In some western countries, during the process to transfer ownership of real estate, the law obliges the parties to use the services of a public body or representative to protect notably the buyer by making the due diligence compulsory.
In Thailand, the parties can directly go to the competent administration to register the ownership or rights in immovable property transfer. Consequently, some buyers take the risk to be engaged without perform a competent and comprehensive due diligence and unfortunately lose a lot of money.
In Phuket the land use restrictions are under three laws with the relative Ministerial Regulations:
– The Building Control Act (2522)
– The City Planning Act (BE 2554)
– The National Environmental Control and Maintenance Act (2553).
Due diligence are to be made basically on the Title Deed, the building, the owner or holder of the immovable rights and legal relations between them and third parties.
The title allows certain private use and grants certain rights to use, possess, own or transfer rights by freehold and leasehold. There are 3 Titles to be considered, the Nor Sor Si Djor (Chanote), the Nor Sor Sam Gor and the Nor Sor Sam.
The due diligence report towards the title deed will show all historical transaction and any encumbrances as servitude or mortgage.
The building has also to be free of any debt, charge or other restriction of private or public law other than the usual easements. To avoid future legal litigation, the construction must correspond to the permit issued.
In presence of condominium project, rules and regulations are stronger, and some developer use the word “condominium” only for marketing purpose and at the end the condominium license won’t be issued and the unit unregistered under your name.
In presence of land and building, the owner of both can be different, in this case, one of the assets can be subject to mortgage for example, and we have to check for each owner his criminal and civil information that could impact the legal process of acquisition.
A Thai company can be also the owner of the whole asset, in this case, the buyer can purchase some share and become director of the company. The due diligence will request specific verification in accounting and tax domains.
For all these reasons, the first step of your real estate investment has to be the due diligence.