Thailand real estate acquisition checklist
The first and most important part of a real estate investment and buying a house in Thailand is the land title deed. Does the land have a suitable and proper title deed. The land title deed is the official a document administrated by the Land Department which states and proves a person's legal right to own or possess a piece of land, its survey status, as well as rights, obligations, or mortgages on the property. Whether it is an online preparation of a contract for sale or usufruct, lease, superficies, or a traditional legal service for the acquisition of a property, the land title deed (or in case of a condominium, the condo unit title deed) is the first document that needs scrutiny and the first document we require complete copies of (front and backside).
With a copy of the land title deed it is possible for us to investigate at the local Land Department if the property really belongs to the seller, is free of debts, and if the description of the property matches what the buyer has been told. In case of an existing house we need to see the Thai house book (Ta Bien Bahn), previous land office transfer sale agreement (Thai), or building permit of the house (Thai). You should get these documents from the real estate agent or seller and having them reviewed before giving any down payment.
What follows is a list of general subjects that could be part of the due diligence process or general considerations prior to the acquisition (freehold or leasehold). Our due diligence service is not limited to the subjects below.
Checklist property acquisition:
- Investigation into the land title deed (Nor Sor 3, Nor Sor 3 Gor or Nor Sor 4 Jor (Chanot)) and history of the land title;
- In case of a condominium the condominium unit title deed;
- The house book (Tabien Baan) building permit and previous land office sale agreement of the building (if any), if the seller can't show a building permit or land office sale agreement the house could be illegally built or could be owned by someone else;
- are there any mortgages or other encumbrances registered against the property and will the property be delivered free from all encumbrances, mortgages, charges and other liens;
- is the seller free to dispose of the property or are there any legal restrictions or disputes affecting ownership rights (bankruptcy or civil court search on the owner of the property);
- investigation with the Land Department about; property taxes, other documents related to the land, registered value and previous transfer date;
- the respective rights and responsibilities of the parties in the contracts for sale (e.g. does the contract for sale offer sufficient protection and who will be responsible for transfer and registration fees and taxes).
Buying land (leasehold or freehold):
- The previous use of the land and possible use of the land, e.g. any building or other restrictions (there are rules limiting building size in relation to plot size) and present use in zoning, according to what planning and zoning tells you;
- has the land ever been rented out or is anyone in occupation on the land;
- any drainage problems on the land or subsidence.
- physical inspection of the land to ascertain access to the land (e.g. dirt roads on hill sides become inaccessible during the rainy season);
- confirm there is public or registered private road access to the land (is there direct access to a public road or is there need to cross over private land to reach the public road);
- is the land connected to the main utilities such as water (water availability is essential) and electricity (if not, how do you get electricity hooked up);
- trash disposal (how will you get rid of it), sewage disposal, telephone and cable;
- how long have the current owner(s) held title over the land;
- a land survey by a surveyor to confirm the size of the land.
Buying into a planned housing (or condominium) development in Thailand could include:
- Has there been separate title deeds issued for each property in the development;
- compliance with the requirements under the Land Allocation Act;
- is there an environmental impact assessment approval report (if applicable);
- are the building permits issued and in whose name;
- are the condominium or housing development license issued or applied for (if applicable);
- the sales structures and responsibilities;
- how long has the developer been developing properties in Thailand;
- what is the developer's registered share capital;
- what is the payment schedule and are payments held in escrow till transfer (payment to the developer prior to delivery has risks and disadvantages);
- which architectural company has been appointed to design the houses;
- which construction company has been contracted to build the houses;
- can the purchaser instruct an independent building surveyor to inspect the build upon completion;
- can the purchaser assign his rights under the contracts for sale to a third party;
- building warranties;
- if sold under a leasehold structure, who is responsible for paying Building and Land Tax during the lease period;
- if sold under a land leasehold structure, will the houses be owned by the purchasers (how will this be registered);
- If sold under a leasehold, maintenance and management contracts are often part of the lease arrangement putting additional long term burdens on the lessee (non compliance could lead to termination of the lease).
- will the developer apply for the house registration booklets for each property;
- who will be responsible for transfer or registration fees;
- how many houses are being built in the project and could the view be blocked by new construction;
- will the land and house be connected to public utilities in the purchasers' separate names;
- if any, what services will be provided and how much are the monthly or yearly maintenance and service fees in the project? How will this be calculated? Do decisions about maintenance and services rest with the house and plot owners within the project or with the developer? (e.g. electricity and water is often delivered as a service through the developer at twice or more of the official government rate)
Buying a condominium could in addition include:
- Who manages the condominium (is it a reputable company) and what are the management charges;
- Review of the rules and regulations of the condominium;
- is the condominium juristic person financially healthy (have you seen the juristic person accounts and sinking fund);
- Sample questionnaire
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In an approved housing development project the sale contracts must be approved by the housing development committee issuing the licenses for the development. These contracts have minimum consumer protection requirements. In anofficial approved housing development the developer is bound by the approved sale structures and contracts, generally no amendments will be allowed in the contracts,. Not all developers follow the exact requirements and the sale contracts often contain clauses and passes on costs that are not according to the law. Contract review by a professional is strongly recommended (we do an online review for 4,800 THB and in the majority of the cases we earn money for our clients).
(c) 2011
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