WHAT OLAF SAYS ABOUT FINDING THE RIGHT LAWYER

Here Olaf Duensing of Duensing Kippen explains what buyers should be looking for in their legal counsel:
Real estate in Thailand can, for the most part, be a very good investment. Sadly, we have encountered horror stories, and they are not as rare as one might hope. If you are thinking of taking this investment plunge, here are a few tips.

When making a real estate investment in Thailand, one of the best ways you can protect yourself is by hiring a competent lawyer. This is imperative, and you should obtain the right legal counsel right at the beginning of the process (i.e. prior to signing any agent’s or seller’s agreement).

The key word here really is “competent”. We often find ourselves dumbfounded when people relate to us what law firms in Thailand have told them. Thailand has a well-developed system of laws, which are in many respects quite similar to laws in the West. For the most part, as in the majority of fully developed nations, the laws in Thailand logically fit together. Furthermore, something which is very convenient for foreigners in Thailand, the English translations of most relevant laws are readily available.

So if something you are hearing from another Thai law firm is seemingly illogical and makes no sense, there is every chance that your skepticism is warranted. If you are uncertain, request a copy of the law so that you may read it yourself. If, with a translation of the law on the table, they are still incapable of explaining their point – or worse yet, if they actually refuse to offer a greater understanding – it would advisable to seek out new legal counsel to help you.

But there is more to “competent” advice than just knowledge of the law—a competent legal advisor will also be ethical. That is to say, they will be compliant with recognised international standards which all lawyers should follow. Every law firm has a fiduciary duty to its clients, meaning your interests are put ahead of those of both the individual lawyer and the firm. This includes putting your financial interests ahead of their own, and ensuring that the firm never has a conflict of interest when it comes to representing you.

That is why your legal representatives should never refer you to real estate developers or agents, and they should certainly not accept commissions from such parties. Your lawyers should never represent both sides in any transaction because to do so is a conflict of interests. You should be able to reasonably expect that the firm will never advance any interest which is detrimental to your interests.

It is simple enough to evaluate any prospective counsel. For starters, ask to see their legal credentials. Then enquire as to their professional code of ethics. Ask to see both, and verify their legal credentials before reading through their code of ethics. If they can’t produce one or the other, or if you are just uncomfortable with their response to your query, then you would be well advised to seek new legal counsel.

As a final point, you should not assume that Thai government officials will provide you with simple or accurate legal advice. While they may be responsible for administering the law, they are not necessarily well-versed in the law’s intricacies.

Someone new to Thailand is usually enamoured with the “Land of Smiles”. What could possibly go wrong in a country full of wonderful smiling people, right?

Unfortunately things can and do wrong, but this is true the world over. That is why every buyer must have an understanding of due diligence and makes sure it is conducted to ensure a property is a viable and sound investment, and that the seller is legitimate and reputable.

Stock market investors often spend hours pouring over balance sheets and fundamentals before investing a few hundred Dollars, Pounds or Euros. Why then do some of the same people fail to exercise comparable caution when spending millions of Baht in Thailand?

Due diligence is where the right lawyer is invaluable. If buying from a developer, especially off-plan, it is important to make sure that the title deed for the plot of land is in the name of the actual development – the corporate entity, as opposed to an individual’s name – and that it definitely is not in the name of an unrelated third party. If the land title is in the name of a third party, he/she has the legal right to sell the land whenever they wish, even after you have paid a deposit, installments or the full value of the unit. If that third party were to die, the fate of the land (and with it your property investment) lies with the new owner.

A representative of the developer might claim that such an ownership structure made it easier to title the land, and that ownership will be transferred to the development company when construction is finished. But if the true owner decides to sell the land, or encumber it by taking out a mortgage or loan against it, every investor could find themselves out of pocket. Furthermore, if the land is encumbered, the mortgage could be foreclosed upon, or taxes might not be paid, in which case the revenue department could stake their claim to what people thought was their property. This caution should be taken with any purchase, not just a condominium, except with condos hundreds of individuals could be affected by a single title.

Buyers of condominiums, especially ones sold off-plan, should always ask for a copy of the title. This should be the Chanote title of land for the entire development, not merely a segment related to the unit in question. The full Chanote title will show any liens, mortgages or loans against property.

