Property Purchase Agreements in Thailand

realestate

No Comments | 0 likes | 10,784 Viewers

Buying properties in Thailand often require that the buyer enters into a purchase contract with a seller or developer of the real property. Executing a purchase agreement entails the utmost attention to detail particularly on the rights, duties, and responsibilities each party has agreed to undertake. Of key importance is understanding that these stipulations, as a rule, carry legal implications that any court of law is required to recognize and enforce. As such, there is a need for every buyer to have a working knowledge of how these stipulations operate.

No purchase contract is complete without a period. A well-written purchase contract defines its existence in terms of a definite date or period of time. It does not allow the parties to speculate or resort to interpretation in order to determine the contract’s lifespan. This stipulation is of particular importance in situations where a phase of the agreement is to be done in the future; specifically, the contract period usually coincides with the payment schedule of any purchase arrangement.

In addition, every purchase contract requires provisions dealing with the purchase price and its manner of payment. These stipulations are perhaps the most important conditions found in any agreement since they define the consideration involved and ensure the means of its payment. Note that Thai law requires a Foreign Exchange Certificate or Form whenever a foreigner attempts to purchase real property within the country. This requirement mandates that any acquisition of real property should be financed by an offshore source with the use of Thai currency or Baht. This means that the foreign financing entity must correspond with a local intermediary bank in order to convert the foreign denominations into local currency. As an added requirement, all foreign exchanges should take place within the country and failure to do so would result in voiding the sale.

Another important stipulation to be found in any purchase agreement is a provision on default. This stipulation dictates the remedies available to a party when the other incurs a delay in the performance of his or her obligation. It usually provides for a penalty or course of action that may be resorted to by the non-defaulting party. In any case, care should be taken in ensuring that any default stipulation entered into does not amount to an unwarranted or excessive obligation.

Of equal importance is the addition of a proviso dealing with the possibility of resorting to arbitration. Arbitration is an alternative mode of dispute resolution which aims to avoid the tedious, time-consuming and costly process of litigation. It requires both parties to resolve their differences without the aid of legal counsel in order to put an end to any pending dispute. Arbitration as a process has had considerable success as more and more people prefer this method over the conventional court process.

An additional concern in every contract is the treatment of the deposit or earnest money paid in advance. A buyer should bear in mind that under Thai law, as a general rule, the deposit furnished is considered as non-refundable. Only in the exceptional case of the seller’s default will the law recognize the right of the buyer to recover the deposit amount with the proper imposition of damages.

Aside from these, every agreement for the purchase of real property contains a description of the property involved usually conveyed in metes and bounds. A buyer should see to it that the description of the land or real property contained in such contract matches the technical description found in the deed of title. That way, the buyer is guaranteed that there is no overlapping or shortage of the land involved.

Some contracts call for the use of terms or concepts only encountered in contract law. Any purchaser must make sure that these terms are well defined and easily understandable. Avoid the use of legalese in the writing of the contract as this tends to add ambiguity to any agreement. Simplicity and brevity should be of prime importance. Better yet, a potential buyer could consult a legal professional as the latter may provide invaluable insight on how to deal with these terms and their ramifications.

In the event that the parties to the contract cannot agree to some of its provisions, it would be advisable to include clauses which provide that the contract signed is but a mere step towards a final agreement. This may be done by adding phrases which highlight the temporary nature of the arrangement. These clauses are usually resorted to when there is a need for the immediate performance of the contract but the parties are still in disagreement as to some of its terms and conditions.

Finally, it is now common practice to include a stipulation determining the person liable to pay for costs such as attorney’s fees, litigation fees and the like incurred due to litigation. If the buyer feels that he or she may not live up to his or her obligations, avoiding these kinds of stipulations would be to his or her interest.