Sale and Purchase Agreements

If you are considering purchasing property in Thailand, you will want to be familiar with sale and purchase agreements. While you should always consult a reputable attorney and conduct due diligence before signing any agreement obligating you to purchase a property, you can learn from a careful review of any contract or agreement offered. In addition to getting professional advice, it is important to remember that no contract is set in stone until both parties agree and sign. If the contract is incomplete or contains terms that you do not like you are free to negotiate with the seller on more than just the price point.

Another important general issue for foreigners may be the language of the agreement. If you and the seller speak different languages and are using translated contracts for negotiation purposes, it is important to specify which version is the governing version of the contract in case of dispute or translation error. Thai law specifies that “whenever a document is executed in two versions, one in Thai and the other in another language, and there are discrepancies between the two versions, and it cannot be ascertained which version was intended to govern, the document in Thai shall govern.” Thus, if you do not specify that the version you understand governs, you may be bound by a different version. It is best for both parties to sign only a single agreement that contains a provision identifying the governing language. If translated versions of the agreement are being used for negotiation purposes they should not be signed or legally executed.

Any agreement will identify the parties. If a seller offers you their standard agreement, it should identify them with their national ID card, passport or company documents. A careful review of company documents may allow you to identify potential issues, such as whether or not the company is a Thai company and has sufficient financial resources to be able to deliver the property. You can check the date of incorporation to get an idea of how well established the seller may be, although more thorough due diligence would include the company’s financial records for the last 3 years.

A sale and purchase agreement should also clearly and completely identify the property being sold. The title deed and house registration, construction permit or other required documentation should be attached. While a thorough due diligence requires inspecting the title deed on file at the Land Office, the copy attached to the sale and purchase agreement can be compared with the property itself and the official documents. If the property is being sold furnished or partially furnished, a detailed list of the furnishings should also be attached. This is especially important if the property is still under construction, in which case the list of furnishings should clearly identify the source and quality of the furnishings to be provided. Fittings such as air conditioners and kitchen appliances should also be included in the list, along with associated make and model numbers.

In addition, a sale and purchase agreement should clearly and completely identify the total purchase price, closing costs, and taxes, and the terms of payment. Terms of payment should include the payment amounts and schedule as well as identify acceptable ways of delivering payment and recording receipt of payment. The agreement should also specify what will happen in case of late payments or transfer of title or default. For example, an initial deposit may be due in cash when signing the agreement with the balance due by check and the seller paying the taxes and fees for title transfer at the Land Office. Complete terms of payment should include a dispute resolution process in case of default by either party.

In cases where you are buying “off-plan” from the developer, the seller may request a payment schedule with additional payments before delivery of the property. It is a good rule of thumb to only make up to 30% of the payments before delivery of the property and most reputable developers will not have a problem with this. Thai law also provides for payments made under a sale and purchase agreement but before transfer of title to be held in escrow in certain banks. However, finding a bank branch and developer willing to use this process may be more difficult.

A buyer should also look for a seller willing to provide contractual warranties and representations regarding the property. These can include everything from guaranteeing that the title is valid and will be transferred free of any encumbrances to a comprehensive home warranty.

As you can see, a sale and purchase agreement is an important document that must cover a lot of information. A careful review can give you a head start on the due diligence process.

 

Tags: buying condominiums in thailand, Due Diligence in Thailand, property purchase in thailand, review of contract in Thailand, thailand property, Title Search in Thailand, Transfer of Ownership, Transfer of Ownership for Foreigners

Category: Business in Thailand, Condominium, Land, Property, Villa