Title Search

Our lawyer will conduct a comprehensive examination of title deed recorded at the Land Department in the province where your land is located in Thailand.  We will verify that the Seller has clear and legal title of the land.  The title search will trace the land to its first possession.  This investigation will also verify the right to access to your property; provide the residential zoning, environmental and planning codes in the area and show any registered mortgage or liens on the land.  It is imperative to make sure that you are allowed to build a structure or house on the land.  There are building restrictions in many jurisdictions in Thailand.  Our lawyer conducting the title investigation will provide you a full report and a copy of the title deed in English language.

Due Diligence

Every financial transaction requires some sort of due diligence on behalf of the purchaser to verify that it is a sound investment.  When you purchase shares of a company listed in stock market or a mutual fund you will generally research the profile and performance of the company or fund.  The same is true when you purchase a property from a developer or third party.  You should check the background and history of the Seller. 

Review of Contracts

The real estate transaction in Thailand is not a standardized process like what you are used to back home.  After you make your deposit on the property, the Seller will have the contracts prepared for you.  It is still common for Thai parties to give you a 2 to 3 page type contract for all types of matters. However, Western buyers are much more used to seeing a contract as an exhaustive list of all the rights and obligations which allows for all possibilities and contingencies.   Our lawyer will conduct a review of the contract and draft any necessary amendments.

First, you want protection for yourself should there be a delay in the property being built.  A proper remedy should be stated in the contract. Second, the Seller will state a penalty if you are late with your payment.   This should be fair and reasonable to both parties.  Finally, your payment schedule should be reasonable and practical. Normally, a fair and balanced payment schedule should be proposed.  Our lawyer will make recommendations on your behalf and these concerns will be given to the Seller for amendment of the contracts before you sign.

Key Points for the Real Estate Contract:

There are some fundamental elements which should be included in every real estate contract in Thailand.  These are, among others:

Clearly stipulates the starting date for construction as well as its completion date.
Check for any extension clauses which normally give the developer a few extra months to complete without incurring any penalties.

The agreement should state clearly the price, the payment terms and the payment method. Ideally, in a construction agreement this should be listed as a schedule. It should also be calculated by units such as per square meter or square wah as plot size may wary after completion. Be wary of additional charges that you have not discussed with the developer.

Check that the penalties for default of payment are not too burdensome on you. Terms such as immediate rescission of contract and retaining the money you have already paid are not uncommon but there should be a period given to you to remedy this default.

Ensure that you have some recourse to a full refund in the event that the developer does not complete the construction due to insolvency or for any other reason.

Penalties should be given to you if the completion is late. This is normally deducted from the final payment due upon completion. Penalty rates vary greatly in Thailand although for condominiums there is a daily minimum penalty of 0.01% of the total unit price. For homes and villas, the penalties tend to be around the 3,000 THB to 5,000 THB per day figure.

The contract should have a comprehensive list of all the materials being used in the construction including its quality, quantity and model. Usually, the more detailed the better. Be wary of substitution clauses which gives the developer the latitude to replace certain materials with “similar or better quality” items should the price of that material increase. Ensure that such a clause is drafted in a way so as to give you the final decision on the matter.

Ensure that a floor plan is also attached to the main documents. Again be wary of clauses in the agreement which allows the developer to “modify” the floor plan but keeping it ‘similar’ to the plan agreed upon. You will want to be aware of such deviations whether minor or not and the agreement should be drafted to reflect this.

Ensure that in the recital or in the beginning of the agreement, it states that the developer is the rightful owner of the land in question. If they don’t, you should address the concern in the fine print or by adding an addendum by inserting language such as if the developer does not currently hold title, the agreement may be rescinded by the buyer along with full refund.

Many things can happen in the future so it is useful to have an exit clause should your plans change. An assignment clause allows you to transfer the obligations of the agreement to a third party. Note the administration fee due to the developer for this action. An assignment clause may also allow you the option to ‘flip’ the property should the market be conducive.

No matter how careful you are or how good your relationship is with the developer, a dispute may arise. The agreement should have an arbitration clause so settle any disputes. Arbitration is generally less costly and formal compared to court proceedings.

Transfer of Property

Once the contract is signed, attested and confirmed, we will go to the Land Office in province to have the transfer registered. If you won't be there in person, we will prepare a Power of Attorney from you to either a third party or one of our lawyers to act you in your behalf. We will also let you know beforehand what documents you will need (e.g. TT3 form –foreign exchange forms for condominium purchase) as well as the cost of the transfer fees and stamp duties fee. It is most common to be shared equally between the Buyer and the Seller.

Thai Will

It is strongly recommended that you have a Last Will & Testament prepared in both your home country and in Thailand.  It is not a pleasant thought to think of your demise. However you should plan in advance regarding your estate so the affairs are in order in the unfortunate event of your passing.  The last thing you want to do is cause additional stress to your family during this period.  Your property in Thailand becomes of value once you sign the contract and make an initial payment.  Hence even before the handover of the property you will have an asset to consider for your estate planning. 

Siam Legal provides legal services for drafting a Thai Will.  The document will detail your assets in Thailand, such as property, bank accounts, vehicle, and personal items.  Typically upon the death of a foreigner in Thailand, the government officer will ask the family for a copy of a Will or they will seek the deceased person’s lawyer for this document. Having a Will drafted in your home country to cover assets in Thailand may be problematic and burdensome to your family as documentations will need to be translated, notarized and approved by a government body.  We recommend a separate Will for your assets in Thailand.  It may be interesting to note that Thailand does not have any inheritance tax.

Contact our Lawyer or Solicitor

Siam Legal is one of Thailand’s premier full-service law firms headquartered in the Bangkok Metropolis. With complementary offices strategically located throughout Thailand particularly in Chiang Mai, Pattaya, Hua Hin, Samui and Phuket and international offices in London and Los Angeles, we at Siam Legal offer an extensive range of professional legal real estate services accessible to clients both domestically and internationally. Our more than 40 multi-national legal staff with a track record of providing highly effective legal solutions to both local and international clients delivers a high degree of expertise at reasonable cost. Keeping ourselves abreast with the latest property developments in Thailand and building networks with other business companies, we are an active member of both American Chamber of Commerce and British Chamber of Commerce in Thailand.

Our law firm specializes in Real Estate transactions, specifically Thailand property purchase, leasehold, condominium, villas, project development & licensing.  We offer a complimentary report on How to Purchase Property in Thailand.  Call our office for a free consultation on your property purchase or send us a quick email with your questions. 

Telephone +66 2-253-8100   (Dial 02-253-8100 inside Thailand)

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