The same information can be obtained from an individual title deed, but these are only issued upon completion of the condominium’s construction. Purchasing a resale unit is therefore relatively safe, and a completed development (or one that is nearly finished) might also be a consideration for a foreign investor.

Let us turn once again to Olaf Duensing to find out more about what constitutes the necessary due diligence.

LEAVING A WILL IN PHUKET AND INHERITING A PHUKET PROPERTY

Planning for our passing is important, so this section  provides guidance on Thailand Wills. No matter where in the world you live, or where your assets are held, you should be sure to make a Last Will and Testament. Planning ahead ensures your loved ones will be looked after and makes the settlement of your estate far easier for everyone concerned.

In Thailand, there are no forced heirship laws. Forced heirship means that by law, the assets must be divided up amongst descendants and spouses. Countries such as France, Italy, Spain, and Portugal have forced heirship. Even Japan and many Arabic countries handle estates in this way.

So, therefore, if you have Thai assets, which may include real estate, especially something of significant value like an expensive luxury Phuket villa, then you should definitely have a Thai Will in place.

Thailand is influenced here by common law, and adheres to the rules of intestacy. If you die intestate (e.g. without a Will) your assets will be shared out equally between the statutory heirs. This means that assets are distributed according to different classes of statutory heirs, with descendants and spouses usually coming first.

But despite the fact that statutory heirs are the legal beneficiaries of your Phuket property, and your whole estate, don’t expect the procedure to be quick and fluid. It is anything but. Even if you are married to a Thai national, the settlement of the estate without a Will still inevitably turns into a lengthy process.

And this means legally married – the influence of common law in Thailand does not extend to marriage. If you’re not married to your partner, even if you have shared everything with them for many years, he/she will have no legal claim to any “joint” assets should you die intestate.

But what happens if you don’t have any family in Thailand and you never left a Will? The simple answer is that your family will be placed in an even more distressing situation than those described above.

To start with, they might have to fly 12,000 miles just to get to Thailand. Once here, the first hurdle is to prove they are who they say they are. Then they will have to go through the settlement of your estate, which is a complicated process that can only really be done using a Thai lawyer.

It could all take years to resolve, and as the lawyers’ work is quite in-depth, the fees involved will not be cheap. Depending on how long it takes, a huge chunk of the estate’s value, could be lost in lawyers’ fees alone.

There is also the chance that the authorities do not even recognise your family member as the beneficiary, which could mean they receive nothing.

Some people think they can get away with their overseas Will (i.e. from their home country), which technically would be accepted in Thailand. But the probate of the estate still has to go through the Thai courts, which would require the Will to be translated into Thai. The translations also need to be notarized, and then authorised by The Ministry of Foreign Affairs.

Thailand’s probate procedures are lengthy enough without the introduction of an overseas Will. Depending on the length of the Will, it could cost as much to have it translated and notarised as it would to draft a Thai Will in the first place.

What If I Inherit a Property in Phuket?

If you inherit a property on the island as a foreigner there a few things to consider.

Firstly, if it is a villa i.e. landed property, which includes land, a townhome, bungalow etc., you are allowed to inherit it, but will not be allowed to title it in your own name. The property must be disposed of – to a Thai national – within a reasonable period of time (typically 180 days).

If you are left a Phuket condominium, the inheritance laws are more favourable. If you inherit a condominium you’re required to inform the Land Office within 60 days. There will be some fees involved because the title deed will have to be transferred into your name.

As mentioned earlier, there are two competing pieces of legislation to contend with on an inheritance. They don’t agree, nor can lawyers agree which one carries the most weight.

Whether or not you get to keep your inherited condo in Phuket may come down to something as simple as which judge hears your case on the day.

So How Do I Get A Thai Will For All My Phuket Assets?

We recommend that you use a Thai lawyer to write a Will. It is quick and easy to do, and a good lawyer can assist you in doing everything correctly.

There are many services provided by the state in Thailand, and making a Will is one of them. However, you need to be fluent (or at least extremely conversant) in Thai to take advantage of this service. If you are a foreigner who can speak and write Thai, you can go to the local Amphur (District Office) and they will write a Will for your Thai assets.

When you get your Will, get as many copies as you need. Give one to every family member who you have named as a beneficiary. Make sure your lawyer keeps copies, keep one safe yourself, and also give one to a trusted friend.

By doing this, you will help to ensure a smooth transition of your estate to your heirs.