Legal & Tax

Purchasing a condominium comes with property rights and is by far the most popular and relatively straightforward method for a foreigner to acquire a property in Thailand. Indeed, a recent Bangkok research conducted in the first quarter of 2007 has shown that there are nearly 50,000 existing condominium units in Bangkok alone and this number is continually growing with new developments sprouting all over the country.

There are also a large number of condominium units in popular tourist destinations such as Phuket, Hua Hin and Pattaya and the number of units in these regions is also steadily increasing.

Many of us are already familiar with condominium titles in our home country. Some jurisdictions refer to it as a 'Strata title' or a 'commonhold' as it is known in the UK, which in essence, is almost identical.

In Thailand, the features of this ownership right are quite similar. A condominium is a planned development that has been created pursuant to and registered under the Condominium Act B.E 1979.

It is characterized by the individual ownership of living units and the joint ownership of the common areas within the building.

Although purchasing a condominium unit in Thailand is a fairly simple process, there are nevertheless certain steps which should also be considered as part of the due diligence.

Standard due diligence will normally check for, among others, that the title is good, that the owner is who they claim to be and that there are no registered encumbrances on the property.

What happens after the purchase of a condominium can be just as disconcerting and taxing if certain precautions are not taken. Much time, money and effort can be saved if these steps are taken into account when selecting your ideal condominium property here in Thailand.

Also, knowing your rights afforded by the Condominium Act would put you in a better position if faced with unfair or unscrupulous treatment by your condominium management company.

Maintenance Fees And Sinking Funds

Ensure that you check in the contract how much the monthly maintenance fee and sinking fund is.

This should be in all the contracts for new condominium units although some units in the secondary market may omit this in their documents. Do ask the seller to provide you with this or you may obtain it directly from the condominium's management company.

The Condominium Act stipulates that the maintenance fees must be in accordance to the ratio of space that you own. As such, it should be expressed as an amount per square metre. This amount is also registered under the Rules and By-laws of the condominium at the relevant Land Office.

Any increase must be agreed with a three-fourths majority vote amongst all joint-owners of the building and the amended Rules and Regulations registered at the Land Office in order to take effect.

Rules and Regulations or By-Laws of the Condomunium

It is prudent to obtain a copy of the Rules and Regulations of the Condominium before you decide to buy the property. According to the Condominium Act, it should, in the least, include the following:

• Name of the condominium's juristic person;
• Objectives
• Location of the office;
• The amount of sinking fund an owner must pay;
• Other common properties;
• How the common and individual properties would be used;
• The ratio of each unit in terms of space;
• The procedures for the general meeting;
• The ratio of the maintenance fees;
• Procedure for managers and their appointments.

There are normally other things which a buyer should also consider so as to reflect their expectations and match their lifestyle. Some rules may be so restrictive that you would not have bought the unit had you read the Rules and Regulations beforehand. It is certainly not the most exciting reading material and is often long and convoluted. Sometimes, there are no English translations or the translations are in such a state that is difficult to make clear what is meant. However, the benefits of having read a clear and precise Rules and Regulations of the condominium unit are well worth the effort.

As a general rule, things to look out for may include the following:

1. Restrictions on pets;
2. Restrictions on age of children who can use the pool or other facilities;
3. Restrictions on parking any vehicles or boats;
4. Restrictions on types of floor-covering materials, drapes or window hangings, screenings or closing in of open balconies;
5. Limitations on use of recreational facilities in the common areas;
6. Sound or noise restrictions.

Know Your Condominium Juristic Person

• Be sure that a good and reputable management company is looking after things in an orderly and transparent manner.
• Beware of development companies appointing their own managers as they could be acting with ulterior motives in regards to repairs during the default liability period in which the developer should be responsible for and not the juristic person. The co-owners may wish to appoint a new manager if 50% of the co-owners in a general meeting agrees.
• You may also want to request for a copy of the juristic person's accounts to ensure that everything is in order and that no funds are being siphoned furtively or that any payments are unaccounted for. This is important as you want to see fees you contribute help maintain the premise and ensure its value in the long run.
• Occasionally, there may be a need for the management to call forward an emergency fund to cover some unexpected repairs. In practice, the Condominium Act stipulates that the decision to attain this fund must have a three-fourths approval in a general meeting. Before you vote, do check that the fund is indeed genuine and by right, you may request for all the related information in regards to this emergency expense.
• As an added precaution, the Condominium Act also allows the co-owners to set up a Committee to oversee the management of the juristic person. The number of members shall not be more than 9 and may consist of any of the co-owners of the condominium who are elected in a general meeting of all co-owners.
• It may be useful to note that a co-owner's voting rights are determined by the proportion of the ratio of space owned in the building.

