The legal way for a foreigner to own real estate in Thailand is to buy a condominium unit(s) (“Condo Unit”). This was proposed in my last article on foreign land ownership. In Bangkok, Condo Unit purchases are now considered trendy among the younger generation of Thais as Condominiums are conveniently located in the inner city area and it is more economical to commute.
TIP
Whether you are going to buy a Condo Unit to reside or for investment purposes, I would like to walk you through the following due diligence steps:
(1) If you can narrow down your choices of Condo Units to 1 or 2 Condo Units, a physical inspection must be conducted by an expert or civil engineer on the Condo Unit and the condominium building. Are they as according to the promises made by the seller ?
Checks should be conducted for water leakage in the Condo Unit, proper and safe electricity supply, adequate car parking spaces allocated, fire exits, correct building materials used.
(2) What is payable by an owner of the Condo Unit for up keeping e.g. common facilities fees, water charges, electricity charges. Who should they be paid to and how much are they? Find these out from the owner of the Condo Unit.
(3) If (1) and (2) above are satisfactory to you, request from the owner of the Condo Unit a copy of the Condo Unit Title Deed. Take this to the local district or Amphur Land Office and counter check with the original Title Deed kept there on:
(a) Who is the owner of the Condo Unit ? This owner should be the person whom you are dealing with and signing the contract to sell you the Condo Unit.
If the owner is a company limited, who can sign on behalf of this company ? Does the company limited have enough capital to complete building the condominium ? The answers to these questions can be obtained from the incorporation records of the company limited at the Ministry of Commerce;
(b) Is the condominium building registered at the Land Office ?; and
(c) Does the original Title Deed reveal any registered encumbrances, lease, mortgage or charges ?
(4) Have a lawyer peruse the conditions of the Reservation Contract or To Sell and To Buy Condo Unit Contract prior to signing it. Legally speaking, this Contract does not create any property rights for you yet because the Condo Unit ownership title will transfer to you at a later date. This Contract is binding only on the promises of both the seller and you that ownership title transfer and sale of Condo Unit will take place at the agreed upon later date. However, the risk exposure to you here is that, at the signing of this Contract, you are usually requested to place a deposit with the seller. If the seller does not sell and transfer ownership title of the Condo Unit to you at the agreed date, you will have to claim the seller in court for breach of Contract to get the deposit back.
As a result, I do not recommend the signing of this type of Contract. You should make a 1 time payment of the whole purchase price at the sale and upon ownership title transfer of the Condo Unit to you. Alternatively, you could arrange for a neutral escrow agent to hold your money and hold the original Title Deed (Note: Under the new Escrow Business Law, effective on May 19, 2008, an authorized financial institution or commercial bank can provide escrow agent services).
(5) Clarify with the owner who is responsible for the ownership title transfer fee, income tax and specific business tax or stamp duties payable at the Land Office on the day of ownership title transfer. Unless agreed otherwise between the owner and you, you are only legally responsible for 50% of the ownership title transfer fee.
Please note that the amounts payable here can be calculated for you by an official at the Land Office.
(6) Make sure that the owner have obtained from the Condominium Juristic Office the following:
(a) A letter verifying that foreigners have ownership in condominium units not exceeding 49% of the total space of all units in the condominium building; and
(b) A letter verifying that the owner has no outstanding debts owing to the Office.
(7) You have obtained the required bank document to verify that the purchase price for buying the Condo Unit was remitted into Thailand.
*(Written by David Tan. David is a Lecturer of Business Law at Asian University. This article was published in September 26 - October 2, 2008 issue of the Pattaya Mail newspaper and October 21 - 27, 2008 issue of the Chiang Mai Mail newspaper)
TIP
Whether you are going to buy a Condo Unit to reside or for investment purposes, I would like to walk you through the following due diligence steps:
(1) If you can narrow down your choices of Condo Units to 1 or 2 Condo Units, a physical inspection must be conducted by an expert or civil engineer on the Condo Unit and the condominium building. Are they as according to the promises made by the seller ?
Checks should be conducted for water leakage in the Condo Unit, proper and safe electricity supply, adequate car parking spaces allocated, fire exits, correct building materials used.
(2) What is payable by an owner of the Condo Unit for up keeping e.g. common facilities fees, water charges, electricity charges. Who should they be paid to and how much are they? Find these out from the owner of the Condo Unit.
(3) If (1) and (2) above are satisfactory to you, request from the owner of the Condo Unit a copy of the Condo Unit Title Deed. Take this to the local district or Amphur Land Office and counter check with the original Title Deed kept there on:
(a) Who is the owner of the Condo Unit ? This owner should be the person whom you are dealing with and signing the contract to sell you the Condo Unit.
If the owner is a company limited, who can sign on behalf of this company ? Does the company limited have enough capital to complete building the condominium ? The answers to these questions can be obtained from the incorporation records of the company limited at the Ministry of Commerce;
(b) Is the condominium building registered at the Land Office ?; and
(c) Does the original Title Deed reveal any registered encumbrances, lease, mortgage or charges ?
(4) Have a lawyer peruse the conditions of the Reservation Contract or To Sell and To Buy Condo Unit Contract prior to signing it. Legally speaking, this Contract does not create any property rights for you yet because the Condo Unit ownership title will transfer to you at a later date. This Contract is binding only on the promises of both the seller and you that ownership title transfer and sale of Condo Unit will take place at the agreed upon later date. However, the risk exposure to you here is that, at the signing of this Contract, you are usually requested to place a deposit with the seller. If the seller does not sell and transfer ownership title of the Condo Unit to you at the agreed date, you will have to claim the seller in court for breach of Contract to get the deposit back.
As a result, I do not recommend the signing of this type of Contract. You should make a 1 time payment of the whole purchase price at the sale and upon ownership title transfer of the Condo Unit to you. Alternatively, you could arrange for a neutral escrow agent to hold your money and hold the original Title Deed (Note: Under the new Escrow Business Law, effective on May 19, 2008, an authorized financial institution or commercial bank can provide escrow agent services).
(5) Clarify with the owner who is responsible for the ownership title transfer fee, income tax and specific business tax or stamp duties payable at the Land Office on the day of ownership title transfer. Unless agreed otherwise between the owner and you, you are only legally responsible for 50% of the ownership title transfer fee.
Please note that the amounts payable here can be calculated for you by an official at the Land Office.
(6) Make sure that the owner have obtained from the Condominium Juristic Office the following:
(a) A letter verifying that foreigners have ownership in condominium units not exceeding 49% of the total space of all units in the condominium building; and
(b) A letter verifying that the owner has no outstanding debts owing to the Office.
(7) You have obtained the required bank document to verify that the purchase price for buying the Condo Unit was remitted into Thailand.
*(Written by David Tan. David is a Lecturer of Business Law at Asian University. This article was published in September 26 - October 2, 2008 issue of the Pattaya Mail newspaper and October 21 - 27, 2008 issue of the Chiang Mai Mail newspaper)
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