Vol. VII No. 43 - Tuesday
October 21 - October 27, 2008



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BUSINESS & TRAVEL
HEADLINES [click on headline to view story]:

Buying a condominium unit?

Buying a condominium unit?

Proceed with diligence

David Tan
The legal way for a foreigner to own real estate in Thailand is to buy a condominium unit(s), as was proposed in my last article on foreign land ownership. Particularly in Bangkok, condo unit purchases are now considered trendy among the younger generation of Thais as condominiums are usually conveniently located in inner city areas and it is more economical to commute. Whether you are going to buy a condo unit for residential or for investment purposes, I would like to walk you through the following due diligence steps:
1. If you are able to narrow down your choice of condos to 1 or 2 units, a physical inspection of the condo unit and the condominium building must be conducted by an expert or civil engineer to ensure that they are both as represented by the seller. Checks should be conducted for water leakage in the unit, a proper and safe electricity supply, the allocation of adequate car parking spaces, fire exits, and use of correct building materials.
2. Amounts payable by an owner of the condo unit for upkeep (e.g., common facilities fees, water charges, electricity charges) to whom these charges should be paid and how much? Find this information out from the owner of the unit.
3. If (1) and (2) above prove satisfactory, request from the owner a copy of the condo unit title deed. Take this to the local district or amphur land office and check with the original title deed kept there as regards:
(a) Who is the owner of the condo unit? The owner should be the person with whom you are dealing and who signs the sale contract for the unit. If the unit is owned by a limited company, who is authorized to sign on behalf of the company? Does the limited company have enough capital to complete the construction of the condominium? The answers to these questions can be obtained from the incorporation records of the limited company held at the Ministry of Commerce.
(b) Is the condominium building registered at the Land Office?
(c) Does the original title deed reveal any registered encumbrances, leases, mortgages 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. 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 yourself that ownership title transfer and sale of the unit will take place at an agreed future date. However, the risk exposure to you here is that, at the signing of this contract, you will usually be 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 sue the seller in court for breach of contract to get the deposit back. As a result, I do not recommend signing of this type of contract. You should make a one-time payment of the whole purchase price at the final sale date and upon transfer of the condo unit’s ownership to yourself. Alternatively, you could arrange for a neutral escrow agent to hold both your money and 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 exactly 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 the ownership title transfer. Unless agreed otherwise between the owner and yourself, 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.
Make sure that the owner has obtained from the Condominium Juristic Office the following:
(a) 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 (b) a letter verifying that the owner has no outstanding debts owing to the Office.
6. Make sure that you have obtained the required bank documents verifying that the purchase price for buying the condo unit was remitted into Thailand.
David Tan is a lecturer on Business Law at Asian University. Any comments or questions should be sent to [email protected]



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