How Foreigners Can Inherit Condominium Units in Thailand

Table of Contents

Introduction

The Condominium Act B.E. 2522 (1979) is central to foreign investment in Thailand’s real estate market, offering unique opportunities for ownership. However, when it comes to inheritance by foreign heirs, navigating the legal requirements under the Act and the Thai Civil and Commercial Code (CCC) can be challenging.

This article provides a detailed overview of the legal framework, eligibility criteria, and practical recommendations for foreign owners and heirs to ensure compliance with Thai laws.

Eligibility for Foreign Ownership

Under Section 19 of the Condominium Act B.E. 2522 (1979), foreigners and certain foreign-controlled juristic persons may legally own condominium units in Thailand. Ownership is permitted only if they meet specific criteria, which apply to both individuals and juristic entities.

Who Qualifies for Condominium Ownership?

To qualify for ownership, foreigners or foreign-controlled juristic persons must meet one of the following categories under Section 19:

1. Permanent Residents of Thailand

Foreigners holding a valid permanent residence permit under the Immigration Act.

(Item 1 under Section 19 of the Condominium Act)

2. Individuals Residing Under Investment Promotion Laws

Foreigners granted residence in Thailand under the Investment Promotion Act, such as those receiving privileges from the Board of Investment (BOI).

(Item 2 under Section 19 of the Condominium Act)

3. Foreign-Controlled Juristic Persons Registered in Thailand

Companies registered under Thai law but classified as “alien” under Sections 97 and 98 of the Land Code due to foreign control or majority foreign ownership.

(Item 3 under Section 19 of the Condominium Act)

4. Juristic Persons with Investment Promotion Certificates

Juristic persons classified as “alien” under the Foreign Business Act and holding an investment promotion certificate under the Investment Promotion Act.

(Item 4 under Section 19 of the Condominium Act)

5. Foreigners Transferring Currency into Thailand

Foreign individuals or juristic persons who:

• Transfer foreign currency into Thailand.

• Withdraw money from a Thai Baht account held by a non-resident.

• Withdraw funds from a foreign currency deposit account within Thailand.

(Item 5 under Section 19 of the Condominium Act)

For more details on purchasing a condominium unit, see our article:

Buying a Condo in Thailand: A Practical Guide for Foreigners

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Foreign Ownership Quota

Under Section 19 bis of the Condominium Act, foreign ownership in any condominium project is limited to 49% of the total floor area of all units. Compliance with this quota is mandatory during both purchase and inheritance. Exceeding this limit requires the heir to sell the unit within one year.

Legal Framework for Inheritance of Condominium Units

Inheritance is governed by the Condominium Act and the CCC, each contributing distinct provisions:

1. Rights Under the CCC

Sections 1599 and 1600 of the CCC stipulate that heirs inherit all properties, rights, duties, and liabilities, except those purely personal to the deceased.

2. Restrictions Under the Condominium Act

The Act limits inheritance by requiring foreign heirs to qualify under Section 19. Non-qualifying heirs must sell the unit within one year, as per Section 19/7.

Eligibility Requirements for Foreign Heirs

Foreign heirs must qualify under one of the categories outlined in Section 19 of the Condominium Act to retain ownership of an inherited condominium unit.

The most common scenario involves original owners who qualified under Item 5 of Section 19 as foreign currency investors—a standard practice involving the remittance of foreign currency into Thailand for condominium purchases.

Key Question: Retaining Ownership Without Selling

Heirs inheriting units under Item 5 of Section 19 often face uncertainties about whether they can retain ownership if they do not meet the stricter qualifications under Item 1 of Section 19 (permanent residency) or Item 2 of Section 19 (investment promotion laws).

Some interpretations suggest that heirs may be required to remit an amount of foreign currency equivalent to that transferred by the original owner, effectively ‘re-purchasing’ the inherited unit, which can pose significant financial and logistical challenges.

Actions for Heirs Who Do Not Qualify

If heirs fail to meet Section 19 requirements, they must:

1. Notify the Land Department

File a notification within 60 days of inheritance, as required by Section 19/7.

2. Sell the Unit

Dispose of the property within one year of acquiring ownership.

3. Comply with Land Department Enforcement

If the unit is not sold, the Land Department may enforce the sale under Section 19 quinque.

Land Department’s Interpretation on Foreign Inheritance

The Land Department has provided practical guidance on how Item 5 of Section 19 applies to inheritance cases:

1. Rights Transfer Automatically

Under Sections 1599 and 1600 of the CCC, heirs inherit the deceased’s properties, rights, and liabilities, including ownership rights under Item 5 of Section 19.

2. No Additional Foreign Currency Remittance Required

Heirs are not required to remit additional foreign currency if the original owner fulfilled Item 5 of Section 19 requirements. This interpretation ensures inheritance includes associated rights.

The Land Department’s interpretation suggests that heirs inherit both the property and associated rights under Item 5 Section 19, alleviating the need for additional foreign currency remittance. While widely applied, variations in local land department practices may create challenges.

Practical Recommendations for Foreign Owners and Heirs

1. Include Heirs in FET Documentation

Specify heirs in foreign currency remittance instructions during the purchase. Retain Foreign Exchange Transaction (FET) records for smooth inheritance registration.

2. Prepare a Thai Will

Draft a will compliant with Thai law to streamline the inheritance process and minimize delays.

3. Consider a Company Structure

Hold property through a foreign-controlled company to bypass individual qualification requirements. Shareholding facilitates easier ownership transfers without inheritance challenges.

Conclusion

The inheritance of condominium units in Thailand by foreign heirs involves navigating complex legal requirements under the Condominium Act and the CCC. While stricter interpretations may impose additional burdens, the Land Department’s guidance provides practical solutions in most cases.

Planning ahead with proper documentation and legal advice is essential to avoid disputes and ensure a seamless inheritance process.