We set out in this article a comparison between Thailand property transactions and some common overseas property transaction processes.

The parties to a transaction are similar of course, but their roles, the regulations governing those parties, and the timing of processes can differ greatly in Thailand compared to other jurisdictions.

Potential foreigner investors in Thai real estate may find property through an agent or an agency specialized in real estate in Thailand. If this is the case, then this agent or agency should be responsible for ensuring that the dialogue between the seller/developer and both the legal team of the seller/developer and the legal team of the foreign investor is set up in a timely and efficient manner. A foreign investor should always keep in mind to take adequate time to receive legal advice and exercise proper precaution and not be rushed into dispensing with obtaining independent advice. Hence the agent has to provide this adequate time for the relevant services to be provided to the foreign investor. Agents in Thailand also owe duties to third parties under law, but there is no strong body regulating behavior of agents across the board in Thailand.

Generally, after seeing the property a foreign investor is most interested in, the investor will be encouraged to sign a reservation form by the agent and the developer. It is important to ensure that the terms of the reservation allow for a standard 30 days of due diligence. Such a timeframe is not generally considered as long. If this timeframe is compared to similar property transactions in the US or European countries it is relatively fast – as in these countries foreign investors may be involved in a property ‘chain’ which can sometimes extend conveyance to lengthy periods. Furthermore, a high number of transactions in the luxury segment in Thailand relate to properties in the millions of US dollars, and therefore a one month timeframe is considered quite fast whilst monies are arranged and ready to be released in exchange for the property interests to be acquired.

In Thailand, foreign investors in property may also be unfamiliar with the method of property investment which can vary between company acquisition in Thailand, offshore company acquisition, condominium unit acquisition, or leasehold purchase.

To engage a law firm and get the most from communications with the legal team, a foreign investor should be aware of the requirements for paying a legal fees deposit and signing the scope of works engagement letter promptly before the law firm can proceed to contact various parties and represent the client. The law firm will identify the needs of the foreign investor, taking clear notes of instructions, and will then keep on record identification and full contact details. Developers and agents generally insist upon the signing of a reservation deposit, in order to protect them against speculative enquiries and to ensure their resources are used properly. A period of 30 days is then provided to buyers in which to conduct due diligence into the property; submit enquiries, and negotiate contracts with the aim to complete at the end of the 30 day period. Caution should be applied so that any delays not through the fault of the buyer don’t result in a forfeit or penalty of the deposit to the seller.

In certain other jurisdictions, the amount of the deposit; the timeline for completion; the contents of the preliminary enquiries submitted between buyer and seller; the nomination of which party’s lawyer will draft the contract and the completion process itself, are all prescribed in detail and regulated by law. In Thailand, more freedom is provided to the parties to choose these processes, and so additional care should be applied to ensuring that silence on a matter does not result in additional risk. The exchange of information during the 30 day period will involve a flow of information relating to the land, the property and its historical construction, zoning and local regulations, and the sales contracts.

In addition to lawyers, agents and seller – the foreign investor may also be dealing with a structural surveyor to check a property for integrity if it is already built but also maybe to check for finer points and issues that an ordinary person cannot detect with the naked eye: sewage facilities; utility supply; drainage; swimming pool pump maintenance status and so on. A buyer may also need an accountant to deal with tax and especially so if the foreign investor has a sophisticated tax status, an architect if the foreign investor is redesigning or creating modifications to a unit. The apportionment of bills is normally made so that the seller pays bills until the buyer occupies the property – and this can be included in the sales contract as a provision to avoid petty disputes over small sundry bills at completion. Finally, the matter of furniture, fixtures and fittings should be considered, and perhaps a value attributed to those, together with a digitally photographed schedule to avoid disputes over wear and tear or ‘as is’ provisions of sale.

The author of this article is Sebastian Kunz, Senior Associate at Limcharoen Hughes & Glanville (Phuket). Email: sebastian@limcharoen.com