Superficies in Thailand: how a foreigner can own a house on someone else's land

What superficies is and why a foreigner needs it

A foreigner in Thailand cannot own land directly. That does not mean, however, that it is impossible to become the full legal owner of a house standing on that land. Thai law permits a separation: the land belongs to one person, while the structure on it belongs to another. The instrument that formalises this separation is called superficies (right of superficies).

Superficies is a real right (real right) attached to a specific titled plot. It gives the holder (referred to as the superficiary) the legal right to erect a structure on someone else's land and to own that structure as his own property, without acquiring any rights over the plot itself. The institution is governed by §1410-1416 of the Civil and Commercial Code of Thailand (CCC).

For a foreign buyer this is a critical point: the prohibition applies to land, not to a house. With a registered superficies, a foreigner appears in the official documents as the owner of the building, while the Thai party (an individual or a company) remains the owner of the land.

For what term is it established

The law offers three options for the duration:

• for a fixed period - but not exceeding 30 years (by analogy with a lease; once the term expires, it may be extended by a new agreement);
• for the lifetime of the landowner;
• for the lifetime of the superficiary himself.

If no term is specified at all, the right is considered indefinite, but either party may terminate it by giving the other party advance notice (generally, no less than a reasonable period of time, or with payment of compensation equal to one year's fee).

If the superficies is granted for a fixed term, it becomes a transferable and heritable right: it can be sold, gifted, or passed to heirs, unless the agreement itself expressly provides otherwise.

The main advantage: combining with a land lease

In practice, superficies is rarely used on its own. The most reliable structure for a foreigner is a long-term land lease (leasehold) combined with superficies over the house.

The logic is as follows. A lease (leasehold under §540 CCC, up to 30 years with registration at the Land Department) gives the right to use the plot. However, a lease has one weakness: it is a personal right (obligatory right), not a real right, and under certain circumstances (for example, the death of the lessee, or a dispute with the lessor's heirs) its stability may be undermined. Superficies, by contrast, is a real right, 'attached' to the land.

What this means in practice:

• even if the lease agreement terminates early for any reason, the superficies over the structure continues in force and passes to heirs;
• superficies survives a change of landowner - a new owner of the plot is bound by it;
• the foreigner's heirs do not automatically lose the house as a result of the lease expiring or being contested.

In other words, the lease secures access to the land, while superficies 'locks in' the holder's right to the house itself.

Registration and costs

Superficies exists in law only after registration at the Land Department. Without registration it is merely a document between two individuals, and has no effect against third parties.

Key rules:

• registration is only possible over titled land (for example, Chanote or Nor Sor 3 Gor) that falls within the jurisdiction of the Land Department;
• the superficies entry is made on the reverse of the title deed (back of the title deed) - that is, it is recorded in the land document itself;
• the government fee for registration is approximately 1.1% of the contractual value (including 0.1% stamp duty). If the right is granted without consideration, the fee may be minimal (a few tens of baht);
• if a completed building already stands on the plot, superficies is normally registered only after ownership of the structure has been formalised or transferred and the relevant fees have been paid, or if the holder can demonstrate that he originally constructed the house.

When the right terminates

Superficies may come to an end:

• upon expiry of the fixed term (where the term is fixed);
• upon the death of the person to whose life it was tied;
• upon a material breach of the conditions by the holder - in particular, failure to pay the agreed fee for two consecutive years entitles the landowner to demand termination;
• by agreement of the parties.

Upon termination, the superficiary generally has the right to demolish and remove his structure, restoring the plot to its original condition. The parties may, however, agree otherwise in advance - for example, that the house passes to the landowner, with or without compensation.

Superficies versus other structures: a comparison

What to check and what to watch out for

• Land title. Superficies is only possible over a full title (Chanote, Nor Sor 3 Gor). Verify the type of document before the transaction.
• Registration has taken place. Confirm that the entry has been made at the Land Department and is reflected on the reverse of the title deed, and has not been left as a 'private agreement'.
• Term and its basis. Record clearly whether the term is: 30 years, the lifetime of the landowner, or the lifetime of the holder. For greater security, combine superficies with a registered lease.
• Inheritance is expressly stated. Verify that the agreement does not exclude transfer of the right to heirs.
• Fate of the house upon termination. Agree in advance what happens to the structure: demolition, buyout, or transfer to the landowner.
• Completed building. If the house is already built, clarify whether ownership of the structure has been formalised and who pays the fees upon registration.
• Transaction funds for a foreigner must be remitted from abroad with a FET form (formerly Tor.Tor.3) - this will also be needed for any future repatriation of funds.