The Thai Real Estate market is unregulated so the foreigner who is contemplating on buying a property in Thailand is advised to follow the following procedures in order to protect his real estate investments in the Kingdom.
Due Diligence and Title Search
This procedure has to be observed when purchasing a property in Thailand to verify the authenticity of the seller/owner of the property. If he is indeed a reliable or trusted guy as he claims to be. You wouldn’t want to be embroiled in a legal battle later on as the property you purchased is in fact owned by another person or that the seller ran away with your money. Corollary to this, a Title Search on the property should be conducted to verify the Title Deed and to check for any encumbrances in the property. Various liens such as back taxes and other rules and regulations have to be taken into consideration before decision is made. The title deed has to be checked prior to the attestation of the Sale and Purchase Agreement or any payment made. Fake Title Deeds proliferate in the market so the necessity to verify with the Land Office the title deed of the property to be purchased.
Review of Contract or the Deed of Sale
It is advised that you contact a reputable lawyer specializing in Thai property laws to assist you with the procedure especially when it comes to interpreting contracts. A lawyer will be able to explain to you the terms and conditions specified in the Sale and Purchase Agreement. Since, most of the times, all these fancy legal terms are very confusing and really hard to understand. As a norm, the seller usually is the party who drafts the Agreement and it is therefore expected that they would draft the Agreement that serves their benefits. Consulting a lawyer for a legal opinion would be a big help so that you know all the implications and impacts of the terms and conditions of the Agreement, once it has been attested, and in most cases the lawyer would represent their client, which herein is the purchaser, in the negotiation with the seller if they feel that their client has been taken advantage of, and most likely, with an anticipation of reaching a mutual benefit for both parties.
Registration of Property Transfer at the Land Office
As it has been publicly aware of and according to the relevant Laws and Regulations of the Kingdom of Thailand, the conveyance of the ownership over a property can’t be accomplished by a mere handover of the title deed from the seller to the purchaser. The achievement of the conveyance thereof shall be fulfilled once both parties had registered the transfer of ownership at the competent Land Department. Dealing with the registration of the transfer of ownership at the land department personally can be very exhausting and annoying since it takes time, usually almost a day, and there are so many formalities to be followed. To simplify this matter, many purchasers choose to retain a legal company to take care of it as they are very acquainted with all procedures involved. By authorizing the lawyer via POA, the authorized lawyer shall act on the purchaser’s behalf at the Land Department to make sure that the transfer of ownership is done properly.
3 major property related transactions, required to be registered at the Land Department are:
- 1. Sale and Purchase of Property:
- The Sale and Purchase of Property is accomplished once the property has been transferred from the seller to the purchaser through a formal registration process at a competent Land Department. This rule applies to all kinds of property; land, house, condominium unit, etc. If not duly registered with the Land Department, all transactions will be nullified and legality of ownership will not be accorded to the buyer despite fulfilling the rest of the conveyancing procedures.
- 2. Lease of Property:
- According to the relevant laws and regulations, the Lease of Property that is longer than a period of 3 years must be registered at the competent Land Department; otherwise, the validity of such unregistered Lease shall be effective for only 3 years. The maximum period of a Lease that can be registered for one time is 30 years. However, after it has reached the thirtieth year, the lease can be renewed for another 30 years and the Lease registration must be, once again, executed at the Land Department.
- 3. Mortgage of Property:
- To secure a loan, the creditor usually asks the debtor to submit a title deed of a property, usually a piece of land, a house or a condominium unit, as a security for that loan. We call it a mortgage. The consequence when a property is under a mortgage is that when the debtor (the mortgager) is unable or refuses to pay back the debt, the secured creditor (the mortgagee) is entitled to sell the mortgaged property and collect the proceeds from the sale of that property, only that which is equivalent to the debt and associated interest, as the reimbursement for the loan. However, in order for the mortgagee to be able to do so, the mortgage must be registered with the land officers at the Land Department. Once the mortgage had been registered, even though the mortgage might later be sold or transferred to the third party; the mortgagee will remain entitled to claim for the reimbursement from that mortgage.
Apart from the said transactions, there are many other transactions that need to be registered at the land department such as a: Usufruct, Right of Habitation, Servitude or other burdens over the property.
Our legal counselors and attorneys who are highly experienced in this area can guide and assist you along the process of dealing with all complications in property related transactions. Please feel free to contact us for additional information or assistance you may require. Our legal consultation is free-of-charge and we are more than happy to assist you.