Having Your Say

Politics may not be everyone's cup of tea and it is certainly regarded by many as a waste of time and effort. Such views do often lead to apathy and many of us try to avoid the dreaded rigmarole of residential politics and hope by ignoring it long enough, it will go away. Living in such a close knit arrangement would, not surprisingly, lead to some conflicts in some way or form. Indeed if you have a complaint, it is best to deal with it rather than live with it especially if you have to live with it everyday. Common complaints may include, noisy pets, parking spaces being used by neighbours in an inconsiderate manner, loud music at unreasonable hours or the committee members acting in an autocratic or biased manner.

The Condominium Act requires that a general meeting be held at least once each year although in practice, this can be as often as required.

• You may wish to take the floor and air your grievances here or if having a right of audience is not your preferred mode of communication, be sure there are other formal methods set up to air your grievances within the juristic person.
• This may be in the form of knowing who to contact or whether there is a complaints box available somewhere.
• If these initial methods do not work, you may wish to pursue other avenues such as, negotiation, mediation, arbitration or, in the most unlikely scenario, litigation.

Summary

These are just some introductory points among many others when purchasing a condominium. There are many others depending on individual circumstances with each purchase unique in its post-treatment stage of the acquisition. The underlying theme here is to do some good in-depth research into the property. It is a big investment fraught with its own cultural peculiarities and proper care should always go into making such a decision.

What is Escrows?

The concept of putting money down on escrow before you receive title to your property is such a familiar occurrence in common law jurisdictions we don't often give it a second thought. In fact, in some states in the US such as California, to transfer a property is to 'close escrow'. In real estate terminology, an escrow can be defined as an impartial holding of documents or funds related to the sale and transfer of a property. An escrow is designed particularly with consumer protection in mind safeguarding your rights should anything go wrong before the transfer of the property. Nevertheless, an escrow system does offer equal protection to all parties involved including the seller, developer and agent.

Problems with Escrow

Thailand has been toying with the idea of regulating and formalizing laws on escrow accounts since early 2001. Even prior to this, the government had implemented a discretionary measure on the practice but the idea did not really take off due to a lack of publicity and understanding. There were other problems as well. The notion of escrow derives from a common law concept of trust law. The main challenge has been that the concept of trust is said to be the major hypothesis that clearly differentiates civil from common law.

Further to this, section 1686 of the Civil and Commercial Code of Thailand voids any relationship created by trusts. It is with this background that many legal scholars believed Thailand will have difficulty introducing escrows to a wider audience. Property developers are also strongly against an introduction of an escrow system because they depend extensively on the 10% to 20% deposit of the selling price to finance the construction. However, because Thailand has experienced immense growth in the last few years, many new laws are required to keep up with these changes. Property developers just have to adapt to the changing environment if they want to survive.

Thai Property Today

The property business landscape is very different today compared to what it was five or ten years ago. Land prices have increased exponentially country wide and international interest in the Thai property market has remained unabated bringing with it different practices and expectations. Property transactions have increased and the numbers of unscrupulous developers have also inevitably increased. With this rise, we are also seeing more and more civil suits from unfortunate consumers losing their hard earned money to projects that have gone to dust or were dust to begin with.

The government recognizes the need for greater regulation and protection to consumers in property and in other large business transactions. Technically speaking, the Civil and Commercial Code does allow for a pseudo-escrow system by applying section 805. This section permits the use of dual agents to hold funds such as instalments to a property prior to the transfer if it is drafted into a sale and purchase agreement. This, however, does not regulate the role of the agent properly and questions often arose as to their impartiality. The other problem is that it is once again discretionary and lacked public awareness.

