You Don’t Own Me !
Nobody owns their home in America, the bank does
I will freely admit having been one of those green-horn expats that would twist up his face while looking at real estate in Thailand and say, “Yeah, but you don’t own it”. It’s a common knee-jerk reaction given by those from my home country, and a few others. After reshaping my idea of what the word “ownership” really means, I’d never want to “own” property the way I used to.
The only people I know in the US that actually possess the title to their home are my octogenarian ex-in laws. The irony of it all is that my ex father-in-law is a retired banker; perhaps because he knows the difference between “ownership” and renting from the bank.
Nobody owns their home in America, the bank does. Watch some old silent movies sometime and you’ll see the evil banker foreclosing on the poor family as a major plotline. We’ve been doing it this way a long time. For most Americans, buying a home without involving a banker is an alien concept.
For generations of Americans, a home is more than a building and dirt, it’s a financial instrument. Many families’s only savings plan is in their home. During the late 80’s we started breaking open the piggybank with home equity loans financing everything from college education to mid-life Corvettes.
Aggressive bankers invited everyone in America to engage in the old “Burning Match” game; just keeping handing it off and hope you aren’t the one to get burned. It’s great when the market’s going nowhere but up. Now, there’s a whole bunch of folks with more burned than just their fingers.
Now most people don’t have enough equity to own the garage, let alone their five-bedroom Mc Mansion. The monthly payment puts barely a drop in the old principle bucket. People are paying the bank to live in their “own” house.
So, before we go on to “owning” property in a foreign country, let’s all admit that almost nobody in America “owns” their house. Even in the most liberal definition of the word, we are at best “co-owners”.
Here in Thailand foreigners are barred from having their name on the title to land. We are also forbidden to own more than 49% of a condominium building. Financing is almost non-existent. (Recently more developers and some owners are offering financing options, but they are almost entirely of the “big down payment/short duration” variety.)
So, you can own a condominium in Thailand; your name is on the legal title deed. When visiting potential properties, it is important to ask if the title is for foreign quota or not. Properties with foreign ownership approved are generally priced 15% higher than those that are not.
If a condo is not for foreign ownership, usually the buyer will form a Thai company that he/she controls. Many people set up with nominee Thai shareholders (more on that later). Not only do you own the majority of shares, you own proxies for all the nominee votes. For somewhere around 50,000 THB you get a company and all the paperwork. The Company, with you as Director, buys the condo and holds the title deed.
The downside is that you have to pay around 15,000 THB per year to file your corporate taxes and maintain your company. The upside is that you can transfer the company and the condo, directly to another foreigner. In this way you avoid taxes from a property sale. In other words, someone buys your company with the condo as the only asset. It’s easy, convenient and I’ve never heard of any Thai government agency having a problem with it.
With houses it’s a little different. A foreigner can own a building. In my opinion the best arrangement is to own the building in your name and form a Thai company to own the land. Just for added security, I always record a lease for 30 years, renewable for two more 30 year periods, from my company that owns the land to me personally.
Why would I lease the land to myself? If by some bizarre chain of events I was to lose control of my company, I still wield power over the land as I personally have a legally recorded lease on that land. The house I already own. So, you could say I “double own” that property.
When an American says he “owns his home”, what he means is that he controls its destiny. He can sell it, he can rent it out, he can live in it; as long as he pays the banker the vig and principle, he “owns” that house. But go down to the land department and look up the title deed and you won’t find that American’s name on the title. Let him get behind more than a few payments and it will become readily apparent who owns that property.
If I had to count the number of people I know who lost their homes for some reason, I’d need all my digits. And every one of them is an American living in America. After living in Thailand for 10 years I know of no one who has ever lost their home. (I do however know a few who paid for houses that never got built, but that’s a different article).
With property in Thailand you can own it or you can control a company that owns it; you can lease it virtually forever; you can sell it; rent it and live in it. And, since financing other than from the seller or developer is unlikely, you will have paid in full and have your hands on the title deed.
