Condo freehold sale and purchase contract

Freehold Condo Sale And Purchase Contract in Phuket, Thailand

If you have already read the Freehold land sale and purchase contract one. The Freehold condo sale and purchase contract (S&P) is mostly the same. But, details in step 1 to step 4 are different.  Above all, this article is not a DIY article. Keep this legal matter in mind, all contracts or an agreements in Phuket, Thailand are subject to the condition of validity. That under Civil and Commercial Code of Thailand (CCC). So, to make a contract yourself. Importantly, you must understand the condition of validity, laws, rules and relevant regulations relevant. 

Also, this article is not in order to understand the whole process when buying a freehold condo in Phuket. But, it aims to give you an idea of what to think about when making a freehold condo S&P. However, it also useful for leasehold condo, too. In addition to this article, you may want to understand the difference between leasehold and freehold in Thai law.

Of course, when making a contract. All particulars of each provision and relevant things have to be clear. As well as attach the relevant information and its particulars when needed. Here, we have an idea of what to think about. And you should make it clear; Let’s go step by step.

Step 1: Parties of the Freehold Condo S&P

The parties of the freehold condo S&P and the reservation contract should be the same parties. In case the parties of both agreements are different. It needs to clearly explain how the assignment rights work and relate to each other. If the contract is signed by the sales agency, it would be the same way. 

This is to make sure that all rights and duties under the contract are bound by the same parties.

In addition to this matter, a company limited as a buyer would not be protected under Consumer Protection Act B.E. 2522 (CPA). Appeal Court Order no. 632/2560.

Most importantly, in the first sale of the ‘Freehold’ condo between the developer and the buyer, the S&P must use the Contract Form called Aor.Chor. 22 under the Announcement of the Ministry of Interior Date of 1 July 2551 (Form Aor.Chor. 22 and 23). If not, the agreement shall be void (Section 6/2 of CPA and section 152 of CCC). 

However, the Form Aor.Chor. 22 may not cover the needs of the parties, in this case a Memorandum of Understanding attached with the Form is allowed.

Step 2: Condo Details

The particular of the freehold condo and the conditions. Then how the parties agreed to sell. Sold as it is, means no warranty for defective. If the Condo includes furniture, make a clear inventory list, to understand each item, price and condition. Also the price and payment to the furniture should be allocated as movable property sale, it due to Tax matter.

Step 3: Purchase Price And Payment

Easy, make it clear, how much, when and how to pay. If using escrow services, the escrow contract must be signed by all parties, the seller, buyer and the escrow. And on top of that, escrow must perform his duties to protect the benefit of both the seller and the buyer.

Finally, if the Freehold Condo includes furniture, and the buyer agrees to pay or share tax payment. The purchase price should be divided and allocated to the Condo and the furniture separately. Importantly, it must be based on tax planning and the tax rate between selling the immovable and movable property which are different. 

In some cases, the purchase price may include CAM fee. Utility bills which are already paid in advance or insurance, if any. Share the payment by pro rata, if you want to.

Step 4: Closing Date And Handover

Set a clear calendar date for the freehold condo register. Also, the handover date. As well as an appropriate period of time for the final check of the documentation for the registration. Set clear duties of each party on what to do. Also make a clear list of items to handover.

Set what to do when the registration couldn’t be made or can not be done as expected. 

Step 5: Basic Warranties of Freehold Condo S&P Contract

Even the freehold condo sold as it is. But the S&P contract should have a warranties for the below listed, at minimum.

(i) Peaceful possession, any disturbance caused to the peaceful possession of the buyer and warranties for any claim from.

(ii) Deprivation, any deprivation of the whole of part of the land and or house.

(ii) Third party claims, any claims by the third party against the property which the claims based on the liability of the Seller. It should clearly decide and clearly mention it in the terms of the contract. How the Seller must respond in case of. As well as the damages, legal expenses and rate of interest. 

Also, the Basic Warranties, both parties should warranties for their capacity to enter into the contract. People’s capacity may be limited by a law or an agreement. For instance  family law, bankruptcy law, prenuptial or postnuptial agreement.

Step 6: ​​Expenses Taxes and Fees

Who pays each relevant cost. Normally, each party pays their own lawyer fee. The seller pays the income tax, local tax. The transfer fees shall be paid 50/50 by the party (Section 457 of CCC). However, in practice, parties often agree to share 50/50 to all bills at the land department.

Step 7: Basic Assignment And Succession of Freehold Condo S&P Contract

Set how assignment and succession works. Basically, buyers should have a right to assign all rights and duties under the Condo Freehold S&P to any third parties. Also, all rights and duties of the parties should be transferred to executors, heirs, and successors.

Step 8: Default Dispute Solution and Penalty

Set what to do when the party is in breach of the contract. It is not only how to resolve the dispute peacefully in good faith. But also the condition to terminate agreement, damages and remedies which should include legal expenses plus rate of interest.

Keep this section of law in mind, this is one of the differences between Thai Law and other countries. Section 383 of CCC stipulates that if a penalty is disproportionately high, it may be reduced to a reasonable amount by the Court. In determination of reasonableness every legitimate interest of the creditor (the one who claims for the penalty), not merely his property interest, shall be taken into consideration.

Step 9: Entire Contract Governing Law And Language

Set what will be a part of the contract. For instance, brochures, all attached, email between the parties etc. Also, set what will not consist of the contract. For instance, email between broker and the buyer, verbal agreement etc. 

Most importantly, When signing a contract in Thailand. The parties are not allowed to choose which Court to go to (Section 4 bis of Civil Procedure Code B.E. 2477). The parties only can choose between Court or Thai Arbitration Center (Section 14 Arbitration Act B.E. 2545). 

Good news, you can choose a language you understand for your freehold S&P. It doesn’t need to be Thai. Also, if there is conflict of language you can choose English to be governing (Section 14 of CCC).

Step 10: Signature Date And Place Of Signing

In person signature or electronic signature are good. Electronic signature is allowed under the Electronic Transaction Act B.E. 2544. Date and Place of signing are needed when the dispute can not be resolved peacefully. It tells your lawyer when and which court to go to.

In conclusion, we hope this article gives you some ideas when making your freehold S&P. If you need help from a law firm who offers full legal services in real estate law. Just feel free to email one of our Lawyers directly. you will NOT be charged for the first session to determine your needs.

Article By:
Akenarin Thongplod Thai Barrister at Law and Notaries Services Attorney
& Frederic Retif, Master in Business law


Department of Land