The Escrow Usage in Thailand

As mentioned earlier, in 2001, by virtue of section 9 of the Commercial Banking Act 1962, the government introduced a 'Letter' allowing commercial banks to provide an escrow account services to customers who have entered into a sale and purchase agreement with a developer. This allows for an escrow agreement outlining the terms and conditions of each party, in particular, the payment to the seller or developer. Although these controls have been introduced since 2001, their applications have also been haphazard, particularly by the banks. The attempt falls short of mandatory practice which when left to discretion often leads to it being, once again, overlooked. It is, however, most certainly a step in the right direction and sets out the agenda for the development of escrow law in its entirety.

In December 2007, the National Legislative Assembly introduced a first draft of escrow law in Thailand. Again, the main thrust of this law is to protect home-buyers from loosing money on down payments in the event property developers become unable to complete and transfer the property to them. The difference is that the draft is intended to apply to all developments across the board and all players are required to oblige. Many property developers are arguing that it will add more pressure on their financial management as they would not have access to the deposits they so heavily rely on until this day. Nonetheless, it will take some time before we know how the new administration will affect the draft bill.

Current Application

Despite a lack of regulation in Thai law, escrows have been widely used by larger property developers, law firms and other third parties in the country for some time already. Law firms and some estate agents apply section 805 of the Civil and Commercial Code, mentioned earlier, to enable this. More established companies and firms provide their clients with an offshore escrow account in a jurisdiction which already has a recognized escrow law in place. Whatever the case may be, it is prudent for you, as a client, to know what the terms and conditions of the escrow are. Some escrow arrangements are drafted into the sale and purchase agreement itself and some more complicated arrangements will require a separate escrow agreement to outline the conditions subsequent to transfer.

Final Word

It is perhaps only a matter of time before escrow laws are fully enshrined into the Thai legal system out of necessity. Indeed, with the draft bill being approved late last year, it would appear almost imminent. This is good news for property buyers as you will be better protected from those few dishonest, under-financed or inexperienced developers. It is certainly a much better alternative to a diluted claim for civil damages in the event of default on the part of the developer. Developers will also benefit by the growing consumer confidence by home-buyers in the property sector.

Title Deeds in Thailand may be mainly divided into 4 categories as follows:

Freehold Title Deed (Chanote or Nor Sor 4)

This type of title grants the holder of this document full rights over the land, to deal with or to use it to the exclusion of others.

Thus, if you are planning to buy land in Thailand, this type of title deed is the best and most credible title deed to hold.

Nor Sor 3 Gor

• A land 'awaiting' a full title deed is granted the document Nor Sor 3 Kor.
• The land is measured by the Land Department; therefore, it has its exact boundaries.
• This type of land may be sold, transferred, or mortgaged in the same manner as land with freehold title deed (Chanote) as long as it is ready to be a full title deed.
• In order to change the title to a Chanote, the owner of the land may file a petition to the Land Department to file a request to change it to a full title deed (Chanote), and the Land Department may do so if there is no opposition made against the petition.

Nor Sor 3

• The difference between this type of land title deed and the Nor Sor 3 Gor is that a land with Nor Sor 3 title has never yet been measured by the Land Department; hence the land has no exact boundaries.
• The Nor Sor 3 title may later be switched to a Nor Sor 3 Gor then subsequently transform to that title to a freehold title deed (Chanote) in the future.

Possessory Right

This type of title deed is least recommended. A land with a possessory right has never been substantiated by Department, but is only recognized by tax payments at the Local Administrative Office.

It is essential to bear in mind that title deeds other than one of a Chanote, is not allowed to register any leases against the land such as, usufructs, mortgages or superficies in order to gain encumbrance.

Although Thai Law stipulates that a foreigner may not own land in Thailand, there are alternative options to owning a land in Thailand. We would be more than happy to discuss the options available to you with a meeting, an over the phone conversation, or by email.

Buying Off-plan Property in Thailand

Pre-construction in Thailand is not uncommon. Thailand is seeing a current surge in housing and condominium developments despite the slight downturn in the economy. The demand for these projects by foreign investors is still strong, particularly in traditionally popular markets such as Bangkok, Phuket, Pattaya and Hua Hin.

This is not exceptional in Thailand as the rest of the world have for many years embraced pre-construction investment for its highly attractive buy low and sell high scenario. Regardless of this trend, in order to protect your future investment and interest with such types of acquisitions, there are certain things to look out for when buying a pre-construction property here in Thailand.

