Thailand Property Solicitors

Thailand is seeing a current surge of interest in housing and condominium developments in advance of the elections of the new government. Seemingly, the upcoming elections stir speculations and excitement among property developers and buyers on how the would-be-elected government’s new policies or amendments of existing policies would affect the Property Business in the Kingdom. Regardless of the speculations, the demand for housing and condo projects by foreign investors is still strong, particularly in traditionally popular markets such as Bangkok, Phuket, Pattaya and our own Hua Hin.

 

 

Pre-construction or off-plan properties have permeated the core of this property market whereas the secondary property markets have remained relatively stable. 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 property here in Thailand.


Before the Deposit

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 and should, in good practice, be fully refundable.

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.

Freehold or Lease?

In Thailand, a foreigner may only own a condominium in his/her own name.  This is called a “freehold” purchase (having no end).   If the foreigner wishes to acquire land and build a house, he/she should obtain a long term lease on the land, typically 90 years (registered 30 years initially and two renewals of 30 years each).   The foreigner should apply for the construction permit to build the house in their own name.  This way the foreigner owns the house and has a secured long term lease on the land.  The lease is written with the option to reassign to another person (if you sell), ability to sublease and with a purchase option (should the law change in the future to allow freehold ownership by the foreigner).   Therefore, a lease is the most common legal method for the foreigner to acquire property in Thailand.


Perform Due Diligence

Back home we would never consider buying property without proper check on the title deed.  In the UK, there are the “local authority check” and “drainage report” which are a must in the conveyance process.  It is required by law to have a solicitor conduct this process or if you opt out then a full disclosure must signed by the buyer that he choose not to conduct these checks.  In the US, an escrow agent or lawyer will be utilized in almost every transaction and a title search on the deed will be initiated as part of the closing process.  Title insurance is available to the buyer to protect his investment.  In Thailand, the buyer should conduct a full due diligence check and title search on the property.  The buyer should select a legal advisor who will perform these checks using international standards and prepare a written report in English for the buyer to review prior to making any initial payment.


Review the Contracts

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. However, throughout the many years of dealing with international clienteles, 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 and serves as the basis of the relationship. However, 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.


Remember your heirs

Property buyers are looking at the acquisition for a second home or retirement home.  Typically the buyer has children either young or grown.  It would be considered that the name of the children be placed on the contracts an owners/buyers of the property.  That way in the unexpected demise of the parents, the children can carry on as owners of the property.  Moreover, it is strongly recommended that you have a Last Will & Testament prepared in both your home country and in Thailand.  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 would not 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. 


Summary

As the interest in condo and housing development continuously surges even in this period of temporary speculations brought about by the current political happenings, this only affirms the belief that buying property in Thailand can be considered a solid form of investment. To make the best out of this investment it’s always best to keep yourself informed and consult with a lawyer for legal advice and assistance.