Purchasing a property in Thailand is a good proposition. Yet, this can only get better if the interested party invests first on several key legal services commonly undertaken when purchasing a property namely: title search, due diligence, contract review, and property transfer.
To protect his investment and himself, a potential property buyer should engage reputable lawyers especially those with considerable experience in catering non-Thais if he is a foreigner.
The following procedures are advised to be conducted prior to property purchase.
Among the basic procedures to conduct before purchasing a property is having its title deed examined. Doing so exposes the property’s background on the type of title it has and if such title allows the property to be sold or leased. As it is, Thailand has the following types of title deeds:
- Chanote or the Nor Sor 4 – also known as “freehold” title deed in other countries, it is the most superior of all title deeds. Lands with a chanote title deed can be mortgaged, leased or sold.
- Nor Sor Gor 3 – it is not a freehold title deed but it is ready to be converted to a chanote thus it can be sold, mortgaged or leased.
- Nor Sor 3 – it is already a title deed in itself but its boundaries are not as well established compared to the chanote.
- Sor Kor 1, Por Tor Bor 5, and Bai Jong – are only claim certificates thus any property with such deed cannot be leased nor sold.
A title search will also reveal the vendor’s legal representation to sell the property, hidden encumbrances if there are any and if the buyer’s intended development of the property is allowed based on the applicable land restrictions of the property’s location.
Due diligence is a deeper undertaking to be conducted before purchasing a property in Thailand as it goes beyond examining the actual property and its title deed.
If it is a property development, due diligence allows the potential buyer and his attorney to check the financial and legal capacity of the real property developer to finish the project or if it has no past or current legal issues at a court of law.
Due diligence also examines the background of the developer such as the status of its previous and current projects.
Before committing to the sale of the property unto him, the buyer must conduct a thorough review of the contract in order to make sure that his interests and rights are recognized and forwarded.
Here, both the buyer and seller’s obligations are agreed upon, put into writing and signed.
After the contract has been sealed and the obligations paid, the title of the property must then be transferred to the buyer.
The process from the title search to transfer cannot be completed if it will not be registered.
Further, a foreign buyer is not allowed to purchase, own and register a property under his name though Thai laws allow him to enter into a long term lease. Nonetheless, it is highly advised that he enlist the expertise of a Thai property lawyer to ensure his interests are properly adhered to, his rights to have been fully respected and that no laws are being violated nor circumvented when securing the property.
If you need legal advice or assistance from a qualified property lawyer, please contact us today.