Realty sale contracts
This page covers the basics of sale and purchase agreements (สัญญาจะซื้อจะขาย) in Thailand.
Buying real estate property in Thailand
Thai lawyer contract drafting service
Property laws in Thailand are for a large part based on the European Civil Law system but also contains parts from Common Law systems, therefor Thailand has very similar real estate laws as to those of most Western counties. Foreigners have under Thai law in principle the same rights available as Thai nationals except foreigners cannot own land. A sale and purchase agreement of land by a foreigner is not per definition void, however a foreigner cannot register ownership of land.
a- reservation
Before signing a contract for lease or sale and purchase (condominium, land or house) and paying a deposit the process of buying real estate in Thailand could involve a reservation agreement. This is usually a simple document in which the seller and the purchaser expresses their intention to the sale and purchase. The reservation agreement will reserve the property for the buyer for a short period of time, usually between 7 to 30 days. The reservation agreement contains the details of the property, the agreed price and conditions of the reservation. It normally requires the potential buyer to pay a reservation fee of up to 100,000 THB, which is non-refundable or refundable under certain conditions depending on the agreement with the seller.
Often the seller and buyer will enter into a contract for sale and purchase of property without a reservation agreement.
b- Due diligence
The buyer should in this stage have obtained the service of an independent Thai property lawyer who will verify all legal facts affecting the value and use of the property and information given by the seller in detail (usually referred to as due diligence). Due diligence forms an important part of any freehold or leasehold property investment in Thailand. The due diligence process varies for different types of property, but includes an investigation at government departments, such as the land department, to confirm that the property has a proper title, is free of debts, liens and encumbrances, that the property really belongs to the seller and that the seller is free to dispose of the property, that the description of the property matches what the buyer has been told and the building is built according to the building permit and zoning regulations, access to a public road, etc.. We complete this process by a written advice outlining relevant legal information, potential risks and legal issues (if any) that are discovered and need attention by the buyer.
In case of and 'off the plan' development property (a property that is not yet completed or based only on the plans of a building) the due diligence process could include a check on the developer's background and track record, and verification with government departments that various development licenses have been granted or applied for and the construction can begin without issue.
c- Signing of sale agreement
The sales contracts for land, house or condominium should be drafted or checked carefully as it outlines the sales process and responsibilities of the parties under various scenarios. The sale contract establishes the respective rights and responsibilities of the parties. Upon signing the contract for sale and purchase of a real estate property the buyer is committed. A non-refundable deposit of up to 20 % of the purchase price is usually required upon signing the contract with a final payment on registration of transfer of ownership.
In an 'off the plan' purchase the purchase price is often paid in instalments following the completion of the development, with a final instalment on registration of transfer of ownership. Deposits and instalments could be paid to the seller or developer's account, or could be held in an escrow account, depending on the agreement with the seller. Deposit in escrow offer greater security for the buyer in the event of seller of developer's default.
- Sale of a condominium unit
- Sale of a leasehold condominium unit
- Sale of a leasehold apartment unit (not registered under the Condominium Act)
- Sale of land
- Sale of land and house
- Sale of leasehold land
- Sale of leasehold land and house
- Sale of leasehold land and sale of freehold house
- Sale of leasehold land and a construction contract and permit
d- Transfer and registration of property
The transfer of ownership of an immovable property (land, land and house, house, condominium) in Thailand is not complete unless the transfer of ownership is registered at the local land office. Also a long term land or ground lease, condominium or apartment unit must be registered at the local land office. Lawyer representation is not required, but recommended. The lawyer will make sure that the transfer or registration is properly registered and the property transfer fees and taxes are correctly calculated and paid by the responsible parties. We often save money for our clients and prevent costly mistakes when we represent them.
