Legal Risks of Buying Through a Thai Company

Why Do Foreigners Use a Thai Company to Buy?

Thai law (Land Code Act) prohibits foreigners from owning land outright. To circumvent this restriction, some buyers establish a Thai company (Thai Limited Company) in which they hold 49% of the shares, with the remaining 51% theoretically held by Thai shareholders. The company then purchases the land on their behalf.

This arrangement has been widely used, particularly for villas and houses with land. However, it involves major legal risks that warrant serious analysis before any decision is made.

The Main Risk: Fictitious Thai Shareholders (Nominees)

In practice, the 51% Thai shareholders are often nominees who are symbolically compensated, without any real contribution or decision-making power. However, using nominees to bypass land ownership laws is explicitly illegal in Thailand (Land Code Act, Section 96 bis).

The concrete risks include:

• Nullity of the title: the land title (Chanote) can be annulled by the authorities.
• Criminal prosecutions: the foreign buyer and the Thai nominees may face criminal penalties.
• Confiscation of the property: the Department of Lands can force the sale or seize the property.
• Total loss of investment: no recourse is possible if the arrangement is deemed fraudulent.

⚠️ Warning

Since 2006, Thai authorities have conducted several waves of inspections specifically targeting companies created to circumvent land ownership laws. Dozens of arrangements have been annulled. This trend has intensified since 2022.

Other Legal Risks to Be Aware Of

Risk of Company Dissolution

A Thai company must have a real commercial activity. A company created solely to hold land without operational activity can be dissolved by the Department of Business Development (DBD). Once dissolved, the property must be sold — often under unfavorable conditions.

Risk of Conflicts with Thai Shareholders

Even if the nominees are trusted individuals, they remain legally the majority shareholders. In the event of death, divorce, personal debt, or disputes, these shareholders can legally block or claim part of the property.

Risk of Transfer and Inheritance

Upon your death, your heirs may not necessarily be able to retain the shares of the company or the property. Thai inheritance laws and those of your home country can create complex legal conflicts.

💡 Good to Know

Foreigners can legally own a condominium up to 49% of the units in a building (Condominium Act). This is the only form of outright ownership directly accessible without a corporate structure.

Legal Alternatives to Corporate Structures

• Leasehold: long-term lease of 30 years renewable (not legally guaranteed beyond that). Less risky but without ownership.
• Purchase through a Thai spouse: possible, but regulated and risky in case of divorce.
• Freehold condominium: the safest solution for a foreigner seeking true ownership.
• BOI or LTR Visa: in some cases, Long-Term Resident visa holders may access expanded rights.

✅ Practical Advice

Before any purchase, have the arrangement reviewed by an independent Thai lawyer — not one recommended by the developer or agency. A second local legal opinion can help you avoid substantial losses. Also, see our comprehensive guide: Buying Real Estate in Thailand (2026).