Do Not Risk Your Deposit Money or Reservation Fee

Published: 22th March 2009Author: David Tan

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 told 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 title 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.


Do some investigative work. Check on whether the developer or seller have been 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 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


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?



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