Buying a Villa in Thailand: Company-Held Property Risks

Why Buying a Villa in Thailand Means Buying a Company

Section 86 of the Land Code is often described as banning foreign land ownership. That is not quite what it says. It permits aliens to acquire land by virtue of a treaty, subject to the Code. Because no such treaty is currently in force, the practical result is a prohibition.

A Thai limited company, by contrast, may own land. Sections 97 and 98 of the Land Code decide when a company counts as foreign, and the test has two limbs that are often reported as one. A company is foreign if foreign shareholding exceeds 49% of registered capital, or if more than half of its shareholders are foreign. Structures are usually built to sit just under both limbs.

There is a narrow lawful route for individuals. Section 96 bis allows a foreigner who brings in at least THB 40 million for investment to acquire up to one rai for residential use, with the approval of the Minister of Interior. The investment must sit in prescribed instruments, and the land must lie in a designated residential or municipal area. It exists, and the Department of Lands still publishes the procedure. In practice it has been used a handful of times since 2002, and it is not a route to acquiring an existing island villa.

What Changed in 2026

Two agencies moved in the same direction this year, and buyers should understand both.

The Department of Business Development tightened company registration in three stages. An order effective 1 January 2026 requires each Thai shareholder to produce bank statements from the specific account used. They must cover the month of subscription and the two preceding months, and show a withdrawal matching the date and amount subscribed. A further order effective 1 April 2026 closes a familiar practice. Companies were incorporated with Thai shareholders and the foreign party added later. Such amendments now require a prescribed investment confirmation statement. A third order effective 1 August 2026 adds statements from the receiving account and a letter tracing the flow of funds.

Separately, the Department of Lands issued urgent circulars to provincial land offices in May 2026. These consolidate existing directives rather than creating new law, but they change practice materially. Land offices must now investigate before registration where a transaction involves cash of THB 2 million or more, or an asset appraised above THB 5 million. They must also build a database of every juristic person holding land locally. Each entity is screened against risk indicators, including foreign control regardless of formal shareholding percentage.

In August 2026 the Department of Business Development reported the scale of the exercise. It had cross-checked land data covering more than 144,000 juristic persons, and identified 36,277 with foreign participation for screening. Of those, roughly 31,500 have foreign shareholding at or below 49%, which is the priority group. Surat Thani sits among the sixteen provinces where these entities concentrate.

Two caveats belong here, because both are accurate and both matter. Officials have stated expressly that a 51:49 structure is not by itself an offence where Thais have genuinely co-invested. High-risk classification is a screening mechanism, not a finding of wrongdoing.

What You Inherit When You Buy the Shares

This is the part that catches otherwise careful buyers. In a share purchase the company survives unchanged. Only the shareholders differ. Every liability sitting inside the company on completion day stays exactly where it was.

• Tax. Assessed and unassessed liabilities, including years the seller never filed properly.
• Debt and guarantees. Including obligations that never appear in the accounts.
• Litigation and employment claims. Staff, contractors and neighbours all outlive a change of shareholder.
• Building compliance. Any permitting or zoning defect attaches to the property itself, as our note on the Koh Samui building regulations explains.
• Historic nominee taint. The most serious item, and the one no warranty can fix.

Consider what happens if the Department of Lands later finds that the land was acquired on behalf of a foreigner. Section 96 of the Land Code applies the machinery of section 94. The Director-General may order disposal of the land within a period he fixes. That period must be not less than 180 days and not more than one year. If the owner does not dispose of it, the Director-General may dispose of it himself.

That consequence attaches to the land and the company. No share purchase agreement between private parties binds the Director-General. A warranty from a departing seller is worth only as much as that seller’s solvency and reachability, and it does not save the land.

The Two Separate Nominee Regimes

Most articles merge these. They are different laws, with different subject matter, penalties and enforcing agencies.

• The Land Code route. Section 96 covers a person who acquires land in place of a foreigner, triggering forced disposal under section 94. Section 113 penalises the nominee with a fine not exceeding THB 20,000 or imprisonment not exceeding two years, or both. Section 74 paragraph 2 lets land officials summon parties and require documents where they suspect evasion. This bites whether or not the company trades.
• The Foreign Business Act route. Section 36 covers a Thai national who holds shares for a foreigner so that the foreigner can operate a business in circumvention of the Act. Penalties run to three years’ imprisonment or a fine of THB 100,000 to 1,000,000, or both. This bites where the villa is let or otherwise trades.

A purely residential family home may fall outside the Foreign Business Act entirely while still sitting squarely within the Land Code provisions. Do not accept an assurance framed only around one statute. Our guidance on nominee land ownership enforcement covers how these investigations run.

Due Diligence Before Buying a Villa in Thailand

1. Trace the original share subscriptions. Ask how each Thai shareholder funded their shares and what evidence survives. Where the company was incorporated years ago with no such records, price that gap. It is exactly what a land official now asks about.
2. Reconstruct the land purchase. Where did the money come from? If the purchase price exceeded registered capital with no mortgage registered, expect the question and prepare the answer.
3. Read the shareholder history, not just the current register. Shareholding that increased on the Thai side after the land was acquired is a specific red flag in the current circulars.
4. Examine the share classes. Preference shares with weighted voting that hand a foreign minority control have been a listed red flag in Land Department scrutiny guidelines since 2006. The statutory test for foreignness under the Foreign Business Act remains equity-based. It is administrative screening, rather than the statute, that looks at control.
5. Check the directors and signatories. Foreign authorised signatories and foreign promoters both appear on the same list of indicators.
6. Verify the share transfer formalities. Section 1129 of the Civil and Commercial Code voids a transfer of name-certificate shares unless it is in writing, signed by transferor and transferee, witnessed by at least one person, and states the share numbers. It binds the company and third parties only once entered in the shareholder register. Defective historic transfers are common, and they cloud title to the shares you are buying.
7. Confirm the building position separately. Company ownership says nothing about whether the villa was lawfully built or lawfully let.

Where the villa is also a rental business, the licensing analysis runs in parallel. See our note on the hotel licence for rental villas.

One More Reason to Take This Seriously

The share-transfer mechanism itself has drawn attention. Investigators have found nominee groups moving property by changing company shareholders rather than registering a land transfer. No transfer fees, specific business tax, stamp duty or withholding tax then fall due. The Revenue Department has begun cross-checking Thai shareholders’ declared income against the value of shares they hold.

In other words, the very structure that makes a villa sale look simple is on the authorities’ list. That does not make a genuine transaction unlawful. It does mean the transaction will be looked at.

Frequently Asked Questions

Conclusion

Buying a villa in Thailand through an existing company is a corporate acquisition wearing the clothes of a property purchase. The house is the attractive part. The company is what you actually receive. Land offices are now screening existing landholding entities, and registration scrutiny tightened through 2026. Diligence that was once a formality has become the substance of the deal. On Samui and Phangan, where these structures are concentrated and values are high, that shift deserves a proper response.

This article provides general information on Thai law and does not constitute legal advice. Whether a particular structure is lawful depends on the facts of funding, control and use in each case. Obtain advice on your own transaction before acting. Company records are maintained by the Department of Business Development, and land registration is administered by the Department of Lands.