To be sure, property ownership in Thailand is not the same as in the US. When I hear the objection, “Yeah, but you don’t own it”, I say, “You’re right, not in the American sense; here in Thailand we leave out the banker and get the title”.
I’m a sucker for a simple plan that cuts out the middle man.
[ Editor’s note: I have corresponded with many fantastic people during my time with Escape Artist but Bart Walters is by far one of the most entertaining and genuine people I have had the pleasure to be in contact with. Bart writes about life in Thailand and permits me to use his work in exchange for a link back to the charity website that raises money for an orphanage in Thailand. Please take a moment to visit the site, donate if you can and help support a good cause. Please go to www.care4kids.info Thank you ]
Interesting article… but wrong on two points:
1. You cannot lease forever. Only 30 years max. is allowed by Thai law…
Pre-signed and/or pre-dated agreements or contracts, however complex etc. to renew for another 30yrs or 30yrs+30yrs at the expiration of the first 30yrs are all totally worthless, legally.
2. Also, saying you can “own the house” but not the land is another commonly quoted but rather silly and misleading statement…
A Tabien Baan book/document might state that you are the head of the household but it is NOT a legal document of “ownership of a house” – there is no such document.
Unless in the case of a condominium, a “Chanot” (title deed) will always list the land never just house ownership.
David,
You make some excellent points but there is a lot left unsaid. As a working person who will be visiting Thailand soon, where can I get more detail? I would consider retiring in Thailand but have many many questions regarding property “ownwership.”
My 81 year old aunt in NH “owns” her home too. Paid it off from the bank. However, she really only ‘controls its destiny’ as you say. Should she not pay the monthly payment of $700 to the county government, who *really* owns it, she’d be forced out at gunpoint. Property taxes are just a ruse —- we call them that but what they really are is rent to some other group of people that allows you to live in the house you trick yourself into thinking that you actually own – bank or no bank.
PS my property tax on my Korean apartment, which I also own free and clear of any bank, is about $10 a month. I make sure I get that back somehow.
Your point is well taken about the banks, but even is you own the “title” to the house out right, it seems you still don’t own the land.
The test for this is to not pay your property taxes for a while and one will soon find out who has the ultimate control of “your” property. The tax man can even sell it at way below the market price as long as he gets his. I know it is unlikely that someone with clear title to a house isn’t going to pay the property taxes. But it does illustrate the point that really we just have a contract to use the land for an annual fee payable to the government. Don’t pay … they take the property back (buildings and all – because they become part of the deal too). Ownership is an illusion.
Cheers,
Even when you hold title here in America you don’t actually own a property.
I own my watch. Outside of a good winding every other day, that’s all I need to do to keep it working fine. I pay nothing more to own this watch, and no body has the right to take it. I guess you can say I own it free and clear. If I don’t wind it, no one comes to me with a bill or a warning for not winding it. Its mine to do as I please.
But in real estate, even if you pay off the mortgage, you still have to pay tribute to the state, its called property taxes. And if you don’t pay your property tax, the State comes and takes it away. How can someone just take what is actually yours.
So in my minds eye, you never truly own your house. That’s just a dirty litle trick to get you to believe you actually own something.
With real estate you pay the bank a mortgage until you get the title. And all the while you pay the State property taxes while your paying the mortgage (basically your paying the banks taxes because until you pay them off, they are the real owners of your property). And after you take title to the property, you no longer have to pay the bank or mortgage company, but you still have to pay the State.
So how do you own that property? You don’t!
I own my watch. Not having to continue payment on my watch to keep it represents true ownership of it. As long as you have to pay someone tribute to keep something, you can’t possibly own it…
Actually you will all find that you actually do own your house not the land it is built on as you have to pay the government tax to live in your house on that land. However proof of ownership is simple…..you sell the house and the money realised belongs to you and nobdy else, you can keep the proceeds under your bed if you want…..