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Buying a condominium unit?
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), 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
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
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
(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
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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