Buying a Condominium Unit ?
Proceed with Diligence
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.
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:
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;
Is the condominium building registered at the Land Office?; and
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 letter verifying that foreigners have ownership in condominium units not exceeding 49% of the total space of all units in the condominium building; and
A letter verifying that the owner has no outstanding debts owing to the Office.
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 and author of the book "A Primer of Thai Business Law", available online at www.chulabook.com. In Bangkok the book is available at all Kinokuniya and Asiabooks bookstores. Any questions or comments to David should be sent to blas.inter at yahoo.com
David Tan Articles:
Does 90-year Lease Exist? - David Tan is a Lecturer of Business Law at Asian University. He has kindly provided us with a series of legal articles looking at property and employment law in Thailand. We start by clearing up the 90-year lease issue.
Foreign Ownership of Land? - David Tan continues his series of legal rights articles with an enlightening look at the thorny issue of foreigners owning land in Thailand.
Buying a Condo in Thailand - How to proceed with due diligence when buying a condo in Thailand.
Escrow Agents in Thailand - How to use escrow agents in Thailand when purchasing a property.
Property Purchase Deposits - If you pay a deposit or reservation fee to a property developer, does that mean you have a sale contract?
Lifetime Land Lease? - Is it possible for a foreigner to lease a plot of land for their own lifetime?
Employee Failing Probation - David Tan's series of legal articles move on to employment law. He starts with a look at the requirements for terminating employees who are on a probationary period.
Fixed Employment Contracts - Fixed period employment contracts are a technique employers can use to avoid having to pay severance and provide prior notice of employment termination to employees.
Sacking an Employee - What are the legal implications for an employer to sack an employee in Thailand?
Selecting Outsource Company - If you outsource in Thailand, what rights do the outsource company's employees have from your company?
Contract Protection for Buyers of Condos - How can you be sure your new condo will turn out like the pictures in the glossy brochure?