land and property, the acquired land may not be fully benefit or you may be unable to use such land. This may cause great damage to you, for example, landlocked property with no entrance and exit, land on a boundary line to be expropriated, land on power pole boundary line in which any construction is prohibited, land on a setback, etc. These lands could be cheap but valueless because a land use is limited. Therefore, you should be aware of obstacles that may occur from regulations to reduce impact risks which could happen.
There are a number of laws which are related to land and property that you, whether as a consumer, a businessman, an entrepreneur or an investor should know. In order to give you an overview, we would like to divide the laws into two categories as follows: (1) “General Laws” which are laws that deal with almost all types of real estate, therefore, it is suggested that you should review them before purchasing or taking any action, and (2) "Specific Laws" which are laws that specifically deal with an action of a particular land and property.
In this regard, we will discuss the aspects of doing business regarding land and property by dividing it into “General Laws” and “Specific Laws”.
The general laws which have an essential role that all types of real estate developers should review before doing business are the Building Control Act, the Town Planning Act and the Environmental Law. In this regard, only the Building Control Act and the Town Planning Act will be discussed in brief as follows:
Building Control Act
The Building Control Act is a law that was enacted to govern a construction of buildings, to have a safety system for building occupants such as fire protection system, ventilation system, etc. , to maintain tidiness and to manage a conservation of environmental quality such as providing a wastewater treatment system before releasing into public sewers.
There are many different types of buildings in a city such as shop houses, shops, markets, offices, schools, etc., and when a city is expanded into a larger city or a metropolis, the number of buildings is also increasing as well as high-rise buildings, extra-large buildings, hotels, shopping centers, etc. These public buildings are used by a large number of people on a daily basis; hence a stability of the building and the building occupants’ safety are necessary. Therefore, it is essential that the Building Control Actmust prevent people from getting into dangerous situation, facing a disorder of the country, having poor hygiene or facing disaster.
However, the Building Control Act is not enforced throughout the country. This law is enforced only in metropolitan areas where there is a building construction density. If any area wants to govern a construction of buildings to be beautiful, orderly, stable, strong and safe, it must announce a royal decree to enforce the Building Control Act in that area, or declare it as a comprehensive plan area under the town planning law first so that the building control law will come into effect.
Town Planning Act
The Town Planning Act is a law for governing land use which deals with comprehensive and specific planning.
The comprehensive planrefers to a plan, policy and project including general control measures which are used as a guideline to develop and maintain cities and related areas or rural areas in terms of property use, transportation and logistics, public utilities, public services and environment for the purpose of town planning.
The specific plan refers to a plan and a project undertaken to develop or maintain specific areas or relevant businesses in towns and relevant areas or rural areas for the benefit of town planning. When any area has announced the enforcement of the comprehensive plan, no person shall use a land plot in a different way than what specifies in the comprehensive plan or perform any operation which contrasts with the requirements of the comprehensive plan unless such land has been used before the Ministerial Regulation enforces to the comprehensive plan and wish to continue to use. However, such land can only be used as it was at that time and cannot be used more than it was before.
Which specific laws real estate developers have to review usually depend on a type of business they will do, for example, business concerning condominium, housing estate development, townhouses, hotels, apartments, department stores and factories, etc. In this regard, only the legal aspects for certain businesses will be mentioned as follows:
The Condominium Act, the Land Development Act, Hotel Act and the Factory Act as follows:
Normally, an ownership of each building cannot be separated , i.e., a single person or several people may share the ownership of the same building in a manner of co-ownership under the Civil and Commercial Code regarding co-ownership which has difficulty in managing property or co-ownership, for example, maintenance, repairing, distribution, and a use of property rights, which are complicated, inconvenient and cause conflicts between co-owners. However, the Condominium Actprescribes that each person can separate the ownership of the same building, whereby the main characteristics of a condominium must consist of 3 parts as follows:
Being a building which an ownership can be separated;
An ownership of each person must consist of (1) ownership of personal property, (2) co-ownership of the common property and;
Being registered as a condominium under the Condominium Act.
