Over the past 18 months, our analysts reviewed documentation from more than 40 villa transactions in Phuket involving foreign buyers - primarily from Europe - who attempted to secure property rights through various legal structures. In at least five cases, the ownership arrangement was sufficiently defective to generate a real risk of losing either the building or the land. What follows are anonymised analyses of those transactions, with measured cost estimates for each structural error. All figures are as of Q1 2026.
Thai law prohibits foreigners from directly owning land (Land Code, Section 86). A villa situated on freehold land therefore requires an indirect structure: a 30-year lease (with renewal options), a Thai company, or a combination of both. Each path carries distinct risks, and a misconfigured structure can cost anywhere from several hundred thousand to several million baht.
Quick answer
- Foreigners cannot hold freehold land title in Thailand; a villa requires an indirect structure such as a registered 30-year lease, a Thai Co. Ltd., or a usufruct
- Approximately 30% of villa transactions reviewed by our team in Phuket during 2024-2025 contained at least one material structural defect
- Rectifying a defective ownership structure costs between 150,000 and 800,000 THB (roughly USD 4,200-22,500 at March 2026 rates, based on our estimates)
- A Thai Co. Ltd. using nominee Thai shareholders is illegal under the Foreign Business Act (FBA) and subject to enforcement by the Department of Business Development (DBD)
- A 30-year lease not registered at the Land Office is unenforceable against third parties
- Loss of company control or lease expiry can mean de facto loss of access to a villa worth 15-40 million THB
Options and scenarios
Case 1 - nominee company in Rawai, villa valued at 18 million THB
Starting position. A European buyer acquired a villa in the Rawai area in 2023 for 18 million THB. The ownership structure was prepared by a law firm recommended by the developer. A Thai Co. Ltd. was formed with two Thai shareholders holding a combined 51% stake.
The error. The Thai shareholders contributed no capital and conducted no genuine business activity. The Department of Business Development classified the arrangement as a nominee structure, in violation of Section 36 of the Foreign Business Act.
Warning signals. No evidence of capital contribution by Thai shareholders. No minutes of general meetings. The company failed to file annual financial statements with the DBD.
Cost of the error. DBD fine of 100,000 THB; company restructuring costs of 280,000 THB; fees for a new legal firm of 350,000 THB. Total: 730,000 THB (approximately USD 20,500). Risk of total loss of the property remains open pending the conclusion of proceedings.
What we would do instead. Rather than a nominee company, our analysts would recommend a 30-year lease registered at the Land Office, combined with a separately registered superficies right (right of superficies) vesting building ownership in the foreign buyer.
Case 2 - unregistered lease in Kamala, villa valued at 25 million THB
Starting position. A buyer signed a 30-year land lease for a villa plot in Kamala, with the villa valued at 25 million THB. The lease was executed in writing but was never registered at the Land Office.
The error. Under Section 538 of the Thai Civil and Commercial Code, any lease of immovable property exceeding three years must be registered at the Land Office to be enforceable against third parties. The landowner subsequently sold the plot to another buyer in 2025.
Warning signals. The landowner refused to attend the Land Office for registration. No endorsed Chanote confirming registration was produced. A clause in the lease deferred registration 'at a later date.'
Cost of the error. The buyer lost all rights to use the land. The villa now sits on land belonging to a third party. Estimated loss: the full leasehold value of 4.5 million THB plus legal costs for pursuing claims - totalling over 5 million THB (approximately USD 140,000).
What we would do instead. Lease registration at the Land Office should occur simultaneously with the first payment instalment. In our view, no funds should transfer without an endorsed Chanote confirming registration.
Case 3 - missing superficies in Layan, villa valued at 32 million THB
Starting position. An investor entered into a 30-year land lease in Layan and constructed a villa at a combined cost of 32 million THB. The lease was properly registered, but no superficies right was established over the building.
