Freehold Land/House Sale and Purchase Contract in Phuket, Thailand
If you have already read the Condo freehold sale and purchase contract one. This freehold land and/or house 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 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 land and/or house in Phuket. But, it aims to give you an idea of what to think about when making a freehold land t (S&P). However, it is not only useful for the freehold. But also useful for leasehold. 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 Land and/or House S&P
The parties of the S&P contract 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.
Keep this fact in mind, a company limited as a buyer would not be protected under Consumer Protection Act B.E. 2522 (CPA). Appeal Court Order no. 632/2560.
Step 2: Land and/or House Details
Firstly, the particular of the land plot and/or house, also the conditions. For instance, plot of land number, house number, location, ownership or possession, amount of land.
Secondly, how the parties agreed to sell. Sold as it is, means no warranty for defective. Or sold with warranty for the amount of land, the defective, for instance.
In addition, if the sale includes furniture. Make a clear inventory list, to understand each item, price and condition. Also, the price and payment of the furniture should be allocated as movable property sale, due to Tax matter.
Note for Freehold Land and or House Sale and Purchase Contract
a) the land NorSorSam or the house, the 30 days advertising will be made before the land registration is completed. For these types of land, this is a major impacts to the handover date and final payment date. It depends on how the parties agree on these.
b) Importantly, the land with possessory right such as NorSorSam, NorSorSamKor and NorSorSamKor. Delivering the land less or more than the contract is possible. In case, sold as it is, the parties have no rights to claim for the deficiency or excess (supreme court judgment no. 3754/2540).
However, If the total area is specified in the contract, the buyer has a right either to reject or accept and pay the pro rata or proportionate price. If the deficiency or excess doesn’t not exceed 5% of the total area specified. The buyer is bound to accept it and pay the pro rata. Any claim against the deficiency or excess can’t be made one year after the delivery date (section 466-467 of CCC).
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 house 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. Also, think about the note in step 2.
Step 4: Closing Date and Handover
Set a clear calendar date for the freehold 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. Finally, don’t forget the note in step 2.
Step 5: Basic Warranties of Freehold Land and/or house Sale and Purchase Contract
Even the land and/or house sold as it is. But the Freehold land and/or house 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 Land and/or House S&P Contract
Set how assignment and succession works. Basically, buyers should have a right to assign all rights and duties under the freehold land and or house S&P contract 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. Also, how to resolve the dispute peacefully in good faith. Als wel as conditions to terminate, damages and remedies. The damages can 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 Agreement 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. 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. 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.
Akenarin Thongplod Thai Barrister at Law and Notaries Services Attorney
& Frederic Retif, Master in Business law
Department of Land