What is Pre-construction Acquisition?

• Firstly, pre-construction real estate acquisition is the practice of buying properties very early on in the construction process.
• Developers are selling these future properties to customers in order to finance the development itself.
• The customers, on the other hand, are banking on the appreciation of the property once the land has been subdivided all infrastructures and amenities have been put in place.
• There are certainly advantages to buying a pre-construction property such as the relatively discounted price, the choice of selecting a more appealing plot within the project or other added incentives offered by the developer to early buyers.

You should, as you would with any property acquisition:

• Carrying out proper due diligence on the pre-construction development is by no exception, very important. In fact, it is prudent to do so.
• It is often easy to get caught up in the buying excitement and the sales pitch of the developer but it is always important to know exactly what you will be purchasing.
• Apart from title deed checks, you may wish to also check on the history of the developer, their financial standing or any previous projects they have developed.
• You can check if the developer has applied for any necessary licenses required for development or if an environmental impact study has been conducted on the project as these licenses give you some automatic protection under Thai law.
• You can also conduct your own investigation into the values and costs of the property or you may want to have an independent surveyor appraise the property or project for you and compare this with the figures given to you by the developer.

These are just some of the things you can do before signing any contracts with the developer in order to safeguard your future investment.

The Thai Contract Culture

• It is interesting to note here that the Thai approach to contracts in general is linked to its cultural importance to relationships between parties.
• Back home, we place great faith on what is written on paper whereas in Thailand, far greater emphasis is given to relationships itself. Throughout the many years of dealing with international clients, Thailand has shifted its approach to accommodate a more comprehensive type of document.
• A "Boston lawyer" style of contract drafting may still not work too well here and it is still common for Thai parties to give you a 2 to 3 page type contract for all types of matters. This is based on the tradition that the contracts are just an outline of the principles.
• We are much more used to seeing a contract as an exhaustive list of all the rights and obligations which allows for all possibilities and contingencies. So it may be good to keep this in mind when dealing with contracts in Thailand although you will generally find they can be quite accommodating to amendments if your relationship with them is good.
• Some foreign managed developers do tend to offer a more comprehensive contract which we are more accustomed to in the West. However, they still tend to provide contracts which are largely biased against the buyer as opposed to a more 'balanced and fair' approach we are used to back home.

Care should be taken whether you are buying from a local or an international developer.

What to Look Out for in Pre-construction Contracts?

There are some minimum requirements which must be met in a pre-construction contract in order to minimize your exposure to any risks should anything happen. These are some fundamental elements which should be included in every pre-construction contract:

1. Time Frame
   • An agreement should have a time frame which clearly stipulates the starting date for construction as well as its completion date.
   • Check for any extension clauses which normally give the developer a few extra months to complete without incurring any penalties.
2. Price
   • The agreement should state clearly the price, the payment terms and the payment method. Ideally, in a construction agreement this should be listed as a schedule.
   • It should also be calculated by units such as per square meter or square wah as plot size may wary after completion. Be wary of additional charges that you have not discussed with the developer.
3. Payment Penalties
   • Check that the penalties for default of payment are not too burdensome on you.
   • Terms such as immediate rescission of contract and retaining the money you have already paid are not uncommon but there should be a period given to you to remedy this default.
4. Developer's Default
   • Ensure that you have some recourse to a full refund in the event that the developer does not complete the construction due to insolvency or for any other reason.
5. Late Completion
   • Penalties should be given to you, a buyer, if the completion is late.
   • This is normally deducted from the final payment due upon completion.
   • Penalty rates vary greatly in Thailand although for condominiums there is a daily minimum penalty of 0.01% of the total unit price. For homes and villas, the penalties tend to be around the 3,000 THB to 5,000 THB per day figure.
6. Building Specifications
   • The contract should have a comprehensive list of all the materials being used in the construction including its quality, quantity and model. Usually, the more detailed the better.
   • Be wary of substitution clauses which gives the developer the latitude to replace certain materials with "similar or better quality" items should the price of that material increase.
   • Ensure that such a clause is drafted in a way so as to give you the final decision on the matter.
7. Building Floor Plan
   • Ensure that a floor plan is also attached to the main documents.
   • Again be wary of clauses in the agreement which allows the developer to "modify" the floor plan but keeping it 'similar' to the plan agreed upon.
   • You will want to be aware of such deviations whether minor or not and the agreement should be drafted to reflect this.
8. Recitals
   • Ensure that in the recital or in the beginning of the agreement, it states that the developer is the rightful owner of the land in question.
   • If they don't, you should address the concern in the fine print or by adding an addendum by inserting language such as if the developer does not currently hold title, the agreement may be rescinded by the buyer along with full refund.
9. Assignment
   • Many things can happen in the future so it is useful to have an 'exit clause' should your plans change.
   • An assignment clause allows you to transfer the obligations of the agreement to a third party.
   • Note the administration fee due to the developer for this action. An assignment clause may also allow you the option to 'flip' the property should the market be conducive.
10. Alternative Dispute Resolution
    • No matter how careful you are or how good your relationship is with the developer, a dispute may arise.
    • The agreement should have an arbitration clause so settle any disputes.
    • Arbitration is generally less costly and formal compared to court proceedings.

