In many cases, a purchaser of real estate will want to have more information about the property they are interested in buying than just what appears on examination of the title deed. For example, if you are buying a property in Thailand that is still being constructed, you may want to be sure that the developer has all of the required permits for the project in addition to ownership of the land. Researching your potential investment in properties is commonly called due diligence. The due diligence process should be done before you are going to sign any contract relative to the purchase of the property or make any payment thereto until ownership thereof is being transferred to you.
Siam Legal International’s property department offers various services that are designed to protect the rights and interests of foreigners wishing to acquire properties in Thailand such as our property due diligence service.
Our Due Diligence ServicePhysical Inspection
In addition to the title search, we will conduct a physical inspection of the land to determine:
- If development has started, we will inspect to ascertain if the land is connected to a public road and if the boundaries of the land are clear and in accordance with the title deed. This visual inspection can give you additional peace of mind if you cannot be nearby or abroad during development. Visual inspection likewise enables the buyer to inspect the quality of the construction works made upon the subject property.
- We will inspect whether the property observes the relevant local zoning ordinances.
- We will also determine the ownership of the parcels of land immediately adjacent the one you are interested in. It is recommended to determine the ownership of the different plots surrounding the property you would want to invest into. We will inspect whether the property observes the relevant local zoning ordinances.
New developments require a number of approvals and official government filings that we can check to ensure that everything goes smoothly with your purchase such as:
- Inspect that the type of development you want to buy is allowed to be constructed in that area. Some areas in Thailand do not permit condominium development, so if you are interested in buying a condominium, we will check the restrictions on land being used to make sure that a condominium can be developed where the development is advertised. This is a very basic check. It is very important to know the land used for the development is allowed under Thai law. In addition, drainage must be available for all new developments.
- We will also review the construction permit to make sure that it was legally issued and accurately reflects the developer's current plans. In the issuance of the construction permit, the developer has complied with the documentary requirements specifically the complete architectural plan certified by a licensed architect and engineer. This permit is issued by the district office where the construction is situated.
- We can review a developer's Initial Environmental Examination (IEE) report filed with the provincial Office of Natural Resources and Environment to make sure that it has been properly filed and approval has been granted. The IEE is a preliminary environmental review of reasonably foreseeable impacts of the proposed activity to determine the adverse impacts whether an environmental assessment is required or not.
It is important to compare the IEE report with the developer's construction plans, as sometimes the construction plans are changed after the developer received the approval of the IEE report.
- For purchasers concerned over parking spots for vehicles, Thai law requires a minimum number of parking spaces with new condominium construction and we can check official records to determine how many parking spaces are planned and if that meets the legal requirements. Car parks generally account for 25% of the total construction costs and are a hidden cost in a condo unit’s price. A newly constructed condominium building in Bangkok is required to have one parking space for every 120 square meters of the construction area.
In addition, we can review local court records to determine:
- Whether the seller is previously or currently been involved in any court cases to ascertain whether other buyers have sued the seller in the past for default. This is a very critical scenario that every buyer should protect himself from. It is very important to know the credibility of the seller in the real estate industry.
- The seller may have been declared bankrupt their assets due to be liquidated and they will not have a title to transfer to you. The right of the seller over the property and to transfer ownership to the buyer is an utmost consideration.
- Whether it is the first time your developer is developing a project. First-time developers often are under more scrutiny as compared to long established brands in the real estate industry.
Prior research of these things could raise a red flag and you may not want to deal with that seller. It could reveal minor concerns with the paperwork that can be corrected before purchase or in another case, it can mean a world of difference between making a good or bad investment. This is the very core of conducting due diligence. Before securing any investment, as in properties, you must see to it that your rights and interests are protected, as such, your investment is secured.
Siam Legal International can prepare a due diligence report for you about your intended purchase. Your due diligence report will be prepared by our Thailand property lawyer and will include your title search report, pictures of the land, and translations of construction permits or other documents related to the property you are interested in. Your due diligence report is a snapshot of the legal parameters of the property you are investigating.