The error. Without a registered superficies, the building is legally a component of the land and belongs to the landowner under the Thai law principle of superficies solo cedit. When the lease expires, the investor loses access to both the land and the structure built on it.
Warning signals. No separate building entry at the Land Office. The developer's legal counsel did not raise the issue of superficies. The lease agreement contained no clause addressing building ownership.
Cost of the error. Potential loss of a building worth 22 million THB (construction cost alone). Retrospective registration of the superficies cost 180,000 THB in fees and legal charges, but required the landowner's consent - and the landowner demanded an additional payment of 1.2 million THB. Total: 1.38 million THB (approximately USD 39,000).
What we would do instead. Superficies registration should be completed in parallel with lease registration, before construction begins.
Case 4 - loss of company control in Bang Tao, villa valued at 22 million THB
Starting position. A buyer held 49% of shares in a Thai Co. Ltd. that owned a villa in Bang Tao with a market value of 22 million THB. The majority Thai shareholder (51%) was a person introduced by the intermediary.
The error. The buyer secured no operational control over the company. There was no trust deed, no power of attorney, and no protective provisions in the Articles of Association. The Thai majority shareholder unilaterally passed a resolution to mortgage the property as collateral for a loan.
Warning signals. No detailed Articles of Association with protective provisions. No unanimity requirement for transactions involving company assets. No record of regular general meetings.
Cost of the error. A mortgage of 8 million THB was registered against the property. Legal costs to recover control reached 620,000 THB. Court proceedings have been ongoing for 14 months. Total blocked or encumbered assets: over 8.6 million THB (approximately USD 241,000).
What we would do instead. The company's Articles of Association should require unanimous shareholder approval for any disposal of company assets. A usufruct registered at the Land Office in favour of the foreign buyer should serve as a second layer of protection.
Case 5 - lease without renewal option on Koh Samui, villa valued at 15 million THB
Starting position. An investor signed a 30-year land lease in the Bophut area of Koh Samui for a villa valued at 15 million THB. The agreement contained no renewal clause of any kind.
The error. Thai law does not guarantee automatic lease renewal. A verbal promise from the landowner carries no legal weight. Even a written renewal option is only a contractual obligation and is not binding on the landowner's heirs unless separately confirmed and documented.
Warning signals. No written renewal option in the lease. No usufruct as a backup. The landowner was elderly with no clear succession arrangement in place.
Cost of the error. After 30 years, the investor may lose rights to a property estimated (per conservative market growth projections) to be worth 25-30 million THB. Negotiations with the landowner's family over a new lease have already cost 400,000 THB in legal fees, with no resolution in sight.
What we would do instead. A double written renewal option (30+30+30 years) embedded in the lease and registered at the Land Office, combined with a 30-year usufruct as a further security layer. Verification of the landowner's succession status prior to signing is, in our view, non-negotiable.
Comparison table
| Parameter | Nominee Co. Ltd. | 30-year lease (standalone) | Lease + superficies + usufruct | BOI-promoted company |
|---|---|---|---|---|
| Legality (2026 status) | Illegal under FBA | Legal if registered | Legal if registered | Legal, subject to qualifying criteria |
| Control over land | Nominal (51% Thai-held) | Right of use only | Right of use + building title | Full freehold ownership |
| Duration | Indefinite (but high risk) | 30 years + options | 30 years + options | Indefinite |
| Setup cost | 80,000-150,000 THB | 50,000-120,000 THB | 120,000-250,000 THB | 500,000-2,000,000 THB |
| Risk of losing control | Very high | Medium (high without registration) | Low | Low |
| Annual maintenance costs | Company accounting: 15,000-40,000 THB | None | None | Accounting + audit: 50,000-150,000 THB |
| Resale route | Restricted (legal exposure) | Lease assignment with consent | Lease assignment with consent | Share transfer |
| Building protection | Building held by company | None (without superficies) | Yes - via superficies | Building held by company |
Risks and mistakes
Risk 1: nominee shareholders. Since 2024, the DBD has intensified scrutiny of companies with foreign involvement. Based on DBD data from Q3 2025, the number of enforcement proceedings initiated rose 37% year-on-year. The measurable test: if Thai shareholders cannot document the source of capital used to subscribe their shares, the structure is at risk.
