THE IMPORTANCE OF SOUND LEGAL ADVICE FOR FOREIGNERS IN THAILAND
Finding a Good Lawyer in Thailand
This is touched on above, and it cannot be stressed enough—the first step when undertaking any property transaction in Thailand should be to enlist the help of a very good lawyer.
What is meant by “first step”? If someone is contemplating a real estate investment in Thailand, they should seek legal representation before they even start viewing properties. But what constitutes a “good lawyer”?
Many times it is not only their knowledge of Thai law, but their ability to explain the law in their customers’ own language. Good lawyer swill be fluent in Thai and English, but if another mother tongue is needed, it might only be the biggest firms which have the resources to help. Not surprisingly, these are likely to be the more expensive law firms.
Crucially, professional individuals don’t have time to waste. If they are flying to Thailand specifically to find the perfect property, then their limited time on the island is especially precious. Without the right lawyer, a buyer could waste their time looking at properties which don’t offer the legal ownership guarantees they want. Sound legal representation will protect their interests, save time, and ultimately save money.
Doing the Necessary Due Diligence When Buying Property in Phuket
Someone new to Thailand is usually enamoured with the “Land of Smiles”. What could possibly go wrong in a country full of wonderful smiling people, right?
Unfortunately things can and do wrong, but this is true the world over. That is why every buyer must have an understanding of due diligence and makes sure it is conducted to ensure a property is a viable and sound investment, and that the seller is legitimate and reputable.
Stock market investors often spend hours pouring over balance sheets and fundamentals before investing a few hundred Dollars, Pounds or Euros. Why then do some of the same people fail to exercise comparable caution when spending millions of Baht in Thailand?
Due diligence is where the right lawyer is invaluable. If buying from a developer, especially off-plan, it is important to make sure that the title deed for the plot of land is in the name of the actual development – the corporate entity, as opposed to an individual’s name – and that it definitely is not in the name of an unrelated third party. If the land title is in the name of a third party, he/she has the legal right to sell the land whenever they wish, even after you have paid a deposit, installments or the full value of the unit. If that third party were to die, the fate of the land (and with it your property investment) lies with the new owner.
A representative of the developer might claim that such an ownership structure made it easier to title the land, and that ownership will be transferred to the development company when construction is finished. But if the true owner decides to sell the land, or encumber it by taking out a mortgage or loan against it, every investor could find themselves out of pocket. Furthermore, if the land is encumbered, the mortgage could be foreclosed upon, or taxes might not be paid, in which case the revenue department could stake their claim to what people thought was their property. This caution should be taken with any purchase, not just a condominium, except with condos hundreds of individuals could be affected by a single title.
Buyers of condominiums, especially ones sold off-plan, should always ask for a copy of the title. This should be the Chanote title of land for the entire development, not merely a segment related to the unit in question. The full Chanote title will show any liens, mortgages or loans against property.
The same information can be obtained from an individual title deed, but these are only issued upon completion of the condominium’s construction. Purchasing a resale unit is therefore relatively safe, and a completed development (or one that is nearly finished) might also be a consideration for a foreign investor.
Let us turn once again to Olaf Duensing to find out more about what constitutes the necessary due diligence.