Re-selling Your Condo
Considering the rise in prices of newly developed condominiums, buyers are seeking more affordable and spacious units compared to the new projects in the market. The property consultancy firm CBRE Thailand has reported an increase in demand for the existing second-hand market since the fourth quarter of 2018. As prices of second-hand units are often cheaper than those of newly launched projects.
The resale market in Thailand is a good investment. Buyers, nowadays, are practical in the choice of properties. Current pricing shows that new condominium projects in greater Bangkok ranges from 55,000 – 350,000 THB per square meter; luxury condominiums may even reach 600,000 THB per square meter. As compared to older buildings, the newly launched projects are quite smaller in unit sizes and more expensive. As such, purchasers tend to look into the second-hand market.
There are two types of resale units: those in buildings under construction where investors want to resell before the transfer of title, and those in completed ready-to-move-in units where the title has already been transferred to the original buyer.
In the re-selling of your condominium unit, it is a common practice that properties are advertised online or in print media or you may hire the services of a real estate agent. If a real estate agent is used a commission of three percent of the final sales price is typical.
The resale of condominium units is easy if you follow the following basic steps with regard to property rights and the process of property sales in Thailand.
Similar to a title search for a new condominium project, this step is essential for the purpose of verification of the status of the land where a building is located. Normally, as a used condominium, the land shall not be under a mortgage, or, if it is, the buyer would acknowledge his position over such land. The purchaser must be absolutely certain that the seller is indeed the owner and has the legal authority to sell the home or lease the land. A title search will list the legal owner(s) of the property. Make sure that all documents and agreements are notarized.
If you buy a condominium from an individual, a sales agreement normally is a ready-to-use contract (an agreement which is not especially drafted for the sale between buyer and seller). A sales agreement can be canceled by withdrawing the property from the sale and returning any deposit that has been collected. This should be included as a condition in the purchase agreement to avoid any legal disputes.
In closing the sale, the seller and buyer shall meet to sign the necessary documents. The meeting usually takes place at the agreement of both parties either at the real estate office or, if a lawyer was hired, at the lawyer's office.
The following documents are required at the time of sale:
- Land or condo title deed
- Passport or ID card
- House Registration Document if applicable (Tabien Baan)
- Marriage or divorce certificate if applicable
- Any relevant tax, warranty, and documents relating to the property
- Purchase agreement
- Power of Attorney form if applicable
- Foreign Exchange Transfer form from the bank (Condo only)
- A document stating the percentage of foreign-owned condos is less than 49 percent (Condos Only)
- A document stating that there are no outstanding maintenance fees owed for any common ground
- If the property has an outstanding mortgage then the bank will need to be involved with the selling process as the
- land title will be in the bank's name.
The authenticity of these documents as well as the relevant contract or agreement may be checked by a competent lawyer. This is the importance of hiring the services of a property lawyer when it comes to buying or selling a property.
A norm is that a buyer shall pay the full price of the property to a seller upon a transfer of ownership at the Land Department. The terms of payment, as well as the mode of payment, is clearly stated in the Sale and Purchase Agreement executed by the Seller and the Buyer. This has been long agreed upon by the parties during the negotiation of the sale.
The payment of the deposit is normally a condition in the Sale and Purchase Agreement in order for the Seller to complete the sale. This deposit is considered a not secured payment, as such a scenario, it is recommended that the deposit be that of a small value. In the market, the deposit is kept at the rate of at least 1% of the total market price. When there is a relatively small period between the signing of the agreement and the transfer of ownership at the Land Office, the Buyer may request the Seller to have the deposit in a lesser value.
Registration of Ownership
To buy a condominium, a buyer (or a seller, or both parties, depending on an agreement between parties) shall be responsible for a registration fee, a stamp duty (in case of having owned the property for more than 5 years) or a special business tax (in case of having owned the property for less than 5%), and a withholding tax.
In case of re-sale of an existing condominium unit, a transfer tax shall be paid. Transfer tax in Thailand is a tax imposed by the Thai government and paid at the local land office when transferring ownership of a condominium. Total transfer fees and taxes could range from a small amount to a relatively larger amount depending on the amount of income tax involved for the seller. Another variation of the transfer taxes and fees in case of a re-sale condominium relate to the agreement between the seller and buyer. Both parties may agree to share these varied costs relative to the transfer of ownership at the appropriate Land Office.
If you have legal questions related to re-selling your property in Thailand, please feel free to contact us.