Duensing Kippen Tax and
Law
You might have heard something like the following all too
common assertion: “the party named in a building permit is considered to be
the owner of that building.” To have heard such may have been particularly
disturbing to many foreigners who are allowed to legally own buildings in
Thailand.
Some of you may have wondered: is the contractor who
applied for the building permit to build and who then built my house
“legally considered” to be its owner? But is such an assertion accurate? In
order for the statement in question to be correct, there must be some
legal basis for a building permit to create ownership rights in a
building. We begin then by investigating the legal nature of a building
permit.
The issuance of a building permit is legally an “administrative
order”. An administrative order is defined as “an exercising of powers
under the law by the competent officers with an effect of creating legal
relations between persons in such a way to create, change, transfer,
reserve, suspend, or which renders an effect to the status of rights or
duties of a person, whether it be permanent or temporary, such as, ordering,
permission, approval, decision of appeal, certification, and acceptance of
registration, but excluding an issuance of rules.” (*1)
The relevant law for the issuance of a building permit
administrative order is the Building Control Act B.E. (“BCA”). What power
then does the competent officer exercise under the BCA in issuing a building
permit and to what effect?
The administrative procedure is as follows. The applicant
submits the application documents to the local administrative office. After
a site visit and a verification of the application documents (e.g.
construction drawings and specifications, etc.) and review of whether or not
the contemplated structure is legally permissible, the local administrative
office must either issue the building permit, or deny the issuance
thereof and inform the applicant in writing with the reasons for the
non-issuance, within forty-five days from the date of the application (*1).
Thus, the legal effect of this administrative order is merely the legal
permission to a person to build a certain structure on a defined plot of
land and that is all it is.
What then is the relevant law that actually does create
ownership rights? And more particularly, how does one actually legally own a
building?
Ownership rights are created through the Civil and
Commercial Code (“CCC”). Sections 137ff and 1308ff of the CCC describe what
ownership rights exist and how ownership rights can be acquired by law. In
the case immovable property, Section 139 CCC states that it is “land
and things fixed permanently to land or forming a body therewith...
(i.e., e.g. buildings)”. The CCC therefore provides that the land owner
“automatically” by law becomes the owner of any structure permanently
affixed to his land. However, it is also legally possible to own a structure
on another person’s land.
Preferably, this is accomplished by the registration of a
“superficies” (*1) which is the legal right of ownership of a structure on
land owned by someone else and it is the legal instrument intended by the
Code to create such a right of ownership.
Note however, that even though property ownership is
generally established and detailed in the CCC, the building permit is not
mentioned. It is understood that on a practical level, it is recommended to
receive the building permit in one’s name. The land department currently
refuses to register certain rights if the applicant does not have the
building permit in his name. Which is, in our opinion, an historical
accident (*4) that has, unfortunately, developed into an administrative
practice and which is a practical reality for the time being but which is
equally without legal foundation.
Therefore, no building owner who has established legal
ownership rights of a building through the construction of a structure on
land under a superficies arrangement should be concerned if another person’s
name is in the relevant building permit. Such person will not be able to
establish any ownership rights to such structure through that building
permit. Even if current land department practice might be an obstacle to a
future sale or lease registration, the courts will follow the CCC and decide
the ownership independent from the building permit.
Thus, what does the building permit have to do with legal
ownership of a building? Answer: nothing.
Footnotes:
1) Section 5 (1) The Administrative Procedures Act
(1996).
2) Note however, the BCA also allows the local
administrative office to extend the forty-five day deadline for up to two
additional forty-five day periods for any reasonable cause; if so, the local
administrative office is required to notify the applicant in writing of the
cause for the extension(s).
3) cf Section 1410 ff
4) The confusion of the land department might also result
from unfortunate wording in the building permit form itself. The building
permit form labels the applicant as “the owner” of the building.
However, the BCA itself never uses this language only and ever referring
instead to the “permit grantee”.
Note: Duensing Kippen is a multi-service boutique
law firm specializing in property and corporate/commercial matters and is
also the only such firm in Thailand that compliments its property and
corporate/commercial legal expertise with a core tax law practice. Duensing
Kippen can be reached at: pattaya @dktaxandlaw.com or for more information
please visit them at: www.dktaxandlaw.com