It is always a good idea to have your contracts reviewed by a legal practitioner here in Thailand whether it's drafted in English or Thai. There can be many unanticipated problems associated with pre-construction acquisitions. However, if proper due diligence and research is done and accompanied with a sound contract, you will be in a much better position when making that decision to invest.

The following is an overview of property taxes in Thailand and how they are calculated. Please consult one of our property lawyers with regards to your property taxes in Thailand.

Thailand Property Taxes

Example of how to calculate taxes and costs:

• Suppose that the government assessed price is 50,000 Baht per square meter
• All areas are 100 square meter
• The total assessed price is 5,000,000 Baht
• Actual selling price is 6,000,000 Baht
• The Seller possessed this property for 3 year

Withholding Taxes

The government assessed price = 5,000,000 Baht
Deduction with the expense of possession for 3 years for 77% = 3,850,000

Balance = 1,150,000 (5,000,000 - 3,850,000)
Divided by the 3 year of possession
Balance = 383,333.33 (1,150,000/3)

Taxation on progression rate
1 to 80,000 = exempt
80,001 - 100,000 = 5% (1,000)
100,001 383,333.33 = 10% (28,333.23)
Total = 29,333.23 (1,000 + 28,333.23)

Multiply by the year of possession = 87,999.69 (29,333.23 x 3)

In this case withholding tax is 87,999.69 Baht (A)

Government Fee for Transfer

2% is based on the government assessed price so 5,000,000 x 2% Balance = 100,000

Transfer fee is 100,000 Baht (B)

Stamp Duty

In this case is exempt. This is because transaction is subject to the specific Business Tax (possession of less than 5 year before sale).

Specific Business Tax

3.3% for Specific Business Tax based on the government assessed price or sale whichever is higher. In this case sale price is higher than government so 6,000,000 x 3.3% = 198,000.

Specific business tax is 198,000 Baht (C)

TOTAL EXPENSES ARE: 385,999.69 BAHT (A+B+C)

Who has to pay land and building tax?

Under the new Land and Building Act B.E. 2562 (LBA), any individual and juristic person both Thai and foreigners who have ownership, possessory, or usage rights over land, buildings, houses, apartments and condominium units, as of January 1 of each year, are required to pay land and building tax to the municipal offices. If land and buildings are separately owned by different person, the person having the title over either the land or building is liable for paying land and building for such properties.

Taxable properties

LBA will apply to the land, condominiums, apartments, buildings, including houses, or any construction which can be used as a residence or for storage, industrial or commercial purposes. The land and building tax will commence to be collected from 1 January 2020 onward.

Tax Base

The base for calculating the land and building tax is the official assessed price of the land, buildings, or condominium units as determined by the governmental authority for the purpose of collecting registration fees under the current Land Code. In the case where there is no appraised value, the tax base will be calculated in accordance with the criteria, method and conditions as prescribed in Ministerial Regulations.

The actual land and building tax rate that authorities will collect will be announced by royal decree in due course, subject to the fixed maximum rates, exemptions, and transition period rates outlined below

Tax Rates

The land and building tax rates shall be specified in a Royal Decree, but shall not exceed the maximum tax rates, which are as follows:

*If the land or building is vacant, unused or undeveloped for more than three consecutive years, the rate will be increased by 0.3% every 3 years until the rate reach 3.0%.

