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Proceed with diligence when buying a condominium
Fri 20 Mar 2009
The only legal way for a foreigner to own real estate in Thailand is to buy a condominium, or ‘condo unit’.

In Bangkok, condo unit purchases are now considered trendy among the younger generation of Thais because condominiums are often conveniently located in the inner city area, making it more economical for them to commute to work.

But whether you are going to buy a condo unit to live in, or for investment purposes, there are some due diligence steps you need to take before you sign on the dotted line.

Firstly, if you can narrow down your choices of units to one or two Condo Units, a physical inspection of the unit and the building should be conducted by an expert to make sure they are what the seller has promised.

Checks should be made for water leakage, and you need to ensure there is a proper and safe electricity supply, adequate car parking spaces allocated, fire exits, and that the correct building materials have been used.

You should also check to see what monies are payable by an owner for maintenance, common facilities fees, water charges, and electricity charges, and who the money should be paid to.

You can generally find out this information from the seller.

If everything seems satisfactory, ask the seller for 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 which will be kept there.

You should also determine who owns the unit you are buying, and make sure that is the person who is signing the sales contract.

If the owner is a limited company, you need to find out who can sign on behalf of this company.

You also need to know that the company has enough capital to complete building the condominium.

This information can be obtained from the incorporation records of the company limited at the Ministry of Commerce.

You should also make sure the condominium building is registered at the Land Office, and check the original Title Deed for any registered encumbrances, leases, mortgages or charges.

It is always a good idea to have a lawyer peruse the conditions of the Reservation Contract or To Sell and To Buy Condo Unit Contract before you sign it.

Legally speaking, this contract does not create any property rights for you 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 on the agreed date.

However, the risk exposure to you here is that, at the signing of the contract, you are usually required to place a deposit with the seller.

If the seller does not sell and transfer ownership title of the condo to you on the agreed date, you can take the seller to court for breach of contract to get the deposit back.

I don’t recommend signing of this type of contract.

You should make a once-only payment of the whole purchase price at the sale and upon ownership title transfer of the condo.

Alternatively, you could arrange for a neutral escrow agent to hold your money and the original Title Deed.

Under the new Escrow Business Law, which became effective on May 19, last year, an authorised financial institution, or commercial bank, can provide escrow agent services.

You should also clarify with the owner exactly who is responsible for the ownership title transfer fee, any income tax or specific business tax or stamp duties payable to the Land Office on the day the ownership title is transferred.

Unless otherwise agreed, you are only legally responsible for 50 per cent of the ownership title transfer fee, which can be calculated for you by an official at the Land Office.

Make sure that the owner has obtained from the Condominium Juristic Office a letter verifying that foreigners have ownership in condominium units not exceeding 49 per cent of the total space in the condominium building, and a letter verifying that the owner has no outstanding debts owing to the Office.

You also need to obtain the required bank document to verify that the purchase price for buying the Condo Unit was remitted into Thailand.

*David Tan is a lecturer in Business Law at Asian University and author of the book A Primer of Thai Business Law, which is available online at www.chulabook.com

In Bangkok, the book is available at all Kinokuniya and Asiabooks bookshops.

To contact David, email him at blas.inter@yahoo.com