Purchasing of condominium in Thailand: The Sell and Purchase Contract
Source: Chalermchat Law Office , November 11, 2008

    According to the Condominium Act of Thailand, the law allows a foreigner to own a condominium unit. There are 2 cases for purchasing a condominium unit. One is purchasing from the owner and the other is purchasing from the developer.

    In case of the purchasing from the owner, the terms and conditions in the sale and purchase contract are depending on the negotiation. Therefore, the Thai government does not specifically control any conditions in the contract, except only the condition that is not applicable or against the law.

    However, the purchasing of a condominium unit from the developer is under the control and supervision by the Office of the Consumer Protection Board (‘OCPB’). The OCPB announced the regulations of the Contract Board dated September 15, 2000 imposing that the condominium activity is the controlled contract business.

    The regulations of the OCPB indicate that the sale and purchase contract must be made in Thai language. The size of the letters must be at least 2 mm. The contract must contain the following details:

    (1) The clause indicating that the developer owns the land and promises to construct a condominium. The developer also shall register a condominium with the Department of Land as required by the law. The person executes a sale and purchase contract must be the authorized person. The documents showing that the developer is the owner of the land must be attached to the contract;

    (2) The clause indicating that the land is whether under the mortgage with which bank or financial institutes;

    (3) Location of land, land title deed number, size of the project, map showing land boarder line and location of a condominium;

    (4) Selling price (per square meter) and size of unit;

    (5) Purpose of usage of all parts of a condominium, details relevant to a condominium unit, details and size of the common property and facilities;

    (6) The developer shall be singly responsible for the withholding tax, specific business tax and stamp duty. Only the transfer fee shall be equally split between the developer and the purchaser;

    (7) Incase the purchaser is in default for paying the selling price before transferring of a condominium unit, the developer may terminate the contract to purchase and sell if only:
             1) the purchaser fails to pay the selling price in case both parties agree that the selling price will be made for only one installment;
             2) the purchaser fails to pay the selling price for 3 installment consecutively if the selling price must be paid for at lease 24 installments or more;
             3) the purchaser fails to pay the selling price equivalent to 12.5% of the total selling price if the purchased price must be paid less than 24 installments.

    The developer must send the 30 days advance notice to the purchaser demanding the purchaser to make the payment. If the purchaser fails to make the payment, the developer is entitled to terminate the contract.

    (8) The developer must construct the project according to the plan, which is approved by the government.

    (9) If the construction is delayed not caused by the fault of the developer, the developer may extend the construction period but not longer than the delayed period. The developer must notify the cause of delay and present the evidence of such cause in writing to the purchaser within 7 days after such cause is ended. If the developer fails to notify the purchaser, the developer will not be able to extend the construction period. The extension cannot be longer than 1 year.

    (10) If the developer cannot finish the construction on time, the purchaser may:
             1) terminate the contract can claim for all money that the purchaser paid to the developer plus the interest at the same rate that the developer may charge from the purchaser incase the purchaser is in default;
             2) if the purchaser does not terminate the contract, the purchaser can charge the penalty on the daily basis. The rate of penalty must be indicated in the contract but it cannot be less than 0.01% of the purchased price and the total penalty must not more than 10% of the purchased price. If the purchaser charges the penalty for 10% of the purchased price and the construction is not finished, the purchaser can terminate the contract.

    (11) If the developer cannot finish the construction caused by the force majeure, the developer must return all money received from the purchaser plus the interest at the highest rate of fixed account of Krung Thai Bank as from the receiving date. The purchaser also has the right to claim for any other compensation from the developer.

    (12) In case of the transfer of unit, the30 days advance notice is required. However, if the purchaser wants to transfer the unit before 30 days, the purchaser can notify the developer and the developer has to transfer the unit to the purchaser within 7 days after receiving such notice.

    (13) The developer must be liable for the defection of the condominium and the unit as follows:
             1) In case of the structure of the condominium and other accessories which are immovable properties supporting the structural competence of the condominium, the warranty period is 5 years after the registration of condominium;
             2) In case of its component parts, the warrantee period is at least 2 years after the registration of condominium.

    The developer must fix the defect within 30 days after receiving the written notice from the purchaser or manager of the condominium juristic person (as the case may be), except in the case of defect which requires emergency reparation; the developer must fix such defect immediately. If the developer fails to fix such defect, the purchaser of the condominium juristic person can fix it and the developer must pay for the reparation cost.

    (14) The contract must not contain the unfair clauses, which are:
             1) The clause that exempts or limits the liability caused by the default of the developer;
             2) The clause that exempts or limits the liability caused by defection, eviction of the developer unless the purchaser agrees to sign on any document to grant such exemption or limitation. However, the exemption or limitation shall be applied only it is fair and appropriate.

    The above details are the summary of the regulations of the OCPB. The sale and purchase contract produced by the developer must at least contain the above details.

    On July 2, 2008, the Department of Land announced the regulations on the compliance according to the Condominium Act B.E.2551 indicated that the sell and purchase contract for a condominium unit must be made according to the form designated by the Minister of the Ministry of Interior. The Department of Land also produces the sell and purchase contract form and the form is available for download.

    The details of the contract form are in line with the regulations of the OCPB. Therefore, it will be useful for the purchaser to know the scope and details of the regulations of the OCPB before entering into the sell and purchaser contract with the developer.