Transition Period Rates

For the first 2 years of the collection of tax on land and buildings under LBA commencing 1st January 2020, the following table summarizes the main points of the LBA (for more details please see the LBA):

Tax exemptions

Tax exemptions are provided in the following cases:

• Individual owners of agricultural properties shall be exempt from land and building tax until 2022, thereafter, a tax-exempt threshold of Baht 50 million shall apply.
• Individual owners of residential land and buildings whose name appear in the house registration book on 1 January in any given tax year will enjoy a tax base exemption, as follows:

Due date for tax payment

In December 2019, a number of time extensions were announced in respect of the implementation of the new law in 2020. Instead of tax assessments being issued to taxpayers in February 2020 for payment in April 2020, they will now be issued in June 2020 and tax payments will be due in August 2020.

There are certain pitfalls when buying property in Thailand. Buying Real Estate is an experience that should be taken with some advanced planning and forethought. Many foreigners come to Thailand to purchase property for various reasons : for their retirement, as a second home or for investment purposes. Purchasing a second home is gaining popularity in many places in the world. For example, in 2004 just over a third of all homes owned by UK citizens abroad were located outside Europe. Thailand is fast becoming a destination of choice as a location for a second home. In this article, we will look at ten pitfalls which are most common in purchasing property in Thailand.

No Title Search

A comprehensive examination of title deed recorded at the Land Department should be done prior to placing on a deposit or signing of a reservation agreement. You need to verify that the Seller has clear and legal title of the land before you enter into any contractual agreement. The title search will trace the land to its first possession, as well as checking for any encumbrances such as liens, leases or mortgages on the title.

This investigation will also verify zoning, environmental and planning codes in the area. Moreover, any mortgage, liens or encumbrances will be discovered during this process. There have been a number of cases where foreign buyers have purchased property only to discover later that they are restricted in terms of structural height on the land and therefore rendering the land virtually worthless. This is especially true for beach resort communities where there are height limitations closer to the beach. This is the number one pitfall since a title search can be completed within a few days. Failure to conduct this step is a grave error and could be fatal to your plans to build your dream house on that wonderful piece of property.

Failure to conduct Due Diligence

Every financial transaction requires some sort of due diligence on behalf of the purchaser to verify that it is a sound investment. When you purchase shares of a listed company in the stock market or a mutual fund you will generally research the profile and performance of the company or fund. The same is true when you purchase a property from a developer. You should check with the previous buyers to see if they are satisfied with the quality and time frame of the construction. If you don't have time to spend on checking the history of the developer, a local lawyer near the development will know or can check the project, who their directors are and their performance history. This Due Diligence report will also outline all the information consisted in a title search mentioned above.

Buying without a Lawyer

It is often possible for individuals to purchase a property in Thailand without the services of a local law firm. This may be risky unless you are familiar with the country, the language and its legal system. Contracts in Thailand do not always adhere to the international standards that we are used to back home and may seem quite unfamiliar to us hence why prior to purchase you should take the time to sit down and discuss the purchase process with a lawyer or a solicitor. That is why before you sign any deposit agreement or contract, you should take some time and sit down with a lawyer or solicitor to discuss the process. You need to know the correct legal process in Thailand for a foreigner to acquire property. Remember that you are spending part of your life savings to acquire this property and you must carefully plan your steps in the process. Your lawyer back home can give you general advice about the contracts and agreements; however they will not be familiar with the country's laws as they may not have the experience in dealing with matters here.

Buying without an Estate Agent

Back home, We are always told that when we invest in property, we should always invest in an area that we are familiar with. This is because property markets are affected by so many variables. It is important to know the market and manage the potential risk which may be involved in any transactions.

Investing in Thailand is no different. You will need a local expert who is experienced in real estate transactions in the local area that you intend to make your purchase. The agent knows how to communicate in Thai and they're familiar with the location and the general geographical area. They can show you many quality properties in their inventory based on your needs and desires. Typically, a good agent will weed out the poor quality units. They want satisfied clients and they will avoid problematic developments. Think about it: you may not really know the community and it would be wise to find someone who has in-depth knowledge and experience with the property market. The most telling benefit of a using an estate agent is that they will act as a conduit between you and the seller. They will obtain a fair price for you and act on your behalf to respect your best interest throughout the entire process. Several international estate agent firms have recently established themselves in Thailand. This provides you access to the same international standard of business practice as in your home country.

