Clarification Of Land Titles

Online, June 1, 2010 (Newswire.com) - Reform of the land tenure system by the Thai government has continued to progress over the last two centuries. Good title by registration only follows on property up the chain from Nor Sor 3, Nor Sor 3 Gor to the most advanced Chanote or Nor Sor 4 Jor title deed.

Using the picturesque island hills of Samui or Koh Phangan as an example, some developers have exploited shortages and ballooning land prices in these attractive destinations, leading investors to believe they can own a piece of paradise.

Known as ´encroached land´ the views are nothing short of magnificent, however the land is, more often than not, a traditional land claim classified as Por Bor Tor 5, Sor Kor 1, Tor Bor 5 and Sor Por Gor 4.

This land is not registerable in the same way as advanced titles such as Chanote Deeds, so that long held dream can turn into an investor's worst nightmare. This is particularly true if the owner occupier is Thai and they decide to disclaim the rights of the foreign buyer to lease or reside on the property.

In recent history, the practice of selling this land on the islands, or so called leasing rights, occurred at a time when endemic corruption was at its peak, More so in the Thaksin Shinawatra era and thereafter, mafia activity combined with administration from central government over untitled public forest land meant illegal land upgrades were granted with unfettered approval.

Specifically, documents were often false or illegally issued by local bureaucrats with impunity. On the one hand they, and the developers, made big money but on the other hand unknowing buyers more or less lost everything. Moreover, while the Thai government permits owners to convert their land into capital, the official policy since 2005 is unequivocal. Upgrades of encroached land or holders of traditional land claims documents would not be issued on these islands.

Investors who have paid money to own or lease this type of land should seek a refund if possible. Having said this, developers would have a case to answer if a litigant buyer files legal action predicated on notions of good faith, misleading and/or deceptive conduct, breach of contract or even fraud under the Commercial and Civil Code and Criminal Code provisions. Consumer protection is an option too. The bottom line is, under the Commercial Code, directors of the developer company do have unlimited liability and can incur civil and criminal sanctions.

In any event, legal recourse is onerous at best in any jurisdiction and next to impossible to determine at worst vis-a-vis transaction on untitled land in Thailand. The reason being is they are illegal in the first place Furthermore, while recent consumer protection legislation was introduced with good intentions, it has yielded mixed results more than 18 months after it came into effect. Claims under the Consumer Case Procedure Act have clogged the system due to a lack of resources to process them. You also need to consider the fact that legal systems are creatures that move slowly and ineffectively, incurring further costs to recovery. That is a factor which is often exploited by developers, causing litigants to leave the case before determination unsatisfied.

Under Thai law, the Land Code prohibits foreign buyers from owning land. Yet property owners of, say, a house with title and leasing rights on land under Chanote Deed gives the buyer security of tenure with good title by registration. In this case, leasing periods are in 30-year terms only with some limited contractual rights of renewal under the Commercial and Civil Code.

More importantly, the Code gives all registered owners of properties the protection they are entitled to consistent with common law jurisdictions. Section 1299 of the Code provides that no juristic act of immovable property is complete unless the juristic is made in writing and the registration is made by the competent official. Furthermore it states that an acquisitions of land without title by registration of the interests in the land "cannot be dealt with through the register" and cannot be set up against a third person who has, for value and in good faith, acquired and registered their right in the property. Thus, it gives a stronger claim and priority over unregistered claims and "presumes a possessory right over the land" under section 1373 to the party it favors.

While Nor Sor 3 and Nor Sor 3 Gor give the holder a legal certification and bestows the right to possess and use the benefit of the land, it does not give the certificate holder ownership. However they are accepted as evidence in disputes arising in competing land claims between parties, including the government. They are described with clear interpretation as "land exploration testimonial deeds". And the holder of the deed can register a sale, lease and apply and obtain building approval on this land if the proposed structure complies with the relevant authority's building, environmental planning and zoning laws

Most titled land in rural Thailand belongs to the Nor. Sor.3 or Nor Sor. 3 Gor variety and, for all intents and purposes, land title deeds are issued and maintained by the District land office - the Amphur.

The Nor. Sor. 3 is in effect the lowest form of land title in this tier group. It has a floating map and no parcel points with clear demarcation on boundaries, a matter which should be confirmed by the neighboring landowners.
If this is not done, hostile boundary disputes and adverse possession claims over the land can arise by a party who has no registered right to it at all. In addition, any legal act on this land requires the certificate holder to publish a 30-day public notice of intent, including matters such as a transfer of the deed to another party. This is a necessary step before any change of status over the land can be registered, so that other interested parties have the right of objection to its proposed use and possession.

Nor. Soar. 3. Gor has more or less the same legal status as Nor. Sor. 3. The distinction between the two is that Nor. Sor. 3 Gor has parcel points on the map, set by an aerial survey on the land area and "cross referenced to a master survey of the landscape with a matching aerial photograph." While its boundaries are more defined than Nor Sor 3, land is still less accurately surveyed than land with a Chanote Deed.

The most intelligent step in mitigating issues of land classification and tenure is verification of the title in the form of due diligence by a reputable law firm. Chanote or Nor Sor 4 Jor is by far the most secure title a holder can own as it certifies true ownership of the property. Land held under Chanote Deeds is accurately surveyed with GPS technology, plotted in relation to a national survey grid with clear boundary demarcation.

For any other traditional land outside Nor Sor 3 and Nor Sor 3 Gor, investors would be well advised to steer clear as they run the risk of losing all their money. For the very reason it is not possible to register a sale or lease over these traditional land claims, banks do accept them as collateral and you cannot build on such land.