Additionally, the Condominium Act also prescribes that the owner of each condominium is a person who has the ownership of personal property and has the co-ownership of common property. It is also prescribed that the ownership of each condominium cannot be separated, and the common property shall not be separated from the personal property. It should be noted that the owner of condominium can register their rights and juristic acts on his/her own condominium without consent of the other condominium’s owners. Besides, the law has also established a committee to govern the management of condominium juristic person.
Land Development Act
If any person occupies land and wish to divide the land for sale into 10 or more lots, he/she must apply for the Land Development License according to the law.
In order to apply for the Land Development License, document must be submitted to the land office showing where the land will be subdivided, how many lots the land will be divided into, how utilities such as roads, sewers, wastewater treatment systems, etc. will be provided, what kind of public services will be available, what is an estimate cost of preparing utilities, along with other supporting documents prescribed by law on details of how such project must be, for example, utilities. The law prescribes systems and standards for various types of roads, drainage, wastewater treatment system, etc. in order to protect buyers so that they will have adequate and appropriate necessities for living whereby an entrepreneur has to enter into a contract or to place a letter of guarantee for the arrangement of the above things as well. In addition, after the entrepreneur has prepared the utilities until he/she receives the Land Development License, the law also prescribes that the entrepreneur must place a letter of guarantee for maintenance further.
After applying for the Land Development License, the entrepreneur will receive the “Land Development License” and a title deed or a certificate of utilization will be divided into lots according to the number requested. Such title deed and the certificate of utilization will be recorded as “this plot of land is under land development” and is used for the transfer of land and buildings to each buyer further.
In respect of the utilities which are developed, they will be subject to a servitude of each buyer to use together. After establishing juristic person of housing estate, the entrepreneur will have to entrust the maintenance of these utilities to the juristic person of housing estate. If such juristic person will transfer them to the public, it may be done in accordance with what the law prescribes.
Nowadays, there are many different types and styles of accommodation service business. The current type of accommodation service has various names and different types of accommodation. This causes confusion as to what type of accommodation business is considered as a hotel according to the law.
Hotel Act is a law that sets measures and regulations for hotel business such as application for Hotel License, renewal of Hotel License, transferring of Hotel License, choosing a hotel business, prescribing duties for hotel business operators, prescribing duties for hotel manager, etc. This is to promote and enhance the quality of the accommodation business to a higher standard as the nature of hotel business is to provide services to the public and it is important to promote a tourism industry to have more quality and safer services.
In addition, the law prescribes exemptions for non-hotel accommodation as follows:
An accommodation with no more than 4 rooms in the same or multiple buildings.
The total number of guests is no more than 20 persons (consider from beds, mattresses, and other equipment related to the guests).
Established for the purpose of providing temporary accommodation for travelers or any other persons.
A business must not be a main occupation.
Must notify to a registrar in accordance with a form of a non-hotel accommodation notice.
In summary, any accommodation which is established for the business purpose of providing services for travelers or any other persons who are charged for such accommodation less than a month and which is not one of the exceptions mentioned above is considered as a “Hotel” regardless of its name.
Nowadays, the government sector has a policy to promote and develop industries which is the main mission of the country's economic development in the long term. This is an important strategy of the Ministry of Industry to promote a competitiveness of entrepreneurs, therefore, the entrepreneurs should have a knowledge and understanding of the factory law in order to be able to operate properly and in accordance with the regulations of the state sector.
Factories can be classified by type or size into 3 categories as follows:
The first type of factory can operate any time upon the manufacturer’s wish.
The second type of factory, before commencing any operation, the manufacturer has to inform the officer and has to comply with Ministerial Regulations and Notifications issued by a Ministry.
The third type of factory has to get the approval from the officer before operating the factory and has to comply with the criteria set forth in the Ministry.