Putting the deposit down too early

Sellers and agents obviously want to sell properties. When you have found the ideal property and you are satisfied that it will meet your expectations, the usual process in a transaction is to put down a reservation fee or an earnest deposit. In return, the seller or agent will reserve the property for you and begin the process of drafting the contracts for the acquisition. This is normally a nominal amount of 10-15% of the purchase price. This will in most cases be deducted from the original purchase price, if the contract is fully performed by both parties. However, in the event that you are not going to go through with the purchase, it is the Seller's right to retain the initial reservation deposit. If in case, it is through Sellers default, this amount is usually refundable. Be sure to retain a receipt and terms of agreement in respect of the reservation deposit.

This is not always the case as sellers and agents sometimes keep this fee for the opportunity cost involved while the property was reserved. Unless you specifically draft an "exit" clause in the deposit agreement, for example "subject to a clear title" or "subject to agreement on contract terms," the money deposited is non-refundable. Exit clauses can be items of fundamental importance such as 'subject to clear title' or 'subject to a new title deed being issued' and so on.

Buying in a Mismanaged Project

Several areas in Thailand have recently seen a surge in new property developers arriving on the scene to build homes. These developers do vary in size and experience. There are many new developers who see the potential in property development as a lucrative business in Hua Hin and decided to venture in this industry. They may not have the necessary experience to manage the project so you would often see delays and other fundamental problems. However, these developers do tend to offer much better prices and are more flexible in their approach to cater to your needs.

The larger developers, on the other hand, are more established and many of them are publicly listed companies. They have the resources, experience and expertise in completing construction projects on time. They generally will not negotiate on the price of the property and some do not offer any advice on variations that you would like to make to the designed plan. They are, therefore, less flexible but the commercial risks are much less. The key factor is to find a developer in which you feel comfortable with. It is recommended to check their previous projects for the quality of their work and ask questions from people who have purchased from them before. You will know them by the fruits of their labour.

Consider the surrounding area

If you purchase in a popular development, most likely the developer will be eager to repeat their success and start a Phase II right next door. You should plan for this accordingly in your plot selection. It would be most unfortunate after having waited for one year while your new home to be build is being built, and then to move in to endure another one or two years of construction noise next door. You must also be aware of the surrounding areas in general so as to avoid blockage of views from other buildings if you are going to purchase on a high floor.

Choosing on the basis of price

There are many variables involved when evaluating the price. In general, you may wish to check the prices of adjoining projects in the surrounding area and that would give you a fairly good idea whether you are paying too much for your property. Back home, Usually in foreign countries, it is possible for us to check the value of various properties through a regulated body and also by looking at tax receipts of a particular area. Thailand is advancing in this area In Thailand, you are able to check these, However, you will still see large discrepancies between the government's assessed value and the actual price paid for a property.

Forgetting your heirs

It is strongly recommended that you have a Last Will & Testament prepared in both your home country and in Thailand to include your newly purchased property. It is not a pleasant thought to think of your demise; however you should plan in advance regarding your estate so the affairs are in order in the unfortunate event of your passing. The last thing you want to do is cause additional stress to your family during this period. Your property in Thailand becomes of value once you sign the contract and make an initial payment. Hence even before the handover of the property you, will have an asset to consider for your estate planning.

The document will detail your assets in Thailand, such as property, bank accounts, vehicle, and personal items. Typically upon the death of a foreigner in Thailand, the government officer will ask the family for a copy of a Will or they will seek the deceased person's lawyer or executor for this document. Having a Will drafted in your home country to cover assets in Thailand may be problematic and burdensome to your family as documentations will need to be translated, notarized and approved by a government body. We It is highly recommended that you have a separate Will for your assets in Thailand. It may be interesting Please also note that Thailand does not have any inheritance tax in general; however, the beneficiary will have to pay certain fees payable to the Land department upon transferring of title, to effect their name in the title deed.

These are the most common property and real estate questions that are asked in Thailand when it comes to buying or selling property in Thailand. If your question is not listed here then speak to us online for further advice and guidance. Call us now, speak to us online or walk into any of our offices in Thailand for attention.

