You look at the brochure, poster, master plan etc. of a condominium or housing development project and you want to purchase one of the condominium units or houses offered. You express your interest to the developer or seller and subsequently sign a Sale Contract and pay a deposit or reservation fee for the condominium unit or house. Do you now have a Sale Contract with the developer or seller?
Regardless of what the developer or seller tells you, in the eyes of the law, this is not a Sale Contract. This contract is considered a promise contract. The developer or seller promises to sell you the condominium unit or house at an agreed upon future date (when the property has been built) and you promise to pay the full purchase price at that time. According to the law, sale of immovable property is payment of the purchase price and ownership title transfer by registration at the local Land Office; these have not taken place yet. Both parties are contractually bound to their promises only.
However, since you (the buyer) had already paid deposit money or a reservation fee to the developer or seller, if the developer or seller defaults in transferring the ownership tile to you by registration at the Land Office on the agreed upon future date, you will have to request the developer or seller to return all deposit money or reservation fee paid by you. If the developer or seller does not do so, you will have to claim against them in court.
Not transferring ownership title to you may be due to: the developer or seller not being able to complete building the project on time, you are not satisfied with the building specifications or materials used, creditor(s) cannot release mortgage, encumbrance or charge placed on the property, developer or seller going bankrupt etc.
Tip
Do some investigative work. Check on whether the developer or seller have being in the business for many years, is a company listed on the Stock Exchange of Thailand, is a company with a capital amount sufficient enough to fund the project etc. Unless the result of this investigation is positive, you should not risk making any sort of deposit or reservation fee payment. Instead, make a one time payment of the whole purchase price upon the developer’s or seller’s registration of ownership title transfer of the completed property to you.
Having said this, if you must pay deposit money or reservation fee, minimize your risk exposure by negotiating for the lowest possible amount.
*Written by David Tan. David is a Lecturer of Business Law at Asian University and author of the book "A Primer of Thai Business Law", available online at www.chulabook.com or at all Kinokuniya and Asiabooks bookstores. Any questions or comments to David should be sent to blas.inter@yahoo.com
Regardless of what the developer or seller tells you, in the eyes of the law, this is not a Sale Contract. This contract is considered a promise contract. The developer or seller promises to sell you the condominium unit or house at an agreed upon future date (when the property has been built) and you promise to pay the full purchase price at that time. According to the law, sale of immovable property is payment of the purchase price and ownership title transfer by registration at the local Land Office; these have not taken place yet. Both parties are contractually bound to their promises only.
However, since you (the buyer) had already paid deposit money or a reservation fee to the developer or seller, if the developer or seller defaults in transferring the ownership tile to you by registration at the Land Office on the agreed upon future date, you will have to request the developer or seller to return all deposit money or reservation fee paid by you. If the developer or seller does not do so, you will have to claim against them in court.
Not transferring ownership title to you may be due to: the developer or seller not being able to complete building the project on time, you are not satisfied with the building specifications or materials used, creditor(s) cannot release mortgage, encumbrance or charge placed on the property, developer or seller going bankrupt etc.
Tip
Do some investigative work. Check on whether the developer or seller have being in the business for many years, is a company listed on the Stock Exchange of Thailand, is a company with a capital amount sufficient enough to fund the project etc. Unless the result of this investigation is positive, you should not risk making any sort of deposit or reservation fee payment. Instead, make a one time payment of the whole purchase price upon the developer’s or seller’s registration of ownership title transfer of the completed property to you.
Having said this, if you must pay deposit money or reservation fee, minimize your risk exposure by negotiating for the lowest possible amount.
*Written by David Tan. David is a Lecturer of Business Law at Asian University and author of the book "A Primer of Thai Business Law", available online at www.chulabook.com or at all Kinokuniya and Asiabooks bookstores. Any questions or comments to David should be sent to blas.inter@yahoo.com
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