The real estate sector in Thailand has experienced overwhelming growth over the past few decades and there exists a lot of opportunities for investors to take advantage of. In the recent past, a lot of real estate investment has been directed towards the development of condos, which is the main avenue available for foreigners in Thailand. However, there are some restrictions that have been set forth by Thai regulations on the type of condominium a foreign investor can buy.

The real estate sector in Thailand has experienced overwhelming growth over the past few decades and there exists a lot of opportunities for investors to take advantage of. In the recent past, a lot of real estate investment has been directed towards the development of condos, which is the main avenue available for foreigners in Thailand. However, there are some restrictions that have been set forth by Thai regulations on the type of condominium a foreign investor can buy.

According to Thai real estate law, foreigners may purchase a condo unit in a condo building, as long as their ownership does not exceed the ratio of foreign versus local ownership. Click here and here to know more about land, condo and property ownership by foreigners in Thailand. There have been some reported cases in the recent past, of condo developers who have swindled investors in a condo development project. These fraudulent developers will often abandon a project halfway through, due to lack of finances or problems with their contractors. There have been cases whereby the developer failed to transfer ownership to the foreign buyer, within the stipulated timeframe. Most of these problems came about due to non-standard purchase agreement, which were mostly drafted by the developers and were filled with loopholes which would allow them to take advantage of an investor.

The government of Thailand came up with a standard template, meant to protect foreign investors from unscrupulous property developers. According to Section 6/2 of the Thai Condominium Act, any sale or purchase agreement between an owner of the land and a purchaser of the unit, shall comply with the form prescribed by the minister. In addition to that, any sale of purchase agreement which does not comply with the form prescribed by the minister and does not favor the purchaser shall be found invalid. The terms of this standard purchase agreement stipulates that it should include the following:

1. The developer should provide a warranty that they own the land, and a statement regarding the status of the land if it is under a mortgage or under any other obligation.
2. The developer should provide a warranty that they have been granted a construction permit and that the building will be registered as a condominium upon the completion of the project.
3. The developer should provide details on the common property and other facilities provided by the developer.
4. The developer should provide details on the price per unit and payment terms.
5. The developer should provide details on the completion date of construction and the resultant date for transfer of ownership and registration.
6. The agreement should allow purchasers the right to assign his/her rights under the agreement to another person, without incurring any additional expenses or assignments fees from the developer.
7. Developers should use standard equipment and materials, while building the condominium project. The developer should also comply with the approved construction plans.
8. The developer is allowed a maximum of one year, to suspend construction just in case of force majeure.
9. The developer has an obligation to install utility meters (water and electricity supply).
10. The developer is obligated to be responsible for their income tax and specific business tax obligations. They are also liable to pay half the registration fee for the building.
11. A cap of 15 percent is stipulated for the amount of interest paid per year to the developer, in the event that the buyer defaults on the purchase price, with the amount not exceeding 10 percent of the purchase price.
12. In the event that the developer is unable to transfer ownership of the unit, to the purchaser within the stipulated time, the developer is obligated to return all the money he has received from the buyer at default interest rate (the buyers interest rate), plus any claims for damages or the possibility of a daily fine.
13. In the event the developer is unable to complete the project, due to force majeure, the developer is obligated to return all the money received from the buyer plus interest equivalent to the highest interest paid on fixed-deposits at the Krung Thai Bank Plc.
14. The developer is obligated to repair defects in equipment and structure, for up to 5 years after the completion of the project. He is also liable to repair other component parts, for up to 2 years.

Developers, who are found to have contravened the rule to apply these standards in a purchase agreement, may face a fine of up to 100,000 baht. Buyers are always advised to read through a purchase agreement, to make sure that the above standards and conditions are met in the agreement for their own safety. If there are additional items on the terms and conditions are found in the agreement, then they should be in favor of the buyer.