Can a foreigner legally own a land in Thailand?

Normally, a foreigner cannot own land in Thailand; however, there are other alternatives exist for a foreigner to acquire land or property.

See also:

• Marriage Property in Thailand
• Thai Limited Company

Am I allowed to own any structure on land?

Legally, any building is considered as being a part of land over which such building is constructed. However, a building may be considered as a separation part when it is a tenant of land who builds a building under a leasing agreement. Therefore, a foreigner may own any building on his rented land.

If your spouse is Thai, and you are planning to build a house on his/her land, you are recommended to sign a lease agreement with your spouse indicating that you are a tenant. This way, you shall have a joint ownership over such construction, not a land, together with your spouse.

See also:

• Marriage Property in Thailand

How do I obtain construction permission?

Construction permission may be obtained at the Local Administration organization (Aor Bor Tor), or the Municipal Office, where your land is located. Structure Plans submitted shall be certified by an architect or an engineer. A building must have the specifications indicating in the permission.

My land was secretly transferred what are my rights?

Any unregistered action, with the Land Department, regarding a land is not recognized under Thai Property Law. You are a sole owner of the land.

See also:

• Things to look out for when acquiring property in Thailand

What are the Thai laws regarding a land lease?

A land lease for duration of 3 years and more must be registered with the Land Department, and some fees must be paid. The maximum duration is 30 years, which may be renewable for another 30 years. In case the parties agree for a lease of 60 years (30 years with an option to renew for another 30 years), a deposit payment against the rent payable during the 2 nd part of contract shall be made at the same time a payment of 1 st half's deposit. The land title deed should be in possession of tenant to ensure his rights under an agreement. This sort of leasing agreement may become problematic in case a land passed on to a tenant's heirs.

What is a condominium under Thai law?

The Condominium Act (The Commonly-Owned Housing Act of 2522) defines a condominium as a building featuring privately-owned property and common property. The owners of condominium unit own the land through a juristic person of condominium.

Can a foreigner legally own a condominium unit in Thailand?

Any foreigner who has legally entered into Thailand may have a freehold ownership over a condominium unit, constructed on a land of less than 5 rai, of certain projects in municipal jurisdictions of the Kingdom, such as Bangkok, Pattaya, and Phuket. However, condominium units owned by a foreigner shall not exceed 49% of the total space of the condominium project. Other restrictions are applicable. A non-Thai owner of a freehold condominium unit may transfer a property to other foreigners. If you wish to buy a condominium in Thailand, there are certain points of which you should be aware before choosing your new property:

• How much will monthly maintenance fees and charges be?
• How much are sinking funds? (For a use of common parts of condominium).
• Some condo units have never been finished, so consider carefully before buying.
• Verify that the total of foreign-owned units is no more than 49%.

See also:

• 3 Steps in Buying a Condo
• Selling Your Condominium

Can I buy a property in Thailand at my absence?

Yes. A person wishing to buy a land, including a foreigner, may purchase a land without being present at the time of registration of ownership at the Land Department. This shall be done by appointing, by a power of attorney, a lawyer to act on your behalf.

Nevertheless, if you are married to a Thai, you, a foreign spouse of a Thai, is required to declare in a written agreement that a fund, of a purchase of land, is purely of your Thai spouse as her personal affair before marriage. This procedure may be done by signing such declaration abroad, and demand for a certification at the Consulate of Thailand in your country.

What are measurements using for land in Thailand?

In Thailand, Land is measured in Rai, Ngan and Wah.

• 1 Rai = 4 Ngan (or 1600 Sq.m.)
• 1 Ngan = 100 Wah (or 400 Sq.m.)
• 1 Wah = 4 Sq.m.
• 1 Acer = 2.5 Rai
• 1 Hectare = 6.25 Rai

Land prices are usually expressed in Baht per Rai or Baht per Wah. Condominium prices are usually expressed in Baht per sqm (square meter).

See also:

• Thai Title Deeds
• Convert Rai to Square Meters
• Land Measurement in Thailand

Can I legally rent out a property in Thailand?

Yes. A foreign-owned property may be rented out. Some banks may allow you to open an account to collect the rents. You, as a non-resident, must be aware that personal income tax shall be deducted from your income earning in Thailand.