Inheriting a Condominium Unit in Thailand as a Foreigner: the 49% Quota, Deadlines and the FET Form

In Brief

A foreigner's right to own a condominium unit in Thailand is a personal right acquired by satisfying the conditions set out in law. Upon the owner's death, that right does not pass automatically to another foreigner. A foreign heir can indeed inherit the unit, whether under a will or by intestate succession, but in order to register ownership in their own name at the Land Department, they must personally satisfy the requirements of the Condominium Act B.E. 2522, Section §19. If they do not meet those requirements, the inherited unit must be sold.

This is the key difference from the familiar European approach: the estate 'opens', but retaining Thai real property in foreign ownership is possible only where the heir has their own independent legal basis for doing so.

Which Foreigners Are Entitled to Own a Unit

Section §19 sets out a closed list of categories of foreigners (natural and legal persons) who are permitted to register ownership of a condominium unit:

• foreigners holding permanent residence under immigration legislation;
• foreigners who have entered the country under investment promotion (BOI);
• legal entities treated as foreign under Sections §97-98 of the Land Code and incorporated under Thai law;
• foreign legal entities holding a promotion certificate;
• foreigners (and equivalent legal entities) who have brought foreign currency into the country, or have withdrawn funds from a non-resident baht account or a foreign currency account.

The fifth category is by far the most common in practice. It is the basis on which the majority of private investors purchase units, and it requires documentary evidence of the source of the funds.

Qualified and Non-Qualified Heirs

The law divides heirs into two groups, and the entire subsequent procedure depends on which group a person falls into.

A qualified heir is one who personally falls within one of the categories listed in §19. Section §19/5 permits such a person to register the inherited unit in their own name, subject to one strict condition: the aggregate foreign ownership share in that particular building must not exceed 49% of the total floor area of all units (the quota is established in §19/2 bis). Section §19/5 applies to heirs under a will, heirs by intestate succession, and persons who have acquired the unit 'by other means', for example by way of gift.

A non-qualified heir is a foreigner who does not fall within any of the five categories in §19. Under Section §19/7, such a person is required to:

• notify the competent official in writing within 60 days of the date of acquisition of ownership;
• sell (dispose of) the unit within one year of the date of inheritance.

In other words, inheriting the unit is formally possible, but retaining it in foreign ownership is not.

Comparison of the Two Scenarios

Note one important nuance: even a qualified heir may find themselves in a position where registering the unit in their own name is impossible, namely if doing so would push the foreign ownership share in the building above 49%. In that case the outcome is the same: sale.

The Role of the FET Form (Tor Tor 3)

If the heir claims qualified status under the fifth category of §19 (by virtue of bringing in foreign currency), it is not sufficient simply to assert that status. The heir must demonstrate that foreign currency of an amount no less than the assessed (government-appraised) value of the unit was brought into Thailand. The evidence required is the FET form (Foreign Exchange Transaction Form, formerly known as Tor Tor 3), which is a bank document recording the foreign exchange transaction.

The practical logic is straightforward: the new right of foreign ownership is 'tied' to a new foreign exchange transaction. The previous owner's FET form does not carry over to the heir - the heir must substantiate their own basis for ownership with their own documentation.

What Happens When the Inherited Unit Must Be Sold

Where the heir is required to sell, whether under §19/7 or because the quota has been exhausted, the following points are important:

• the time limit runs from the date of acquisition of ownership by inheritance, not from the date on which the heir learned of the inheritance;
• until the sale, the heir remains the lawful owner and may deal with the property, but retaining it in foreign ownership indefinitely is not permitted;
• the buyer may be a Thai national (to whom the quota does not apply) or a qualified foreign buyer within the available 49% headroom.

Wills and the Order of Succession

A unit may be inherited under a will (testamentary succession) or, in the absence of a will, by operation of law (intestate succession). A will drawn up in accordance with Thai requirements considerably simplifies and expedites the process in court and at the Land Department, particularly where there are multiple heirs or where the heirs include foreigners with different statuses under §19. A will does not, however, override the requirements of §19 or the 49% quota: it determines to whom the right passes, but does not relieve the heir of the obligation to satisfy the legal basis for holding that right.

What to Check and What to Bear in Mind

• Your own status under §19. Determine in advance whether you (or your intended heirs) fall within at least one of the five categories - this determines whether the unit can be retained.
• The current foreign ownership share in the building. Request data on the 49% quota utilisation from the management company - re-registration is impossible without available 'foreign' headroom.
• The FET form. Retain the originals of all foreign exchange documents relating to the purchase; a fifth-category heir will need to produce evidence of their own importation of foreign currency.
• Deadlines. If you are a non-qualified heir - 60 days to notify and 1 year to sell; do not miss the calculation running from the date of acquisition.
• A will governed by Thai law covering Thai assets - prepared separately from any will made in your country of citizenship.
• Taxes and fees on registration of the inheritance and on any subsequent sale should be factored into your planning from the outset.