Via Phuket News.
Media reports have cited certain development projects which are not progressing and are currently stalled, purportedly due to legal issues relating to their building permits.
Although these projects have obtained a building permit for the construction of the project, they are still facing challenges. Why? To answer that, we must first understand the legal status of a building permit in Thailand.
The issue of a building permit is legally an “administrative order”, which is defined by Thai law 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 issue of rules.”
The relevant law for the issue of a building permit administrative order is the Building Control Act (1979) – the BCA for short. If a person wants to construct, modify or move a structure, he or she must get permission to do so.
The administrative procedure is as follows. The applicant submits the application documents to the local administrative office. The responsible officer schedules a site visit. The officer will also verify the application documents (for example, construction drawings and specifications) and will then review whether the contemplated structure is legally permissible by law.
In certain areas of Thailand, including Phuket, the land use restrictions are basically defined by three laws – the BCA, the City Planning Act of 1975 and the National Environmental Control and Maintenance Act of 1992.
If all the application documents are in order and the building is legally permissible at the applied-for location, the local administrative office must issue the building permit. If the documents are insufficient the administrative office will deny the issue of the building permit and inform the applicant in writing with the reasons for the non-issue, within 45 days of the date of the application.
Thus, the legal effect of this administrative order is a legal permit to a person to build a certain structure on a defined plot of land.
So how can it now be that a person who has already received a building permit can be stopped from exercising his right under the permit?
The answer is: he cannot. As long as the building permit is in effect, the applicant has the right to construct the building as permitted. Section 42 APA states that “an administrative order shall be valid so long as it is not revoked or terminated by time condition…”
Construction time frames
It should be noted that no such “time condition” applies to building permits. The temporal validity of a building permit depends on the size of the building to be constructed. Licenses of one year are issued for buildings with less than 10,000 square meters, two years for buildings exceeding 10,000 square meters, but not exceeding 100,000 square meters and three-year licenses are issued for buildings exceeding 100,000 square meters.
The licenses may be renewed up to four times. The first renewal will be for same period of time as the initial term for which it was granted. However, the second, third and fourth renewal terms will be for a period of just one year each.
A little known fact in relation to building permits is that the applicant has a duty to report on progress and invite the relevant official to inspect construction progress every 90 days.
Revoking building permit
Can a building permit be revoked after its issue and before it expires? Yes, it can.
Legally, a building permit is merely an administrative order and administrative orders can be revoked through an appeal or by action of the relevant government office.
The revocation can be initiated through an appeal by “a party”. Note that such “party” is not necessarily the person subject to the administrative order. It may also be any third party affected by the administrative order – for example, the neighbour of a development project that has received a building permit.
If the officer agrees with the “party” that there is a problem of facts, or of a point of law or of suitability, he may revoke or amend the order.
Section 49 of the The Administrative Procedures Act of 1996 (APA) states, “The competent officer or the supervisor of the competent officer may revoke an administrative order according to the bases in Section 51, Section 52 and Section 53, whether or not it has passed the steps of appeal or protest under this law or other laws.”
The conditions stated in those three sections for revoking and administrative order without appeal are strict.
The relevant regulations, treatment and outcome of a revocation of an administrative order depend on whether or not the original order was a lawful or an unlawful one.
The revocation of a lawful administrative order is subject to compensation for damages arising out of the revocation, but only if the recipient of the administrative order was not aware of the unlawfulness of the order. Section 51 of the APA explicitly states that if:
“1. The said person [ie, the recipient] has produced false statements or has concealed facts which should have been reported, or has made a threat or a persuasion by offering property or providing any other benefits illegitimately; or
“2. The said person has produced statements which are incorrect or incomplete in the material part thereof; or
“3. The said person has known of the unlawfulness of the administrative order at the time of receiving the administrative order, or his/her not knowing of such is due to his/her serious negligence.”
If any of these apply, the building permit recipient will not be entitled to any compensation. Thus, an illegal building permit obtained through means of corruption, for example, can be revoked without any compensation.
No gurantees to complete building
In sum, once a building permit is received, that alone is no guarantee that the applicant will be able to complete the project to which the permit applies.
A building permit can “expire”, be revoked after an appeal or be revoked by the administration that issued it.
To mitigate the harsh consequences of revocation it is strongly advised to perform a strict and comprehensive due diligence on the legality of the project prior to applying for the permit.
Duensing Kippen is a multi-service boutique law firm specializing in property and corporate/commercial matters and arbitration and litigation proceedings arising therefrom. It is the only firm in Thailand with three Members of the Chartered Institute of Arbitrators (MCIArb). It 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: firstname.lastname@example.org or for more information visit duensingkippen.com