Risk 2: unregistered lease. The measurable indicator: no endorsement on the reverse of the Chanote (title deed) means the lease does not exist in relation to third parties. Verification at the Land Office takes roughly 15 minutes.
Risk 3: missing superficies. A building without a separately registered right becomes part of the land. The measurable indicator: no 'Sor Tor 4' entry in the Land Office records relating to the right of superficies.
Risk 4: lapsed powers of attorney. Thai Co. Ltd. structures require annual renewal of powers of attorney and updates to the director register at the DBD. Neglecting this obligation for two years creates a risk of the company being struck off.
Risk 5: failure to check Chanote for encumbrances. Before signing any lease, a title search at the Land Office for mortgages, liens, and litigation is mandatory. In our dataset, 12% of plots marketed to foreign buyers in Phuket in 2025 carried undisclosed encumbrances.
Tax exposure for foreign investors. Rental income from Thai property is subject to tax both in Thailand and in the investor's home jurisdiction, subject to any applicable double tax treaty. A defective ownership structure can complicate tax filings and may increase the effective tax rate by 5-12 percentage points, based on our estimates.
FAQ
Can a foreigner own a villa in Phuket outright?
A foreigner cannot hold freehold land title in Thailand (Land Code, Section 86). However, a foreigner can own the building on leased land, provided the lease and a superficies right are properly registered at the Land Office. A Thai Co. Ltd. with genuine - not nominal - Thai participation, or a BOI-promoted company, are alternative routes.
How much does it cost to set up a correct villa ownership structure?
Based on our estimates from Q1 2026, a complete structure combining a registered lease, superficies, and usufruct costs 120,000-250,000 THB (approximately USD 3,400-7,000). This covers legal fees, Land Office registration charges, and document translation.
What is a superficies and why does it matter?
A superficies (right of superficies) is a distinct real right that allows a foreigner to hold title to a building situated on land owned by another party. Without a registered superficies, the building is legally part of the land and belongs to the landowner.
Can a 30-year lease be extended?
A renewal option (for example, 30+30+30 years) can be written into the lease agreement. However, such an option is only a contractual obligation - it is not binding on the landowner's heirs unless separately confirmed. Land Office registration covers the initial 30-year term.
How do you identify a nominee company in Phuket?
Measurable red flags: Thai shareholders have made no documented capital contribution; they do not attend general meetings; they are unfamiliar with the company name; the company has not filed annual accounts with the DBD. If any of these conditions apply, the structure shows characteristics of a nominee arrangement.
Is a BOI company a realistic option for an individual villa buyer?
A BOI-promoted company can hold freehold land, but it requires a minimum investment of 40 million THB (approximately USD 1.1 million) and genuine business operations. For a single villa priced at 15-30 million THB, the structure is disproportionately costly and complex.
How long does a Chanote title search take at the Land Office?
A personal visit to the Land Office and a check of encumbrances typically takes 1 to 3 working days. The administrative fee is in the range of 100-500 THB. Our analysts treat skipping this step as a serious due diligence failure.
Does usufruct offer stronger protection than a lease alone?
A usufruct registered at the Land Office grants a foreigner the right to occupy and benefit from a property independently of the lease. It appears as a separate entry on the Chanote and constitutes an additional protection layer. Our analysts regard the combination of lease, superficies, and usufruct as the minimum acceptable standard for villa ownership structures in Phuket and Koh Samui.
What happens if annual company obligations are not met?
A Thai Co. Ltd. must file annual financial statements, maintain a current director register, and renew relevant powers of attorney each year. Failure to comply for two consecutive years risks the company being dissolved by the DBD, which would sever the foreign buyer's connection to the property entirely.
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