When purchasing a condominium from a developer or from a private vendor, make sure you have checked the following factors:
1. Due Diligence
Due Diligence in Thailand is a thorough investigation of a property prior to signing a contract. This is an investigation done prior to your intended purchase of condominium. Make sure you inspect the following:
- the property in question has to match the description in the title deed that represents it
- the boundaries of the property have to be concur with the boundaries stated on the title deed. No one should dispute the boundaries.
- the vendor has to be confirmed as the owner of the property
- there should be no encumbrances registered against the property that would prevent the unencumbered transfer of ownership (or obtaining an unencumbered registered lease)
If you are purchasing from a developer, they have a standard contract format. Contact an attorney and have your sales contract checked.
When purchasing a completed property from a private vendor, draw up a reservation or purchase option contract This is a contract which binds you and the vendor to the sale of the house at a specific price in accordance to a specific schedule, and will typically set up penalties for default of either party.
A deposit of 10% is usually required to secure a property and closing payments will typically be expected within 30 to 60 days. Longer closing terms are sometimes agreed but usually against the payment of a greater deposit. Deposits are typically non refundable, save in the event of default by the vendor, so bear in mind that once the deposit is placed you are committed.
There is typically an equal and corresponding commitment from the vendor, where he will commit to refund of your deposit and payment of a penalty of an equal amount if he defaults on the contract. Deposit in escrow is still rare in Thailand, but it is becoming an increasingly recognized way of proceeding. It generally trades off greater security for the buyer’s deposit versus a weakened claim for damages in the event of vendor default.
4. Property Taxes
Beyond the price, payment and closing schedules, it’s important that a contract includes clauses to cover who will pay the legal fees, transfer fees and taxes (there is often a business tax and always an income tax assessment made at the point of sale) as well as an understanding of the value at which the sale will be declared – this is typically (for tax reasons) at or close to the government minimum assessed value.
Inheritance of the Ownership of a Condo
Property ownership of a condo may be inherited by either Thai or non-Thai descendants under normal circumstances.
Condominium Long-term Leases
Leasehold of condominiums is available in Thailand. Condominiums may be leased to foreigners for periods of up to 30 years and may have options to renew. Leases of greater than 3 years are required to be registered with the Land Department. This option may be useful to acquire condominiums in buildings that have exceeded their foreign ownership ratio quota.
As compared to western jurisdictions, Thailand real estate transactions has no inherent consumer protections. It it best to contact a law firm who could assist you in property acquisition leasehold, due diligence, sales contract review, property taxes, transfer of ownership and other legal assistance.