Due diligence is defined in legal circles as the diligence reasonably expected from and ordinarily exercised by a person who seeks to satisfy a legal requirement or to discharge an obligation. In terms of purchasing property, due diligence refers to the care a reasonable person should take before entering into an agreement to purchase property. Note, due diligence should be completed, if possible, before signing any agreements or depositing any money with the seller.
The best place to start in your due diligence is with the seller of the property. That person or business should be able to provide a title deed for the property or, if the development is not yet complete, a title deed for the underlying land. The seller’s name should be listed as the last name on the back of the title deed, before any bank holding a mortgage.
The seller should also be able to provide you with information regarding its business and, if a person, his or her identity. In Thailand, a condominium juristic person should be able to provide proof of its registration as a juristic person and its rules and regulations. A developer or corporate seller should provide a current company affidavit. An individual Thai person should be able to provide his or her household registration and Thai ID card.
The seller or developer should also be able to provide you with information regarding the property. If the development is not yet complete, the developer or seller should be able to provide you with environmental approval certificates and construction permits. If the development is complete, the developer or seller should be able to provide a land allocation license and/or a title deed for your particular piece of property.
Once you have these documents, you can double-check the information on the documents by using the DBD website and by obtaining a current title deed at the land office. You may need a Thai friend to help you with these tasks.
You should also make sure that you ask the seller or developer all of your questions. Of particular concern, if you are buying a condominium, is whether the seller has exceeded its foreign ownership quota. Thai laws currently limit foreign buyer freehold purchases of condominium units to 49% of the total area (reserved for private ownership) of a condominium building at any one time.
Finally, you should thoroughly inspect the property. Try to inspect the property during the day and at night. It may be that nearby construction inhibits your daytime enjoyment of the premises or that a rowdy neighborhood bar will keep you up at night.
You should look also for construction defects, water and other damage, and evidence of rodents or other pests. Be inquisitive and detail-oriented. Make sure to check the lights, ceiling fans, air-conditioning units, electrical sources, and installed kitchen appliances. Turn on the water in the sinks, showers, baths, and flush all toilets. Open all windows, doors, closets, cupboards, and drawers.
Take good notes. Good luck.
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