Does a building permit confer ownership?

PHUKET: What does the building permit have to do with legal ownership of a building?

Friday 10 August 2012, 02:20PM

An all too common assertion that pops up in conversation is, “The person named in a building permit is considered to be the owner of the building.”

Hearing this must be particularly disturbing to many foreigners – who are legally allowed to own buildings in Thailand. Some of you may have wondered, “So is the contractor who applied for the permit to build, and who then built my house, legally considered to be its owner?”

Is this assertion accurate? In order for the statement to be correct, there must be some legal basis for a building permit to create ownership rights in a building. So we will begin by investigating the legal nature of a building permit.

The issue of a building permit is legally an “administrative order” (AO). An AO 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 [as] 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.”

The relevant law for the issue of a building permit AO is the Building Control Act (BCA). What power does the competent officer exercise in issuing a building permit and to what effect?

The procedure is as follows. The applicant submits the application documents to the local administrative office. Officials visit the site and verify the application documents (for example, construction drawings and specifications).

After reviewing whether or not the contemplated structure is legally permissible, the local administrative office must, within 45 days of the date of the application, either issue the building permit, or deny the application and inform the applicant in writing of the reasons for the non-issuance.

Thus, the legal effect of this administrative order is merely the legal permission for a person to build a certain structure on a defined plot of land. That is all it is.

What, then, is the relevant law that actually creates 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.

The CCC provides that the land owner, by law, becomes the owner of any structure permanently affixed to his land.

However, it is also legally possible to own a structure on land owend by someone else.
Preferably, this is accomplished by registration of a “superficies” which is the legal right of ownership of a structure on land owned by someone else, and is the legal instrument intended by the CCC 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 or her name. This is, in our opinion, an historical accident that has, unfortunately, developed into an administrative practice and which is a practical reality for the time being though it has no legal foundation.

So 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 on the relevant building permit.

That person will not be able to establish any ownership rights to the structure through the building permit.

Even if current Land Department practice may be an obstacle to a future sale or lease registration, the courts will follow the CCC and decide the ownership independently of the building permit.

So, what does the building permit have to do with legal ownership of a building? Answer: Nothing.

Duensing Kippen is a multi-service boutique law firm specializing in property and corporate/commercial matters, as well as arbitration proceedings arising therefrom. Duensing Kippen 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 by email to contact@duensingkippen.com. For more information visit duensingkippen.com